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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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Your Brand
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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