new era underwriting: delivering term life insurance in 20 … · 2017-09-28 · 1 new era...

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New Era Underwriting: Delivering Term Life

Insurance in 20 Minutes or Less!

Faster, Better, Lower Cost

Bill NuttingBill NuttingAmerican Life Insurance Co. of New YorkAmerican Life Insurance Co. of New York

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Today’s Topics

1. A Changing Market for Term Insurance2. Technology’s Impact on Distribution3. Marketing with New Technologies

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$526 Billion Life Insurance Market

Observations

!! Sold vs. boughtSold vs. bought!! Commodity pricingCommodity pricing!! Differentiation based on:Differentiation based on:

!! issuer rating & brandissuer rating & brand!! commissioned agent recommendationcommissioned agent recommendation

!! Little focus on product featuresLittle focus on product features

!! Middle policy markets overlookedMiddle policy markets overlooked

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Term Insurance Traditionally Dominated by Agents

Traditional Insurance Agents

Financial Planners

Mortgage Originators

Lending Banks

Affinity Groups

Benefit Consultants

Credit Unions

Finance Companies

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Enter Direct Marketers

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Direct Marketers Are Targeting Savvy Baby Boomers & GenX Consumers with Highly

Sophisticated Messages - Including TV Ads

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Competition is Fierce Among Direct Marketers Who Today Control Only 7.5% of the Market

0 1000 2000 3000 4000 5000 6000

ForemostULLICO

Prudential (NEA)Guarantee

Central StatesFidelity Security

Liberty LifeUnited Family

Conseco DirectGerber Life

Minnesota MutualSignature

Mutual OmahaAllstate Life

CUNA MutualGlobe

TIAA-CREFPhysician's

CIGNAForethought

NY LifeGEFA

AssurantAEGON

USAA

$ Premiums

Source: JCG Ltd.

$ millions

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…. And They’re Now Competing With All Types - From Credit Card Issuers to QVC

Traditional Insurance Agents

Electronic Insurance Marketplace

Financial Planners

Mortgage Originators

Electronic Marketplace-Mortgage

Mortgage Brokers

Lending Banks

Brokerages-National

Brokerages-Tier II

Insurance Direct Marketers-Life

Affinity Groups

Insurance Direct Marketers-P&C

Benefit Providers

Benefit Enablers

Benefit Consultants

Credit Card Providers

Credit Unions

Finance Companies

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Today’s Topics

1. A Changing Market for Term Insurance2. Technology’s Impact on Distribution3. Marketing with New Technologies

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How Can We Capitalize on Emerging Technology to:

1. Differentiate products: faster & better

2. Lower costs to be more price competitive in a commodity-driven market

3. Produce incremental sales

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The Internet is Certainly the Most Important Component of Emerging

Technology

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But Pure Internet Life Insurance Plays (.com) Offer Limited Sales Potential – Consumers Just

Aren’t Ready

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Not Surprisingly Auto Policies Are Expected To Dominate Online Sales

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But Things are Changing Quickly as the Industry Gears Up To Deliver Products

Electronically

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Financial Services Companies Are Expected to Invest Nearly $10B in 2003 vs. $1 Billion in 1998;

3 Times That of Retailers

Companies

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Consumers

New, Faster, Lower-Cost, Readily-Available Technologies Are Fueling

Consumer Internet Usage

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The U.S. is Way Ahead of The Rest of the World

020406080

100120140160180

UnitedStates

Germany Australia Mexico

internet users

160+ Million Internet Users

Source: Internet.com

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U.S. Internet Access Has More Than Tripled Since 1997….

0

10

20

30

40

50

60

1984 1989 1997 2001

internet access

% of U.S. Households With Internet Access

Source: Internet.com

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…And The Pace Will Continue to Surge…

! incomes > $75k: 88% now have computers @ home

! school computers level the playing field across income and ethnic groups

! online shopping at work accounts for half of all online shopping

! high speed internet access (broadband) is growing exponentially

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Broadband’s Growth Projection Reflects Its Many Advantages

Broadband Subscriber Base (millions)

0

5

10

15

20

25

30

35

40

2000 2006

BroadbandSubscribers

Broadband Connections Are “Always On” and Up to 125 Times Faster Than Dial-Up Modems

Source: Internet.com

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What’s the Potential Impact on the Insurance Industry?

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The Industry Will See The Internet As Much More Than .com

.com vs. Electronic Processes

E Commerce E CommerceApplicationUnderwritingAccount Servicing

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START

Agent Links toALNY Web Site

Agent enters clientdata taken over

phone forunderwriting

Collect personaldata, beneficiary,

& paymentinformation

*EFT and Credit Card Payments Only

Yes B

B

Agent will print barcoded app and place in

closing packet

Applicant will signapplication at

mortgage closingC

CCW prints contract

and paymentconfirmation

CW mails contractto policyholder

END

END

Countrywide New Business FlowSimplified Issue Product Process

Intermediated by Phone Center Representatives

Passunderwriting?

ALNY mergesto client's file

ALNY sends policyprint file to

Countrywide

ASSUMPTIONS:*This flow supports the simplifiedissue product only and assumesno MIB, MVR, or Labs.

See weblink workflowYes

August 3, 2001

SignElectronically?

No

YesAgent sends

e-mail for digitalsigning

Customerperforms digital

signatureCoverage Begins

Generate InitialPayment

Transaction

CoverageBegins

Generate InitialPayment

Transaction

END

CW Faxes App toALNY

CustomerApproved formortgage?

YesSent to

LicensedAgent

Does Clientwant 10K No

Does Clientwant

additional?

Does clientwish to apply

electronically?Yes

No

Yes

CW SendsContract Data to

ALNYElectronically

ANo

A

No END

ALNY Sets upContract

No END

Opportunity to Re-Engineer Cumbersome, Expensive, Paper-Based Processes Like This….

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Electronic Underwriting, As An Example, Can Instantly Incorporate Always ReliablePrescription Drug Database Information…

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And Electronic Underwriting Can Dramatically Improve Decision-Making Turnaround Time..in an Industry Not

Known For Its Speed

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Today’s Topics

1. A Changing Market for Term Insurance2. Technology’s Impact on Distribution3. Marketing with New Technologies

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Marketing Options Range From Simple Links to More Complex Integration with Existing Distribution Channels…

1.

Link on Your Website

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Marketing Options Range From Simple Links to More Complex Integration with Existing Distribution Channels…

1. 2.

E-mail Campaign toSelected Addresses

- mortgages- life events

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Globe/Credo reportedly sold 3,800 simplified issue policies via the internet in 3Q 2000. Globe also sold > 20,000 on their website.

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Marketing Options Range From Simple Links to More Complex Integration with Existing Distribution Channels…

1. 2. 3.

Direct Mail LeadGeneration with Data CenterInputs (key-in)

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Marketing Options Range From Simple Links to More Complex Integration with Existing Distribution Channels…

1. 2. 3. 4.

Call Center/Data Integration- outbound- inbound- point-of-sale

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Marketing Options Range From Simple Links to More Complex Integration with Existing Distribution Channels…

1. 2. 3. 4.Link on Your Website E-mail Campaign to Direct Mail Lead Call Center/Data IntegrationTo American Life Selected Addresses Campaign with Data Center - outboundOf New York - mortgage Inputs (key-in) - inbound(co-brand w/ your brand) - life events - point-of-sale

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1015202530354045

Link on Your Websi te E-M ai l Cam paign Direct M ai l Fol low-up Cal l Center In tegration

Incremental PolicySales

Incremental Sales Are Expected to Increase With Integration Complexity

%

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Bringing it all together

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Application through Issuance in < 20 Minutes

! 24 hour availability! all-electronic application process! immediate underwriting decision! electronic signature! immediate binding & issuance! policy issued online & stored immediately

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inviva Term Insurance

1. Fully Underwritten1. $250k - $1,000,0002. 30 questions; immediate bind for 90 days;

electronic Scheduling of Paramed

2. Simple Terma. 100% electronicb. $25k - $250Kc. 6 questionsd. 20 minutes – start to finishe. Documents Stored in Your iFolderf. Online Servicing Available Immediately

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Technology Platform

• Policy Administration System is fully internet-enabled

• MARTHA is our Modular Automated Real Time Health Analyzer

• MARTHA Underwriting Engine evaluates applicants (capacity is 325 applications per hour)

• MARTHA orders and evaluates “outside” supplemental data

• Customer self-service improves speed and accuracy of policy administration

• Innovative identity validation reduces chances of fraud

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Underwriting Engine (MARTHA)Data Sources

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6 Questions

Your Brand

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Your Brand

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47

48

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Your Brand

50

Your Brand

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Instant Term – Fully Underwritten Term ProductCustomer Service Contacts Are Evenly Distributed

iMaileMailPhoneChatMail

It’s still too early to draw conclusions

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Are Variable Annuities Next?

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“Now that the first online-only variable annuity has been approved…

…..American Life Insurance of New York got the commission's (SEC) go-ahead to launch an all-electronic VA late last year. Investors get all their statements, make all their transactions and monitor their accounts online. “

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Thank You

Bill Nutting