reinventing insurance

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