Improving the New Business Process. A Report from The SOA Committee on Life Insurance Mortality & Underwriting Surveys

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2 Improving the New Business Process A Report from The SOA Committee on Life Insurance Mortality & Underwriting Surveys

3 Members of the Survey Subcommittee Sharon Smith, FALU, Chair Ev Kunzelman, FLMI Mark Swanson, FSA David Wylde, FSA SOA Staff: Jack Luff, FSA Korrel Rosenberg

4 Overview of the Survey Report The New Business Process 1. Application is sent to the company 2. Additional requirements are gathered 3. Underwriting is performed 4. Policy is delivered to approved applicants

5 Overview of the Survey Report The Report 1. Respondent Demographics 2. The Application Process 3. Changes to Underwriting Requirements 4. Underwriting Systems 5. Underwriting Resources 6. Effect of Past Changes on New Business Practices 7. Delivering the Policy

6 The Application Process For paper applications, what is the average number of days from signature to received date?

7 The Application Process For paper applications, what percentage are received not in good order (NIGO)?

8 The Application Process Any plans to introduce an electronic application in the future?

9 Changes to Underwriting Requirements How long ago was a change made to the company s age and amount requirements?

10 Changes to Underwriting Requirements What was the effect of the change in requirements? Medical Exam Stress ECG Resting ECG Paramedical Inspection Report Non-medical APS Guidelines Blood Profile MVR Urinalysis Tele-interview/Tele-application Prescription Database Query Oral Fluid Cognitive or Functional Testing Number of Responses Increase (More Liberal) Decrease (More Conservative) No Change Not Applicable

11 Changes to Underwriting Requirements When will the company consider next reviewing or changing underwriting requirements?

12 Changes to Underwriting Requirements What will be the effect of anticipated requirement changes? APS Guidelines Tele-interview/Tele-application Paramedical Non-medical Stress ECG Medical Exam Resting ECG Inspection Report Prescription Database Query Blood Profile Urinalysis Oral Fluid Cognitive or Functional Testing MVR Number of Responses Increase (More Liberal) Decrease (More Conservative) No Change Not Applicable

13 Changes to Underwriting Requirements What requirements have been added in the past 5 years and what was the primary reason for the addition? Cognitive/Functional Tests Blood Profile Test - NT-proBNP Tele-interviewing/Tele-application Limits Blood Profile Test - Glycohemoglobin Other: Prescription Database Urine Test - Microalbuminuria Other: PSA Blood Profile Test - hscrp Other: Hepatitis Other: Database e-searches Other: MVR Blood Test - CEA Chest X-Ray Medical Exams Stress ECG Number of Responses Protective Value Faster Competition

14 Changes to Underwriting Requirements What requirements have been deleted in the past 5 years and what was the primary reason for the deletion? Chest X-Ray Stress ECG Medical Exams Other: Oral Fluid Tele-interviewing/Tele-application Limits Other: Meth Testing Other: Not Indicated Blood Test - CEA Blood Profile Test - Glycohemoglobin Blood Profile Test - hscrp Blood Profile Test - NT-proBNP Cognitive/Functional Tests Urine Test - Microalbuminuria Number of Responses Protective Value Faster Competition

15 How Evidence is Received How is underwriting evidence received? APS Paramedical / Medical ECG Stress ECG Lab Results MVR Number of Responses Electronic Image Mail / Courier (paper) Fax Electronic Data

16 Underwriting Systems Are applications and underwriting evidence imaged as part of the new business workflow? Yes (front end) 83% Yes (back end) 10% No 7% For those companies with front end imaging, can the underwriters choose which case to work on next? Yes 70% No...30%

17 Automated Underwriting System Does the company have an automated underwriting system that can make underwriting decisions? Yes 34% No 66% If you do not have an automated underwriting system, are you planning to install one in the near future? Yes 38% No 62%

18 Number of Respondents Remote Underwriters Do any of the company s underwriters work remotely from home at least some of the time? Yes 62% If yes, what percentage of underwriters? Percentage of Underwriters

19 Underwriting Resources Does the company have any specialized underwriting teams? (check all that apply)

20 Effect of Past Changes to New Business Practices

21 Effect of Past Changes to Expected Mortality What was the impact on expected mortality? APS guidelines Blood profile Cognitive or functional testing Inspection report Medical exam MVR (motor vehicle report) Non-medical Oral fluid Paramedical Prescription Database query Resting ECG Stress ECG Tele-interview / tele-application Urinalysis Number of Responses Increase Decrease No Change Unknown

22 Effect of Past Changes to New Business Practices Which changes increased the percentage of cases approved within 30 days? (check all that apply)

23 Delivering the Policy How are policies delivered to the policyowner? (check all that apply)

24 Delivering the Policy For policies mailed directly to the policyowner or the agent, what was the method of delivery? (check all that apply) Regular mail 86% Courier service 40% Express mail with confirmation 23% For policies delivered via regular mail or courier service, how is delivery confirmed? (check all that apply) Signed delivery receipt 58% Delivery is not confirmed 55% Mail-back delivery receipt 18% Other 3%

25 Improving the New Business Process For more information about this survey Contact me directly at Thank you!

26 Hélène Chatelain VP NB & Chief Underwriter Transamerica Life Canada

27 Distance Underwriting STP Transamerica Life Canada CRC April 2013

28 Going Paperless What began as an effort to be competitive in the insurance industry to retain our underwriters from being swayed over to our competitors, who offer remote underwriting possibilities has evolved into a paperless workflow system to then focus on a WORKBENCH for all the staff.

29 The phylosophy and advantages The goal of an upfront paperless office is to use paper more efficiently, not eliminate it altogether. The most common advantages of going paperless upfront are: Increasing productivity Eliminating storage space Reducing expenses Working remotely Enhance customer service

30 Advantages for Transamerica First Implementation without a proper workflow engine: All mail is received at Head Office no longer in the regional office Any cheques to be deposited are done the same day instead of the day after. No more mail cutoff time for mail deliveries to underwriters, we have a continuous workflow. Easier to coordinate a business recovery plan. Reduction of mail cost and office supplies. Better control on work received that requires processing. An easier overview of the business unit s workflow status for management First step towards becoming paperless

31 Stage 1 Creativity workflow

32 Project started September 2011 name NULIFE Phase 1: Establish a solid foundation (both business and technology) In order to build our capability to support our straight through processing effort and being able to provide solution for further development STP process and vision

33 NULife Phase 1 We leverage our front end scanning of documents into the new platform Automatically matches inbound documents Proper follow-up training where needed, and coached. Getting used to NULife s operation system and workflow We moved from a paper based New Business process to an electronic based process. We established a single consistent approach to underwriting processes and establish a platform that will leverage underwriting process efficiency.

34 NU LIFE Phase 1 First steps in improving the application workflow and consistency in our Underwriting decision making steps. Contributing to our Must Wins: Communication consistency we all talk the same language Improving our operational processes and streamlining how we accomplish tasks DTEE We have standardized how decisions are made and are creating a consistent decision making environment

35 NULIFE PHASE 1 We did not anticipate the extent of the learning curve associated with front end scanning documents While we had identified the processes and trained staff and provided practice sessions some staff still struggled with the realization of where and how documents flowed. Early break out or business process review sessions with staff helped We had plans, we had newsletters, we even had wacky Wednesdays but there were still struggles in gaining a clear idea of what was being delivered, what the NU world would look like, how it would impact them and why it was significant to TLC. Now time to do phase 2

36 NULIFE Phase 2 Same Vision of STP at Transamerica We will use electronic processes to automate and streamline our business from acquisition through to in-force administration, supporting our market and increasing the ease of doing business, improving our profitability. Insanity is doing the same thing, the same way and expecting different results. Milliken s Law or The Law of Life Insurance

37 NU Life Phase 2 It will do the easy clean cases; thus freeing up the talented underwriters to really solve problem cases. Development of rule Vendor Integration Teaching the young underwriter how to carry the load of underwriting Other efficiency

38 Intent is Gain Momentum Consistently Deliver High Value Quick Wins Leverage our foundational work: Building rules Ingestion of data Integration of information further streamlining how our information flowing in from our external providers (Labs, Para s etc) Working Together & Bringing Clarity to our processes and decisions further gathering data analysis and working with rule engine.

39 NU Life Phase 2: Approach Auto decision for clean cases: Created a Proof of Concept (POC) associated with rules for clean case underwriting -We need to know that the rules engine is working as expected, and is capable of making U/W decisions. -We need to ensure that we can move forward with more complexity rules, and that we can visibly demonstrate our capability to deliver this. Ingestion of data -Ingestion of vendor data (e.g., Lab test results, Parameds) and further development of the both UW & business rules to support this. Minor cycle time benefits and productivity improvements are expected.

40 NU Life Phase 2: Approach Extension of complex rule: The extension of the POC to include additional classes of data (e.g., Lab test results) and further development of the business rules to support this. The increased extension of the application data capture capabilities so that a percentage of incoming cases will be auto-decisioned / assisted-decisioned once they reach LifeSuite.

41 NU Life Phase 2: Approach Ingestion of Data and on going eapp ingestion commences Underwriting support for inforce (Policy Change)? Percentage of incoming cases that will be autodecisioned /assisted-decisioned within LifeSuite should increase overtime

42 NU Life Phase 2 : Requirements Similar to phase 1 we need to review the following: Review and streamline the integration process and users Approval and review of automated underwriting rules Internal approvals and governance Communication (internal & external) Training of Head Office Business staff Change Management Process/Procedures Analysis and Documentation Updates to DRP/BIA plan Support of addition of new products eg Critical Illness program Our VISION of STP has just started!

43 Questions????

44 Jay Sankoff Director, New Business and Underwriting Operations RBC Insurance Company

45 Infrastructure Distance Underwriting Resources Underwriting Underwriting Requirements E-apps Learnings What is Next

46 Infrastructure We were already in the process of examining our legacy underwriting and administration systems Recognized that one of the leading causes of wastage was slow cycle times Always looking for ways to do more work with less staff The opportunities for continuous improvement and improved workflow in a paper environment were pretty much exhausted To be competitive we needed to get to the next level e-app

47 Infrastructure - Closed our Burlington Living Benefits office in Out of necessity introduced a strict work from home program while still operating in a paper environment - Competition for Life Underwriters - Over 3 million pieces of paper

48 Infrastructure Embarked on a 2.5 year project Underwriting Imaging and Workbench Examined roles and responsibilities Examined workflows introducing LSS best practices of reducing waste (tasks) Looked for opportunities to introduce automation where possible Connectivity to the vendors and reinsures

49 Resources The introduction of an Underwriting Workbench introduced great opportunities for the underwriters Not only for those working from home locally, but across Canada as well We were able to re-open and manage our Montreal underwriters more efficiently Began engaging contractors and full time staff from Vancouver to Gatineau

50 Underwriting Requirements Stress ECGS - > ECGs Medicals - > Paramedicals ECGs MVRs Inspection Reports But what of the relationship between APSes and Tele-interviews?

51 Tele-interview Tele-interview allows you to remove nonmedical questions from your application Allows for a shorter e-app Easier adjustment for the field Fewer errors on applications Second most common outstanding requirement? Better take up rate

52 Learnings Customer Service Commitment Look to your partners to assist in moving the business Sales they own the front end and the back end Vendors what can they do for you

53 Learnings Continuously build upon your successes and your failures Sky is the limit don t reject any idea

54 What is Next? Always looking at our age and amount reqts, new products, new process opportunities Automate more Review of the labs to the level of preferred categories Automatically evaluate the preferred underwriting criteria Improve communications to the field Continue to engage our Sales, Product, Pricing and Reinsurance partners

55 Sharon Smith Chief Underwriter Sun Life Financial

56 New Business Transformation Multi year, multi phase, multi million dollar initiative Regionalized underwriting teams & large case team In Box for underwriters to sort their work Changes to Underwriting requirements Updated electronic application with drill down questions Integrated tele-interview offering Installation of new underwriting rules engine MIB all business

57 How it all fits together

58 Learnings It takes more than three months for three underwriters to build life and CI application and drill down questions Stay focused and not allow scope creep to derail the project Senior leadership active involvement is critical The transition to results may take longer than you d like Data analytic support is an absolute must to maximize the power of the technology There will always be some resistance to change

59 Where Next? Quarterly up-dates for the forseable future Look externally once we ve maximized what we can do Ongoing review of underwriting guidelines Significant revisions to underwriting requirements Focus on tools that can be received and reviewed electronically Reap benefits of tele-interview recording

60 Summary There are a number of components to the new business process, each of which needs to be examined Trends Electronic applications Image and underwriting workflow systems Underwriting rules engine Underwriting requirements reviewed more regularly

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