Life insurance remains one of the most undersold categories of protection products, but insurers are working to change that through the adoption of technologies, such as e-applications, e-signatures and automated underwriting, that provide greater ease of doing business for their distribution forces. Technologies that minimize errors -- reducing not-in-good-order (NIGO) applications -- and speed policy delivery please agents and enable growth.
The life insurance industry has suffered from thinking of the world from the inside out, rather than outside in, says Rob McIsaac, a principal with research and advisory firm Novarica. "If you're in the manufacturing mode, you have had the ability to dictate what a captive distribution force would do," he notes. "As more insurers work with independent agents, they must line up with what their distribution partners want to do."
What worked in the past won't suffice for the next generation of producers, McIsaac advises. "Mobility will be important, as more agents see tablets making their jobs easier and more effective," he says. "Insurers need to make sure they have tools that work together with seamless integration, from the sales process to execution of orders to making sure data is available from their core platforms."
Life insurers have struggled with the cultural and technical change management challenges associated with rapidly maturing technology, but some have begun to see notable success. "For example, we've seen NIGO rates drop dramatically with the use of online e-apps," McIsaac says. "With an online app, you have the ability to make sure you have the right application for the right product and that you're screening appropriately for compliance issues."
Adoption of technologies such as e-signatures and e-applications is far from uniform, but some carriers are taking more than 90% of new business through e-apps. "E-signature adoption has been a bit slower, driven in part by concerns about legal precedents," says McIsaac. "Our take is that those issues are largely behind us."
McIsaac sees adoption of new business technologies accelerating among life insurers. "We'll see more companies making those investments to stay relevant in the markets they've been active in, but also as they move into new distribution systems or markets where technology really does make a difference in how carriers are able to play," he says.
Genworth (Richmond, Va.; $9.6 billion in total 2012 revenue) invested in an expansion of its Life Quick Request (QR) distribution platform to simplify and enhance the sales process in advance of launching the company's new index universal life (IUL) product on May 28, according to Chris Olson, senior VP of operations in Genworth's U.S. Life Insurance division.
For the past few years, Genworth has sold hundreds of thousands of policies on its QR platform, using short-form tickets for new applications on all product lines, Olson says. The insurer is integrating that existing platform with what Olson calls a robust and efficient new business platform. When Genworth launches its IUL product this month, it will debut an easy-to-follow system that generates clear, understandable illustrations.
"We've used e-signature in various forms across all lines of business as a key part of both the new business and policy delivery processes," Olson says. "In 2013, we launched an integrated electronic policy delivery process for our life products called ePolicy Delivery. The combination of QR for policy application and ePolicy Delivery gives us a comprehensive front-to-back electronic offering that's hard to beat from the producer's perspective."
Erie Family Life ($173.1 million in life and annuity gross annual premium), a division of Erie Insurance (Erie, Pa.), recently added point-of-sale underwriting to its integrated online quoting, e-application and e-submission platform launched in 2011. It's seeking to increase life insurance sales to its more than 4 million policyholders, says Mike Plazony, senior VP at Erie Family Life.
"It's important to make it easy for our P&C agents to sell life insurance," Plazony says. "It requires us to think like our customers."
Erie Family Life chose iPipeline's iGO e-App product and found it was a game changer, he says. After enjoying unexpectedly rapid agent adoption, Erie sought to include automated underwriting capabilities. "We needed an e-application with e-signature to set the stage, and iPipeline was the leader," he says.
Erie piloted point-of-sale underwriting in July 2012. Agents begin the process by having clients sign a HIPAA authorization for the insurer to tap into databases containing relevant medical information, according to Rebecca Nurse, the carrier's director of strategic initiatives. The agent proceeds to ask 10 medical questions, and depending on how the client answers, the system reflexively refreshes the screen and either moves on or asks further questions. "The results come back from database searches, and then the decision is rendered as either approved or it goes to underwriting," Nurse explains. "The underwriter will get back to the agent within a day or two -- we didn't want to put the agent in the position of declining on the spot."
[Genworth Life Reduces Policy Cycle Times Nearly 70%]
Erie began rollout of the point-of-sale underwriting capability to its branch offices in January, according to Plazony. "We wanted to get five or six months under our belt, make sure everything was working appropriately and get the right marketing messaging to the remaining agents," he says. "The product messaging -- easy, fast, no exams -- is driving people to our agents and they are selling to the need."
Since Erie completed rollout and training in March, the carrier has seen a 10-point improvement in placement ratio over products without automated underwriting, and the average time to close new business is only 15 minutes, as compared to days or weeks with traditionally underwritten products.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio