eService Strategic Plans and Market Research by

Grant S. Andrew

January 28, 2008

Research Background Summary

• 4 LIMRA studies were primarily used to provide support for this presentation – Optimizing Opportunities with Online Customers (2007)- Surveyed 2,007 online consumers between

the ages of 25 and 69 located in Chicago and Denver. – Policyowner Self-Service: A Delicate Balance (2006)- Surveyed 1,795 policy holders through two

surveys completed in December 2005 and February 2006 with 7 participating firms (Allianz, American Fidelity, Amica, Bershire Life Insurance Co., Jefferson Pilot, Loyal Christian Benefit Association, and Thrivent Financial for Lutherans.

– Field Technology Review: Carrier Perspective (2006)- The report is based on an email/ web-based survey with 44 companies (AIG, Hartford, John Hancock/ Annuities, Transamerica, Sunlife, etc.), with a focus on technology for Individual Producers covering: Field use of Technology, including tools, expenditures, and obstacles; Field force technology adoption; Online tools offered; and sales tools provided.

– Field Technology Review: Individual Producer Perspective (2006)-The research included focus groups with producers in St. Louis and Westchester, New York, in late 2005, and a survey (delivered via email and mail) with 928 individual producers in January and February 2006. This covers technology used, making technology work, technology offered by carriers, and how carriers can help more.

• Benchmarking completed with four carriers (MetLife, Lincoln (JP), John Hancock, and PacLife) with a focus on services provided and planned for consumers online (See Appendix).

• Additional information was utilized to frame the overall perspective of the presentation and long-term vision

– LIMRA Reaching out to the middle markets Online (October 2007) – Global Issues (David Smith)/ Global Futures and Foresight – What Makes a GREAT Insurance Website (LIMRA’s Marketfacts Quarterly/ Fall 2006)

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LIMRA Optimizing Opportunities With Online Consumers (2007)

People are willing to complete sales online today for all products (6% of the sales). This number will grow as security improves, online sales tools improve (provide support to step through the process), and the online insurance and overall Internet market grows. It also highlights the priority of term life sales (23% of the 6% online sales) while noting the possibility for all Life sales online.

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LIMRA Field Technology Review: Carrier Perspective (2007)

Carriers are providing a good suite of services to Producers to drive more online usage. This is expected to grow and to move to support consumers. The complete strategy includes CSRs, Producers (Captive and Independent), and Consumers.

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LIMRA Field Technology Review: Carrier Perspective (2007)

This model outlines how to attract and maintain producers based on LIMRA’s research. The same model applies to the consumers in providing basic services, valued services, and finally market differentiators to retain and grow loyalty and new sales.

We have built the Technology Service foundation for New Business and are leading the industry in a number of areas. We are beginning to differentiate ourselves in the marketplace where technology service is a competitive advantage. However, we are behind with providing table stakes (7x24 support) and complete policy information online for Customer Service. We have the opportunity to leap frog the industry as we did with the New Business Technology beginning with shoring up the Online infrastructure and leveraging existing platform. 5

Policyowner Self-Service: A Delicate Balance (2006)

Highlights how people today want three ways of doing business (Call, Internet, and Agent). The % of the transactions will change over time with initially less complex transactions getting completed online but all three groups will need access to the same information to support the business.

•Consumers preferred CSR support for 13 out of the 13 services referenced

•Consumers preferred Online support for 9 out of 13 services compared to using an Agent 6

LIMRA Optimizing Opportunities With Online Consumers (2007) Table 2 and Fig 3

The Online Consumers Study resulted in identifying four very distinct market segments based on Age, Income, and Education when determining and predicting Internet Usage. The study also introduced the classic market segments related to the Baby Boomers (born between 1946-1964) and the Silent Generation (born between 1925-1945).

The average for all four users groups to access and research information from the Internet was 36%.

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E-Service Business Technology Strategy Customer Usage Strategy Details

Website UsageIncome

EducationTransaction Complexity

User Ages and Time

Information Market Search

Planning Tools

Account Maintenance

New Purchases

ü Purchase of a new insurance policy entirely onlineü Purchase of a new insurance policy with online assistance ü Purchase of a new insurance policy through requesting an agent (lead

generation)ü Provide a wizard check to audit purchase (needs analysis check, suitability,

explain other options, etc.)

ü Retirement Planningü College Fund Planningü Portfolio Analysis and Asset

Reallocations managementü Insurance needs analysis

Older Users and the Present Time

Younger Users and the Future

ü Simple illustration toolsü Health Care (LTC) Planningü Major buying and selling

planning tools (cars, houses, etc.)

ü Check the status of a transactionü View billing and change payment

information and modeü Change Beneficiaryü Change unplaced policy

information and pay premiums

ü Assisted transaction supportü Change name, phone, and

address (including email)ü Reallocations with fund transferü eDelivery of documents

(prospectuses, etc.)

ü Statementsü Forms & Marketing Materialsü Policy Informationü Email boxü Product Information and

comparisons

ü General Company Information (ratings, call center hours, etc.)

ü Price Quotes and Comparesü Links to other relevant information

(costs for colleges, retirement locations, etc.)

Stepping Up eServices !!!!!

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E-Service Business Technology Strategy Market Research

Website UsageIncome

EducationTransaction Complexity

User Ages and Time

Information Market Search

Planning Tools

Account Maintenance

New Purchases

Technologies Offered to the field (Fig 1- Carrier Perspective)• Websites with functions for producers 95%• Sales Illustrations 90%• Technology training for the field 76%• Lead Generation tools 34%• Policy Administration Systems 50%

Older Users and the Present Time

Younger Users and the Future

Online Consumers- Table 8• Used online calculators/

worksheets to determine amount to buy 19%

• Used online calculators/ worksheets to determine product needed 16%

Most Preferred Service Method for Specific Transaction-Related Tasks (POS Fig 3)• Check Claim Status- CSR 49%, Online 20%, Agent 22%• Change bank info- CSR 42%, Online 22%, Agent 20%• Change premium mode- CSR 40%, Online 20%, Agent 25%• Submit claims- CSR 40%, Online 13%, Agent 25%• Change beneficiary- CSR 19%, Online 19%, Agent 26%• Pay premiums- CSR 16%, Online 16%, Agent 10%

NET FANS- Highest education, highest income, youngest64% Use net for Insurance purchase research(Online Consumers Table 2 **)

(GenX- born: 1965- 1980/ Echo Boomers-Generally Net Fans)

(Silent Generation- born: 1936-1945 - Generally Older Apathetics)

(Older Boomers- born: 1946- 1954)

(Younger Boomers- born: 1955- 1964)

Concerned Enthusiasts- Second highest education, second highest income, second youngest47% Use net for Insurance purchase research **

Worried EmailersLowest income segment, most concerned with security, interested in email, unwilling to conduct transactions online20% Used net for Insurance purchase research**

• 7% phone• 6% online *• 6% other

Older ApatheticsOldest and least educated, will not use Internet (15% Used net for Insurance purchase research **)

Purchase Methods for Individual Ins. and Annuity Products (Online Consumers-Fig. 2 and 3)• 51% In-Person• 17% work• 13% mail

Most Preferred Service Method for Specific Info -Related Tasks (POS-Fig 2) • Get Billing Information- CSR 43%, Online 25%, Agent 17%• Request Account Statements- CSR 40%, Online 31%, Agent 13%• Request forms- CSR 40%, Online 29%, Agent 16%• Your policy information- CSR 38%, Online 26%, Agent 26%• General information- CSR 36%, Online 35%, Agent 18%• New Product Information- CSR 31%, Online 31%, Agent 26%

* Most Likely Product for those responding to purchase online phone• 23% Term, 15% Permanent Life,

16% LTC, and 13% Individual annuity

LIMRA Policyowner Self-Service (2006): The average cost of a CSR call is over $6.00, while the average cost of an Internet transaction is closer to 50 cents. This provides a 12X opportunity.

34.4 million (46% of the baby boomers are expected to be retired 2014 (LIMRA)

Silent Generation are likely to only research online while GenX are likely to complete sales online)

38% of the online consumers are interested in receiving opt-in newsletters, 33% say one of their desired informational sources is clicking on a link online, 25% like information sent via email, and 18% look for ads online (but not pop ups)-LIMRA Online Consumer Research. This information helps support the development of a loyal Internet following through providing information and related links that will lead to a web community of users.

77% of producers use technology with clients (scenarios and illustrations) and 1 in 2 has a wireless laptop (Nov 2007)

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E-Service Business Technology Strategy Benchmarking

Other Carriers Provide • Online calculators/worksheets to determine amount to buy (LIMRA- Online

Consumers study)• Online calculators/worksheets to determine product needs (LIMRA- Online

Consumers study)Additional Benchmarking Research and Analysis Required

Other Carriers Provide • Rule Based Fillable Forms for New Business Applications (PRU, AIG, GNW, etc.)

Additional Benchmarking Research and Analysis Required

Website UsageIncome

EducationTransaction Complexity

User Ages and Time

Information Market Search

Planning Tools

Account Maintenance

New Purchases

Older Users and the Present Time

Younger Users and the Future

Other Carriers Provide • Bill and One time Payment Online (Met, JP) • Beneficiary Changes (Met, JP)• Initiate and Pay Loans Online (Met)• Address, Email, Phone Changes (Met, JP, Pru)See Appendix for Benchmarking Details

Other Carriers Provide • Display Payment and Transaction History Online (Met, JP, JH, Pac, Pru)• Ability to print formatted documents Online (Met, JP, Pac) • Site Availability 7x24 (Met, JP, JH, Pac) • Trust Access to Information Online (Met, JP, JH, Pac)• Rules based forms (Pac)See Appendix for Benchmarking Details

POL was ranked 12th out of 25 Life Carriers in the first quarter 2007 DALBAR website review 9% increase in life client visits 2007 from 2005 18% increase in self service transactions 2007 from 2005

WORK IN PROGRESS

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E-Service Business Technology Strategy Future Outlook

Information Market Search

Information and Entire Infrastructure (Secure, User Friendly, and Complete for all three layers)

Planning Tools

Transaction Support

Account Maintenance

Transactions

New Purchases

Sales

Website Usage (total

transactions*)

Time* Total Transactions includes info searches, planning, account maintenance transactions, and sales)

Total Transactions projected 3-5 years

Complex transactions (sales and account maintenance) triple in volume as greater acceptance of virtual sales, ease of use, and safety / security meet customer expectations. Follows Amazon, e-Bay, Banks, etc.

Total Transactions projected 1-2 years (Double every two years for the next 10 years and beyond)

As older people become more familiar and comfortable with the Internet and the eldest generation turns over the % of users will exponentially grow 8-10 years out

Users’ Basic Needs: Needs Information Needs to understands options, prices, and cost

differentials Needs to process own transactions and receive

help only when necessary at anytime (flexibility in resolving questions, gathering info etc.)

Empowered to act (buy or not to buy, get help only when needed, complete additional research based on buy options etc.)

Web Value: Self-paced virtual access to libraries of information Links to related information and service tools No high-pressure situations Ability for companies and people to interact when

it is most convenient to the customer (7 X 24)

Questions????

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13

Service MetLife Lincoln (JP)

John Hancock

PacLife Pru

Pru FIC

Comments

Bill and One time Payment Online ü ü * ü past due payments only

Address and Email changes ü ü ü ü

Address change is planned for Lincoln in 2008 (PacLife does not support STP)

Display Payment and Transaction History Online

ü ü * ü ü ü * PL support producer only complete display and JH supports pre Mani merger. Pru has only Payment history

Rule Based Fillable forms Online ü * ü * ü ü *

Ability to Print formatted documents Online

ü ü ü

ü *

Beneficiary Changes Online ü ü ü * ü Planned in 2008 for POL

Site Availability 7 x24 ü ü ü ü ü Only available 23 ½ hours

Trust Access to Information Online ü ü ü ü PL support producer only complete display and JH supports pre Mani merger

Initiate and Pay loans Online ü N/A

Policy Information/ Account Inquires

ü ü ü ü ü ü

Billing/ Coupon Book ? ? ? ? ü N/A

Edelivery of Prospectuses and Annual/ Semi Annual Reports

?

ü * N/A ? ü N/A

LF plans to suppress mailing in 2008

Fund Transfer or Premium Allocation

? ? ? ? ü N/A

ü Indicates the carrier provides this service today

Benchmarking Summary

ü * Indicates the carrier plans to provide this service in 2008

LIMRA Optimizing Opportunities With Online Consumers (2007)

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LIMRA Optimizing Opportunities With Online Consumers (2007)

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Policyowner Self-Service: A Delicate Balance (2006)

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LIMRA Optimizing Opportunities With Online Consumers (2007)

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