Session 6: Accelerated Underwriting and the New SI. Moderator: Cheryl Johns. Presenters: Kevin Oldani Jon Davis Doug Parrott

Transcription

1 Session 6: Accelerated Underwriting and the New SI Moderator: Cheryl Johns Presenters: Kevin Oldani Jon Davis Doug Parrott

2 Accelerated Underwriting and the New Simplified Issue SOA Underwriting Issues and Innovations Seminar Monday, August 3,

3 Accelerated Underwriting Hannover Life Reassurance Company of America Kevin Oldani, SVP & Chief Underwriter SOA Underwriting Issues and Innovation Seminar Chicago, IL August 2-4, 2015

4 Disclaimer The information provided in this presentation does in no way whatsoever constitute legal, accounting, tax or other professional advice. While Hannover Rück SE has endeavoured to include in this presentation information it believes to be reliable, complete and up-to-date, the company does not make any representation or warranty, express or implied, as to the accuracy, completeness or updated status of such information. Therefore, in no case whatsoever will Hannover Rück SE and its affiliated companies or directors, officers or employees be liable to anyone for any decision made or action taken in conjunction with the information in this presentation or for any related damages. Hannover Rück SE. All rights reserved. Hannover Re is the registered service mark of Hannover Rück SE. 3

5 Accelerated Underwriting Agenda Define Accelerated Underwriting Why has this developed recently Underwriting process and requirements Issue ages Face amounts Pricing Automation Learning process Accelerating the non accelerated cases 4

6 Defining Accelerated Underwriting Policies issued faster with a different underwriting package Consider fully underwritten with a new package of requirements Some percentage of cases still go through the full underwriting requirements Not your historical SI program Short application Anti-selection Limited underwriting such as MIB 5

7 Accelerated Underwriting Focus Principal Financial Group New/improved underwriting tools Big Data Coordination between Actuaries and Underwriters Better client experience Desire for sales in broader market of ages and incomes 6

8 Underwriting Process and Requirements Underwriting requirements MIB RX MVR Predictive Model, financial and non financial data Implementation Identity Check Tele Underwriting with extensive drill downs Other data 7

9 Issue Ages with stretch to age 60 Prevalence of impairments and cause of death Value of underwriting requirements Cost of requirements vs. premium 8

10 Face Amounts $100,000 to $500,000 typical with movement to $1 million Will this go higher? 9

11 Pricing Implications Close to normal retail rates Preferred classes Mortality differences Offsets 10

12 Monitoring the results Random sample audits before issue Post issue audits Robust reporting Consistency of offers Automation Learning process Willingness to change 11

13 Accelerating the Non Accelerated cases Improve the process for fully underwriting cases Correct underwriting package by age Use new requirements to offset others Blood profile that is more robust Automation of medical records process Electronic records Data driven APS s Order what you need every case is different? What is the DNA of the case 12

14 Wealth Transfer Simplified Issue Products A New Category in the Life Insurance World Jon F. Davis, FSA CEO Innovative Underwriting Solutions

15 Wealth Transfer Market In the annuity market, annuities are sold to clients who may have certain financial assets they want to primarily leave to their heirs (i.e. kids, grandkids,) with secondary consideration for growth and access. 14

16 Challenges in the Annuity Market Low Interest Rates High Market Volatility Increased Regulations Senior Sales Suitability For Carriers Concentration Risk 15

17 Why is Life Insurance Undersold? From the agent/rep perspective, they don t sell it because: Too complicated Takes too long The client has to get stuck with a needle 16

18 Defining the Product Single Premium Life Whole Life or Fixed Indexed Universal Life Sold by Agents/Reps in the retirement planning business Accept/reject underwriting Issue decisions in 1 to 3 days Highlight of tax-free death benefit to the beneficiary Still provides liquidity in case the owner needs the money Offer current terminal and critical illness accelerated benefit riders 17

19 Current carriers: Equitrust Fidelity & Guaranty Midland National National Western Life North American Sagicor Millions $400 $350 $300 $250 $200 $150 Total Sales of Wealth Transfer Simplified Issue Single Premium Life $100 $50 $ Data courtesy of Sheryl Moore, Wink, Inc., Pleasant Hill, retrieved June 15, 2015.

20 Underwriting Generally 4 to 6 tables standard Products rate based: Age Sex Smoker/non-smoker Accept/reject Variations on underwriting process App taken Call with the client to answer medical questions Script check, MIB MVR Limited times decision is deferred to review APS s Goal limit to small percentage of cases 19

21 What About Anti-Selection? Underwriting Process Distribution is Key Selling along with annuities rather than shopping against other life products Product has fixed premium to Death Benefit relationships (diminishes with age) Limited total death benefit or net amount at risk 20

22 A Look to the Future Continued growth is expected as more carriers get involved. Market will develop as: Agents/reps adopt the concept Insurers/reinsurers gain actual experience 21

23 22 Thank you

24 Simplified Issue Market & Underwriting Doug Parrott AVP, Chief Underwriter-North America SOA Underwriting Issues and Innovations Seminar Chicago IL, August 2-4, 2015

25 Simplified Issue Underwriting Agenda Four major challenges of simplified issue business -Product design -Application design and underwriting evidence -Agent training and education -Post launch monitoring in the first two yearsimportant; years three and beyond-more important. Non-disclosure monitoring extremely important. 24

26 Simplified Issue Underwriting Product Design Mortality appetite-how different do you want to be from everyone else? Knock out, assess or hybrid product? Face amount and age comfort zone-non med face amounts are rising. Underwriting evidence-what do you think you need? What do you really need? 25

27 Simplified Issue Underwriting Application Design Years ago, questions of fully underwritten apps were simply bunched together into 7 or 8 questions. Market demands more now which is actually less. Medical questions-approach depends on the product type (knockout, assess, hybrid). Start big and scale back depending on your product type; rework those questions you stick with. What questions are specific to an age band? Consider the lifestyle/nonmed questions-reworked or eliminated? Do you have an e-app with an attached process or is this a paper application and process? 26

28 Simplified Issue Underwriting Underwriting Evidence MIB, prescription history are must haves. MVR s have been successful for some. The sentinel effect of prescription history is still alive. Teleunderwriting/interviews-do you use them? Is a point of sale decision part of your design? Are you priced for the expense? E-app provide POS decision? Other ways to get additional evidence depending on product type. 27

29 Simplified Issue Underwriting Agent Training and Education Design and approach should be something that is easily explainable to the agent. Design agent materials that highlight prescription drugs, what they are used for and what your action might be. Highlight medical issues and what your action might be. Provide build charts that are accurate to the product. Explain your position on e-cigarettes and marijuana use 28

30 Simplified Issue Underwriting Post Launch Monitoring Develop a method in which to track and monitor the spread of risk-usually through the underwriting practice. Track contestable claims for gaps in your application questions. Use MIB Plan F codes and IAI s for nondisclosure assistance and stacking coverage. Rescind coverage if the medical information is developed; take appropriate action with agents who are multiple offenders. The contestable period through claims review and a good Plan F process should keep mortality in check in duration one and two. Application question changes-driven by experience; don t be afraid to make the changes that are required. 29

31 Simplified Issue Underwriting Post Launch Monitoring-continued Don t stop reviewing the experience over durations. The SI market is driven by a certain type of client sold by a certain type of agent. Most companies in this market have the same client and agent type-changes in application questions and pricing are generally inevitable. A strong relationship between the actuarial team and underwriting is key in understanding not only the business coming in, but also the gaps that will develop over time and the resolutions that will be developed to solve problems. 30

32 Thank you