A forum to recognize the forward thinking among insurance organizations that breeds success.

www.bestreview.com

Monthly Insurance News Magazine Insurers • Agents & Brokers • Reinsurers

January 2013

Best’s Review • January 2013 • rePrinT2

t he 10 innovations presented in the next few pages were selected based on their impact on an insurance organization and in some cases,

the industry. They represent a wide range of industry segments from personal lines to multinational and catastrophic coverage. what they have in common is measurable success that improved the performance of the business.

Best’s Review appreciates the participation of these insurance professionals who reviewed the submissions: Stephen applebaum, Senior analyst, Property & Casualty insurance, aite Group; Dianne Batistoni, Partner, Financial Services-insurance Group, eisneramper; alan Bauer, auto insurance direct market consultant; Bill Jenkins, Managing Partner, agile insurance Technologies; Bob MacDonald, a principal at CTw Consulting; william Panning, founder and principal of erMetrics; robert Stein, retired vice chairman of global financial services for ernst & young and a director of assurant inc.; and Patricia Saporito, Senior Director of analytics, SaP Labs LLC.

each reviewer set their own standard for determining whether a submission was innovative. For example, Batistoni discounted a lot of submissions that focused on automation process improvement, “These types of improvements are a critical evolution of the way insurance organizations do business; they are at the very heart of information processing in today’s world. Since i view these types of improvements as

absolutely indispensable to survive in today’s economic environment, i did not view them as necessarily innovative unless they were somehow a completely new way to approach these processes.”

Stein singled out three submissions, predicting that those initiatives may well be the type of breakthrough the life insurance industry needs to make significant inroads in the middle market.

“american General Life insurance Cos., Primerica and rGa reinsurance are to be credited with the successful development of an approach to automated life underwriting that may enable the industry to grow in the middle market, which may be the best target market in the united States,” Stein wrote. “These approaches, which have many similarities, make the application process easy through the use of electronic web-based applications, make the underwriting decision quickly through an automated process without specimens, thereby increasing taken rates, and offer post-sale consumer-driven service via the web. all this should appeal to the middle market, especially the younger customers in this segment.

“Simplifying and speeding up the application and issue process is likely to be an essential feature of efforts to increase sales in this lower average size and cost-sensitive market segment. it may also be important to improving work-site voluntary sales processes and might be an approach that could finally make bank branch sales of life insurance a reality,” he concluded.

A forum for forward-thinking initiatives that are providing insurance organizations with measurable success.

InnovatIon ShowcaSe

Life Underwriting

What It Isin 2011, Primerica introduced its Termnow life insurance products with a design that can put an acceptance letter and policy number into a customer’s hands in under three minutes. To be eligible for Termnow, a customer must be applying for a policy with a face amount between $15,000 and $250,000 depending on age. The heart of this in-house written expert system is COSMO, an application that screens the requested policy for compliance integrity. COSMO contains more than 700 rule checks and more than 3,700 data processing methods that are critical to the company’s business. a typical policy is processed by COSMO in under 10 seconds. Compliant applications are analyzed in a rules-based underwriting process to determine risk and an email is then sent to the client alerting him or her of their application acceptance. also when the application is submitted, Primerica images the application so that the agent’s record-keeping is paperless and automated. The application image is also attached to the policy that is delivered within minutes to the client via secure access to the Primerica agent portal MyPrimerica.com.

Why It Is InnovativeTermnow products allow a representative to take an online application and, with the client’s permission, access databases, including prescription drug, Medical information Bureau and motor vehicle records as part of the underwriting process. This replaces the process of taking a saliva sample as a part of the traditional underwriting process. results of these searches are reported to the underwriting system in real time in order for the underwriting system to make a decision about whether or not to rapidly issue the policy. The traditional process can take between one and six weeks depending on what tests are required, and the longer a customer has to wait for a response, the greater the risk that he or she may choose not to accept the policy. additionally, Primerica has deployed its application software to the web allowing agents to take an application from a laptop, iPad, PC, Mac, or any device that supports traditional HTML web standards.

Measure of Success according to reporting metrics, Primerica received Termnow applications for 13,375 individuals during the month of December, 2011. More than 85% of these applications came from the web. Of the applications that were eligible for rapid decision, 83% were accepted at the kitchen table and 17% were referred to underwriting. additionally, 90% of the rapid decision policies had a time in process less than two minutes. These clients receive an email with a link to the Primerica Client Portal which they can click to see an immediate summary of their policy, and a copy of their policy can be found there on the next business day.

How It Was ImplementedThe development process for Termnow spanned more than four years with thousands of hours of research and development. Twelve departments and more than 150 people were instrumental in the development and successful rollout of this product. This unique and innovative process combined web-based data collection with multiple rules engines to create a service that gave the client a policy-issue decision in under three minutes.Primerica partners with SCOr, a reinsurance company, to fine tune the rules engine that is utilized to make underwriting decisions for our Termnow product. Primerica utilizes a web service to interact with SCOr, sending information required to underwrite the insurance. SCOr accesses external databases for the additional personal information needed to analyze the insurability of the applicant and recommend an underwriting decision. all in under three minutes.

Primerica

termnow

expert Review

“The Primerica TermNow is what innovation is supposed to look like. Primerica did not change the nature of underwriting, but the company—using existing technology—did change the process of underwriting and that qualifies as innovation. The inherent beauty of the Primerica TermNow innovation is not that they did what other companies could not do, but that they did what other companies could have, but did not do. By doing so, Primerica created efficiencies, improved service, reduced costs and enhanced value for virtually every stakeholder—inside and outside—of the company.”

ReviewerBob MacDonald a principal at CTW Consulting

Copyright 2012 by a.M. Best Company, inc. all rights reserved. reprinted with Permission, www.ambest.com Best’s review, January 2013.

3120 Breckinridge Blvd Duluth, Ga 30099

770-381-1000 www.primerica.com