Title: Life Insurance Sales in Banks: The Process is...

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Title: "Life Insurance Sales in Banks: The Process is 'Broken' What's Coming to Fix it?" Speakers: Jim Sorebo, Dan Delity, Jason Bowman, and Bob Mittel Location: Diplomat 4 Time: 2:15 – 3:15

© 2014 FSFG For agent or broker use only. Not for use with the public.

"Life Insurance Sales in Banks: The Process is 'Broken' What's Coming to Fix it?"


• Introduction of Panel • Bank Insurance Marketplace • Questions to the Audience & Panel • Summary • Q&A


Dan Delity

Corporate SVP Global Sales


UK

Ebix, Inc. - Overview

• Headquarters in Atlanta, Georgia

• 2,000 insurance and investment employees servicing over 500,000 agents in 52 countries on 6 continents

• Ebix Insurance Exchanges power over $120 billion in new insurance premiums annually

On-Demand Insurance Solutions

http://www.ebix.com/contactdetails.aspx


Jason Bowman

Head Accelerated Underwriting & Data Insights

SVP Life & Health


Bob Mittel Vice President – Financial Institution Channel Leader


James J. Sorebo, CLU President & CEO


“How many of you are looking to grow your life insurance revenues through the sale of life insurance in banks greater than: • 10% this year? • 15%? • Greater than 25%?


A show of hands if you agree “That the process, and utilizing technology will serve as one of the keys for significant life insurance growth for financial institutions?

http://www.wbnfrederick.org/wp-content/uploads/2012/10/raised-hands.jpg


Bank Life Insurance Market


There is no scalable multi-carrier solution for middle market or

mass affluent sales in the industry


Individual Life insurance adoption is at 50 year lows


90%+ SPL

Source: BISRA Life Report

$0$50

$100$150$200$250$300$350$400$450$500 $487

$383

$297 $326 $340 $374 $381

$413 $390 $369 $293 $319

$259

$26 $34 $15 $21 $23 $43 $18 $25 $24 $22 $13 $22 $14

Single Premium 1st Yr Recurring Premium

Approximate Average Gross Commissions = $9,500 per FC




“We all agree with the premise that technology and change are part of the equation, to make financial institutions a major source for life insurance sales. What have you seen, what have you learned?”


Goal

To use technology and bank distribution strengths to change the way

We Price, Underwrite, Sell & Deliver Life Insurance in the U.S.A.


Why is the Life Insurance Business Struggling?

• Average age of the U.S. life agent is 55+ • Captive agent sales growth is limited to high net

worth market and shrinking in both premium size and agent recruitment

• New and powerful distribution methods have not

emerged; college grads aren’t becoming insurance agents

• Process: application/underwriting to policy

issuance process is long and painful


The Current Bank Life Process

• We still continue to do life business the way we did 50 years ago – Process doesn’t match bank strengths

• Enhanced forms fulfillment does not work – Only replicates the old process – Most bank advisors cannot reach full sales potential

• Adoption of the current life offerings is low – Carriers drive you to their specific solution because they

have not experienced the ROI they expected – Sales are focused on single premium products and some

term




Banks and Life Insurance Technology

• Needs Analysis, Quotes, Illustrations, Research and eApps

• Make it easy to sell and buy and affordable • Sell appropriate product to fit client need • Point of Sale Underwriting • Provide coverage with no need for fluids, labs, APS’s • Instant issue • True transaction based model


Dedicated Bank Agent

Financial Advisors

LBE’s

Consumer Direct

Needs Analysis/ Illustration

Worksite

Point of sale Underwriting

Evidence Management

Workflow Compliance Suitability

Policy Issuance

Policy Administration

System Quote

E-App

Pre-Sales New Business Servicing

Life Insurance Process Change

On-Demand Insurance Solutions


25

E-App

Drilldown Questions

Application Form Questions

Electronic Underwriting

Policy Issuance

Requirements (MVR, MIB, Blood etc)

Magnum Initialized

Decision

Call out to third Parties

MVR Rx MIB

Others

EMR

The Future of Bank Life Insurance Sales


• We have a highly competitive market that has differentiated on price but at the cost of the process

• Reinsurers & insurers have relied on invasive testing to protect against anti-selection

• Those that have tried to simplify the process have generally fared poorly in terms of mortality experience

• Increasing product pricing tends to exacerbate the problem

Why are we where we are?

26

Mortality experience

worsens

Increase price

Drive better risks away


• The emergence of new approaches & solutions is helping companies break the vicious circle –New data sources – Interactive underwriting –Predictive underwriting

• Business intelligence / Big-data underpins many of these developments & offers the ability to change the model

So what's changed?


• Use of rule engines –Detailed / interactive drill-

down –Controlled by business

users rather than IT • Availability of real-time data

–MIB –MVR –Prescription / Rx

• Predictive Underwriting • All underpinned by analytics

28

Finally, some innovation around the process!


Your company has decided to launch a new Middle Market product which will be issued on a Simplified Issue basis. Your experience data is limited to fully-underwritten products. How would you proceed:

2

A. B. C. D.

35%

2%

11%

52%A. Start cautiously until sufficient experience is available

B. Increase claim assumptions modestly assuming background checks (e.g. Rx data, MIB) will protect against anti-selection

C. Be more aggressive but look to review after a short period

D. Advise against entering the middle market as its too risky!

Even actuaries are coming on board!

SOA Conference 2013: Poll Question


WHY THE BANK MARKET’S ATTRACTIVE FOR LIFE SALES

• Banks continue to look for new revenue opportunities • Banks continue to seek out ways to increase their share of

customer’s wallet • Platform programs on the rise …leverage staff more –

insurance can do that easily.

• Low interest rates continue to challenge banks and their clients to find alternative wealth management strategies

• Customer Awareness of insurance being sold at the banks is improving

Confidential: For Internal Use Only – Not for Public Release 30


BEST PRACTICE BANKS DO IT AND SHOW THE WAY

• Leverage bank relationships - regardless of client age or channel preferred – research shows that banks customers trust their banks and use multiple channels to access products.

• Promote Insurance to Investment customers – customers who participate in investment program are more likely to consider buying insurance

• Banks customers are primarily receptive to simple product like instant term and SPL

• Leverage the website - to offer life insurance • Grow the platform - Hire an internal specialist that works with the field –

more than one based on bank size and geography. • The name and reputation of the insurance company providing the

insurance is a key consideration for bank customers

Confidential: For Internal Use Only – Not for Public Release 31


PATH TO SUCCESS – LIMRA 2012 SURVEY “BANK ON IT”

• Banks and their partners are well positioned to succeed in selling life insurance to their customers. The outlook is encouraging for the bank channel.

• Consumers most receptive to buying life insurance from a bank are those with the greatest need; 55% of Gen Y’ers and 56% of Gen X’ers admit they are uninsured — this translates to 30 million younger households who don‘t have enough life insurance coverage.

• Of those consumers who feel they need new (or additional) coverage, 36% are looking to buy in the next year. 50% of 18-to-34 year olds are likely to buy. (More receptive than other groups to buying life insurance from their bank.)

• Approximately 4 in 10 high-asset households ($250,000 or more) own no individual life insurance; 30 % of insured HNW have only group coverage.

• The % of consumers willing to consider meeting their life insurance needs through their bank is at the highest level it has ever been.

Internal Use Only 32


AMERICAN BANKER – BRANCHES ARE STILL IMPORTANT

Confidential: For Internal Use Only – Not for Public Release


For over 20 years we’ve partnered with over 150 banks and 3,000 top bank advisors,

creating insurance solutions, to assist their clients in realizing their financial hopes and dreams.

We creatively offer strategies for risk management,

wealth accumulation, preservation, and transfer.

“We partner to grow insurance revenues at banks”


Comprehensive Wealth™

Total Life ™ Simply Life ™


• Top down reinforced

• Accountability at all levels

• Measured and reported monthly

Average first-year life insurance commission revenue Source: 2010/2011 Kehrer-LIMRA Bank Life Insurance Study


Introducing . . . .


Average Gross Commission on Life Insurance for Bank FC’s = $9,000* POS < $250k Term = $13,400 GC >$250k Term = $28,800 GC $50,000 SPL’s = $84,000 GC RMD’s to fund life = $144,000 GC Annuity Max to Life/monthly = $187,200 GC

*Kehrer Limra 2010

https://www.google.com/imgres?imgurl=http://www.legalcheek.com/wp-content/uploads/2013/06/Churchill-v.jpg&imgrefurl=http://www.legalcheek.com/2013/06/bristol-uni-law-student-who-swore-at-police-avoids-criminal-record-after-representing-himself-in-court/&docid=Em1SB9NK8bpjmM&tbnid=6vuz_herfgwxoM:&w=640&h=592&ei=1IETU8q3M--u0AG_lIHYAw&ved=0CAIQxiAwAA&iact=c


EBIX – • Life Insurance delivery needs to change to match

the bank distribution strengths and maximize bank sales potential

• Process – Tech – Distribution – Carriers - together we’ll solve the problem

Swiss RE • Software tools & analytics can help us • Develop more effective products • Simplify the underwriting process without reducing

risk selection • Get an early view of likely experience

Summary of Positions


Prudential • Leverage bank relationships • Promote Insurance to Investment customers • Name and reputation of the carrier providing the

insurance is a key consideration for bank customers Four Seasons Financial Group • Have a Plan & Goals for Life Insurance • Establish a partnership with distribution dedicated to

the bank space • Help us Change the Industry – Process – Tech –

Carrier & Distribution

Summary of Positions

c.

http://blindgossip.com/wp-content/uploads/2014/02/help-me-help-you.jpg


1. Plea for all of us to band together: Technology–Process-Product-Distribution-Banks as the major distribution source for Life Insurance

2. Do what AnnuityNet did for annuity sales & do it on a multi carrier basis for life insurance

3. Sign the sheets at your Table to get involved

Help Us Change the Industry!


Questions?


Legal notice

©2014 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivatives of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re.

Although all the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial and/or consequential loss relating to this presentation.

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