Addressing the Middle Market Protection Gap. Online Distribution Kevin Pledge, CEO and Founder, Acceptiv

Transcription

1 Addressing the Middle Market Protection Gap Online Distribution Kevin Pledge, CEO and Founder, Acceptiv

2 How much personal protection life insurance (by policy count) will be sold online 5 years from now? % 10 19% 20 29% 30 39% 40 49% % 60 69% 70 79% 80 89% %

3 Agenda Digital Disruption Online Life Insurance in North America What is happening elsewhere? Can this be applied here?

4 Digital Disruption 4

5 Digital Disruption 15 years ago Travel Agents would claim that you cannot book vacations online it needs a personal touch and experience 10 years ago you would not dream of banking online it s not safe 5 years ago few people would buy groceries online 5

6 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 6

7 Trend - Agents 85% of consumers research insurance online Most consumers happy doing business online Disconnect to consumers average age of agents now 57 7 Insurance Gap - $20T in US, 1T in Canada 57% of families with children will have immediate financial trouble if the primary wage earner died 50% of households believe they are underinsured

8 Our Research Agents are not the first source for information Not a positive view of agents or insurance companies The broker is needed to make the sale. They push you (to buy) because they will make the commission. What are you getting? What are you really covered for? What are your options? No one tells you. 8 Life insurance companies want to sell you more than what you need. First place I would go to is Google. I would go on the internet and research companies through forums.

9 Industry Performance Key Metrics: 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 9

10 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 10

11 Online Life Insurance in North America The Problem : The traditional new business process is not customer friendly Modify Application Further Questions Indicative Quote Apply Offer Add l Q s Underwrite Underwrite evidence multiple hand-offs lack overall process control 11 Issue

12 Simplified Issue Indicative Quote Apply! Customer pays for convenience speed of issue Anti-selection risk 12 UW at claim

13 Would anyone else do this? 13

14 Would anyone else do this? 14

15 Quick Issue Indicative Quote Apply OR Answer a few questions and we may issue immediately (but the chances are we won t) Refer to agent otherwise Modify Application Further Questions Indicative Quote Apply Underwrite 15 Offer Add l Q s Underwrite evidence Issue

16 Accelerate existing processes Good (at least to industry insiders) 70% will take more than a week More than half will take more than two weeks but not great 16

17 Is there a better solution? Simplified Issue - Quick Issue Accelerate existing processes All have issues Why do you want to sell online? You can t just do what you do today online 17

18 What is Happening Elsewhere? The future is here, it s just not very evenly distributed 18

19 Beagle Street UK New entrant not really an insurance company Not encumbered by existing distribution Online only No advertising for first two years 19

20 The Beagle Street Approach 5,000x faster 1/10 of the cost scalable (85% of the time) Buy Indicative Quote Apply and UW Fully Underwritten No fluids or additional evidence Cover up to 750k Better lapse experience Ave issue time 12 minutes 20

21 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 21

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23 Can this be applied in North America? Market research tested 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). 23

24 Survey results Percentage of votes % 10-19% 20-29% 30-39% 40-49% 50-59% 60-69% 70-79% 80-89% % Percentage of life insurance sold online 5 years from now ASNA (ave 43%) CRC 2 (ave 35%) 24 CRC 1 (ave 36%) LAS (38%)

25 10 30 year term insurance, up to $500k Coverage age range 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 25

26 Where did this put Teachers Life? Insurance 26 T10 - $13.42 T20 - $21.08 Online Quote, Application and Buy Automated underwriting immediate decision including rating if applicable T10 - $18.65 T20 - $24.80 Online Quote and Application Simplified 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

27 Threat or opportunity? 27

28 28 $1T uninsured Synergy 400k term policies 800k individual life policies

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30 Thank You Kevin Pledge CEO and Founder, Acceptiv