reinventing insurance
TRANSCRIPT
Reinventing InsuranceKEVIN PLEDGE FIA, FSA
13 Oct 2015
Session 114
How much personal protection life insurance (by policy count) will be sold online 5 years from now?
0 – 9%10 – 19%20 – 29%30 – 39%40 – 49%
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50 – 59%60 – 69%70 – 79%80 – 89%90 – 100%
Previous results
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Agenda
1. Trends in Life Insurance2. Why sell online?3. Online Experience in North America4. Online Experience in Elsewhere5. Can this be applied here?
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Trends in Life Insurance
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Trend – Life Insurance Sold in US
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Trend -‐ Uninsured households
57% of families with children will have immediate financial trouble if the primary wage earner died30% of households have no life insuranceInsurance Gap -‐ $20T in US, 1T in Canada
50% of households believe they are underinsured
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Trend -‐ Agents• 85% of consumers research insurance online
• Most consumers happy doing business online
• Average age of agents now 57
• -‐ disconnect to young modern consumers
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Our Research• Agents are not the first source for information• Not a positive view of agents or insurance companies
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“The broker is needed to make the sale. They push you (to buy) because they
will make the commission.”
“Life insurance companies want to sell you more than what you
need.”
“First place I would go to is Google.”
“What are you getting? What are you really covered for? What are your options? No one tells you.”
“I would go on the internet and research companies through forums.”
The Trend is to Online• Consumers are looking online to buy insurance:• 250,000 relevant Google searches every month in Canada• 2.6m relevant Google searches every month in the US
• Opportunities:• Growth• Better customer experience• Low expenses = better price / higher profits
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Why sell online?
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Willie Sutton
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Reporter:
“Because that’s where the money is.”
Sutton:
“Why do you rob banks.”
Everyone is recommending a modern digital strategy
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We have seen it in other industries
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Banking online – “it’s not safe”
Groceries – “I like to choose my groceries”
Travel - “it needs a personal touch and experience”
Digital Disruption in Retail
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Life Insurance Industry -‐ Barriers to Entry
• Highly Regulated• Prudential oversight of insurance companies• Capital adequacy• Policyholder protection• Complex Infrastructure• Systems & Processes• Brand Reputation
Life Insurance is Sold not Bought
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Industry Metrics
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Time to Issue 47 days* (including appointment)
Cost $500 - $747** + commission
Capacity Depends on number of agents
Sources: * 2009 LOMA Service Turnaround Times Survey – Term Products: 47 days**SOA 2010 Expense Study Average Per Policy $500 weighted, $747 unweighted
Can we do better?
Online Insurance Experience in North America
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Online Life Insurance in North America• The Problem : The traditional new business process is not customer friendly
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Indicative Quote
Underwrite
IssueOfferAdd’l Q’s
Modify Application
Apply
Underwrite evidence
Further Questions
multiple hand-offslack overall process control
Simplified Issue
• Simplified issue:• Less underwriting = worse mortality experience• Claim underwriting = worse customer experience
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Indicative Quote ApplyUW at claim!
➢ Higher premiums = disappointed customers & higher lapse rates
Would anyone else do this?
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Would anyone else do this?
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Would anyone else do this?
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OK – maybe one company
Quick Issue Answer a few questions and we may issue immediately(but the chances are we won’t)Refer to agent otherwise
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Indicative Quote
Underwrite
IssueOfferAdd’l Q’s
Modify Application
Apply
Underwrite evidence
Further Questions
Indicative Quote Apply
OR
Accelerate existing processes
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Online Life Insurance Experience Elsewhere
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What is Happening Elsewhere?
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“The future is here, it’s just not very evenly distributed”
Beagle Street
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UK New entrant – not really an insurance companyNot encumbered by existing distributionOnline onlyNo advertising for first two years
The Beagle Street Approach
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Indicative Quote
Buy
Apply and UW
Fully UnderwrittenNo fluids or additional evidenceCover up to £750kBetter lapse experienceAve issue time 12 minutes
• 5,000x faster
• 1/10 of the cost
• ∞ scalable (85% of the time)
What about barriers to entry?• Not an insurance company• Focus on distribution• Partnerships – Reinsurer, Traditional Insurer, Software
• No complex systems• Focus on distribution – outsource the rest
• Fresh approach to branding…
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www.acceptiv.com/SOA2015
Can this be applied here?
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Market research
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“Almost half of participants found the value proposition [to buy directly online] very appealing (rating of 8 or more out of 10); these results are encouraging.
Years ago, when evaluating consumer interest in the ING Direct value proposition, our goal was to find interest in only half as many target group members (who we defined as innovators).”
• 10 – 30 year term insurance, up to $500k• Coverage age range 18 -‐ 70• Applied UK experience and P&C lessons• Simpler, yet more flexible than current products• No medical evidence referrals• Online, with offline support if needed• On cover in 15 minutes or less
• Full UW + Lower cost = Lower premium
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T10 - $13.42T20 - $21.08
Online Quote, Application and BuyAutomated underwriting immediate decision including rating if applicable
T10 - $18.65T20 - $24.80
Online Quote and ApplicationSimplified and Manual Underwriting
T10 - $20.00T20 - $26.04
Online Quote and ApplicationBasic auto and Manual Underwriting
T10 - $20.10Online Quote and ApplicationBasic auto and Manual Underwriting
T10 - $20.30T20 - $30.69
Online QuoteManual Application and Underwriting
Where did this put Teachers Life?
Insurance
Turn Key Solution for Canadian FraternalsA Complete Solution: Full go to market solution for online fulfillmentAdministration support Product and underwriting designed for online sales
Faster, less costly, more agile: Fast, economical solutionBenefit from Teachers Life experience Pay for results
Final Thoughts?
$20T Uninsured
Synergy&
Threats
$2.7bnTerm
Market
$14.5bnProtection
Market
www.acceptiv.com/SOA2015
Thank You & Discussion
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Kevin PledgeAcceptivwww.acceptiv.com/soa2015