American Fraternal Alliance Annual Meeting 2015

Fraternals need to consider seling online. This presentation shows how Teachers Life made this transition.

Transcript

1. Are Online Sales in Your Future? (Hint: They Better Be) Doug Baker CEO, Teachers Life Kevin Pledge FSA, FIA CEO and Founder, Acceptiv
2. 1. The Market Today 2. Why sell online? 3. How does it work? 2 Agenda
3. A couple of notes before we start Building a U.S. – Canada Wall… 3 It will only work in the summer…
4. And just remember….. 4 We’ve had practice climbing over things…….
5. How much personal protection life insurance (by policy count) will be sold online 5 years from now by Fraternals? 50 – 59% 60 – 69% 70 – 79% 80 – 89% 90 – 100% 0 – 9% 10 – 19% 20 – 29% 30 – 39% 40 – 49% 5
6. Trend – Life Insurance Sold in US 6
7. Trend - Uninsured households 57% of families with children will have immediate financial trouble if the primary wage earner died 30% of households have no life insurance Insurance Gap - $20T in US, 1T in Canada 50% of households believe they are underinsured 7
8. 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 8
9. 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 9
10. It’s slightly different for Fraternals Limited capital Hostile acquisitions are not possible Fraternals have a reason to do what we do (beyond profit) But, we are still competing in the same market and (most likely) for the same customers. 10
11. Why sell online? Part 2 11
12. Willie Sutton 12 Reporter: “Because that’s where the money is.” Sutton: “Why do you rob banks.”
13. Teachers Life Large players dominate the market – including the banks Brand and Advertising can be lost, especially through intermediaries How can Teachers Life compete in this market? Responsibility to members to offer best terms possible? 13
14. 14 2007 2008 2009 2010 o Member   portal o Online  product   launch o Website o Online  Payment o Document   Management   System o Term  20  Online 2011 o New Accounting   Software   System
15. 15 2012 2013 2014 2015 o New   Business   Continuity  /   DR o Expense   Point (Mobile         Accounting   Software) o Policy  Admin   System o New  Policies  &   Procedures   System o Phone  System o New  Online   Product   (T10-­30) o New   Marketing   Website o PCI  Payment   Portal o Continuous   Improvements  to   Customer  Journey o Expanded  Online  (T-­10-­ 40) o New  Online  Portal  for   Retirement  Products o New  Marketing  Website   and  Fall  Marketing   Campaign o Provide  TPA  Services  for   Other  Insurers
16. The best thing about a small company - it’s a small company. The worst thing… Our Weaknesses are our Virtues 16 › Agility to respond – we had put ourselves into a position to capitalize on the new online opportunity › Decision-making › The ‘cost’ of technology relatively speaking is within the reach of small organizations › Strong partnerships – outsourcing is key › Ability to ‘punch above our weight’
17. Advocates for a Modern Digital Strategy 17 PWC:  Life  Insurance  2020:   Competing  for  a  future “As customer expectations become more exacting and the supply chain becomes more fragmented, your business will need to develop new routes to market or risk being cut out of the loop.” Deloitte:  2013  Life  Insurance   and  Annuity  Industry   Outlook ”Carriers looking to overcome challenges reaching the middle market might consider developing direct-to-consumer options to bolster their agency distribution system.” Accenture:  The  Digital   Insurer “The difference between the front-runners and those who are struggling to keep up is, in many cases, the engine that drives them. Old, outdated legacy platforms are costly to maintain and prevent insurers from competing effectively against those with modern, flexible systems. “ Capgemini:   Trends  in   Insurance  Channels “To remain competitive in the marketplace, insurers need to redesign their business processes to speed up the automation process and also develop predictive analytics and automated underwriting solutions. “
18. 10 years ago you would not dream of banking online – “it’s not safe” 5 years ago few people would buy groceries online 15 years ago Travel Agents would claim that you cannot book vacations online – “it needs a personal touch and experience” Digital Disruption – Other Industries 18
19. Disruption in Retail 19
20. The Trend is Online Distribution Consumers are looking online to buy insurance: § 250,000 relevant Google searches every month in Canada § 2.6m relevant Google searches every month in US Opportunities: § Growth § Better customer experience § Low expenses = better price / higher profits 20
21. But … The Market Today Full underwriting is complicated, involves multiple hand-off and is hard to convert to an online process Immediate issue in North America typically means simplified issue: § Less underwriting = worse mortality experience § Claim underwriting = worse customer experience 21 ➢ Higher premiums = disappointed customers & higher lapse rates
22. How does it work? Part 3 22
23. Typical Process Indicative Quote Underwrite Issue Offer Add’l Q’s Modify Application Apply Underwrite evidence Further Questions Indicative Quote Apply UW at claim ! Or Simplified Issue 23
24. Can we do better? Metrics to beat: Time to Issue 42 – 47 days* Capacity Depends on number of agents Cost $500 - $747** + commission Sources: * 2009 LOMA Service Turnaround Times Survey – Term Products: 47 days **SOA 2010 Expense Study Average Per Policy $500 weighted, $747 unweighted 24
25. Yes, we can do better - Much better! Indicative Quote Apply and UW Buy > 5,000x faster ∞ scalable (85% of the time) 1/10 of the cost Fully Underwritten No fluids or additional evidence Cover up to $500k Ave issue time 12 mins 25
26. 10 – 40 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 26 The Solution at Teachers Life
27. T10 - $19.10 Online Quote and Application Basic auto and Manual Underwriting T10 - $20.00 T20 - $26.04 Online Quote and Application Basic auto and Manual Underwriting T10 - $20.10 Online Quote and Application Basic auto and Manual Underwriting T10 - $20.30 T20 - $30.69 Online Quote Manual Application and Underwriting And price leadership… MNS Age 40 $150K. Term Life Monthly Premium * Based on Onvivo product design and pricing at May 2014 27 Insurance T10 - $13.42 T20 - $21.08 Online Quote, Application and Buy Automated underwriting immediate decision including rating if applicable
28. Demo – Path to Purchase 28 Video is available at www.acceptiv.com/AFA2015
29. Our Turn Key Solution for Canadian Fraternals A Complete Solution: § Full go to market solution for online fulfillment § Administration support § Product and underwriting designed for online distribution Faster, less costly, more agile: § Fast, economical solution § Benefit from Teachers Life experience § Pay for results 29
30. Acceptiv / Teachers Life Solution 30 Acceptiv § New Business Process customized to your brand § Underwriting Rules and system § Product design and pricing Your Reinsurer Teachers Life § Administration System § Customer Service VersaPay PCI compliant payment New Business Administration
31. Do we need to change? Closing Thoughts 31
32. $20T uninsured New Entrants? Synergy $2.7 b Term market $14.5 b Protection market 32
33. 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 33
34. 34 Video is available at www.acceptiv.com/AFA2015
35. Any Questions? 35 www.acceptiv.com/AFA2015
36. Are Online Sales in Your Future? Thank You Doug Baker dbaker@teacherslife.com Kevin Pledge FSA, FIA kevinpledge@acceptiv.com www.acceptiv.com/AFA2015