Presentation for the 2015 Life and Annuity Symposium in NY. This presentation discusses the potential for life insurance to be disrupted by online distribution.

1. Session 75: Disruption of
Insurance Product Distribution
Kevin Pledge
CEO and Founder
Acceptiv Inc.
www.acceptiv.com/LAS2015

2. How much personal protection life
insurance will be sold online 5 years from
now?
1. 0 – 9%
2. 10 – 19%
3. 20 – 29%
4. 30 – 39%
5. 40 – 49%
6. 50 – 59%
7. 60 – 69%
8. 70 – 79%
9. 80 – 89%
10. 90 – 100%
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3. Do you believe that online distribution
could disrupt your business?
Size of Insurer
Small Medium Large NA
Yes 1 2 3 4
No 5 6 7 8
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4. Agenda
1. Trends
2. Innovation in Insurance Distribution
3. Case studies
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5. Digital Disruption – Other Industries
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10 years ago you would not
dream of banking online – “it’s not
safe”
5 years ago few people would buy
groceries online
15 years ago Travel Agents would
claim that you cannot book
vacations online – “it needs a
personal touch and experience”

6. Online Retail Sales
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7. Life Insurance Industry - Barriers to Entry
Highly Regulated
• Prudential oversight of insurance companies
• Capital adequacy
• Policyholder protection
Complex Infrastructure
• Systems
• Processes
Brand Reputation
LIFE INSURANCE IS SOLD NOT BOUGHT
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8. Trend – Life Insurance Sold in US
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9. Trend – Life Insurance Sold in US
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10. Trend - Uninsured households
57% of families with children will have immediate financial
trouble if the primary wage earner died
50% of households believe they are underinsured
30% of households have no life insurance
Insurance Gap - $3T in US, 1T in Canada
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11. Trend - Agents
• 85% of consumers research insurance online
• Most consumers happy doing business online
• Disconnect to consumers – average age of
agents now 57
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12. Can innovation address these issues?
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13. Innovation
Is possible due to trends creating a discontinuous
opportunity
Will question an existing paradigm
Often involve looking at the bigger picture or from
another perspective
Timing is critical
Disruptive Innovation will be:
 n times better, at
 1/x of the cost
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14. INSURANCE IS SOLD NOT BOUGHT
1. Yes, this is true
2. No, insurance may be bought
Paradigm
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15. Perspective
Look at the bigger picture
…..from the customer perspective
Issue is NOT
agent productivity
Customers
want choice
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16. Timing
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17. N times better at 1/x of the cost
Metrics to beat:
Time to Issue 42 – 47 days*
Capacity Depends on number of agents
Cost $500 - $747** + commission
Sources:
* 2009 LOMA Service Turnaround Times Survey – Term Products: 47 days
**SOA 2010 Expense Study Average Per Policy $500 weighted, $747 unweighted
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18. What makes disruptive innovation difficult?
You actually have to do it
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19. Life Insurance Industry - Barriers to Entry
Highly Regulated
• Prudential oversight of insurance companies
• Capital adequacy
• Policyholder protection
Complex Infrastructure
• Systems
• Processes
Brand Reputation
LIFE INSURANCE IS SOLD NOT BOUGHT
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20. Case Studies
“The future is here,
it’s just not very
evenly distributed”
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21. Beagle Street
UK New entrant – not really an insurance
company
Not encumbered by existing distribution
Online only
No advertising for first two years
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22. The Problem
The new business process is not customer friendly
Indicative Quote
Underwrite
IssueOfferAdd’l Q’s
Modify Application
Apply
Underwrite
evidence
Further Questions
multiple hand-offs
lack overall process control
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23. The Solution – North America
Indicative Quote
Underwrite
IssueOfferAdd’l Q’s
Modify Application
Apply
Underwrite
evidence
Further Questions
Indicative Quote Apply
UW at
claim!
or
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24. The Solution – Beagle Street
Indicative Quote Apply and UW
Buy
> 5,000x faster
∞ scalable
(85% of the time)
1/10 of the cost
Fully Underwritten
No fluids or additional
evidence
Cover up to £750k
Better lapse experience
Ave issue time 12 mins
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25. What about barriers to entry?
Not an insurance company
• Focus on distribution
• Partnerships – Reinsurer, Traditional Insurer
No complex systems
• Focus on distribution – outsource the rest
Fresh approach to branding…
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www.acceptiv.com/LAS2015

27. Can this be applied in North America?
Market research tested
Customers go to Google for
information
Facebook and Google for
advice
Disconnect with agents
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28. Can this be applied in North America?
Market research tested
“Almost half of participants found the
value proposition [to buy directly
online] very appealing (rating of 8 or
more out of 10); these results are
encouraging.
Years ago, when evaluating consumer
interest in the ING Direct value
proposition, our goal was to find
interest in only half as many target
group members (who we defined as
innovators).”
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29. • 10 – 30 year term insurance, up to $500k
• Coverage age range 18 - 70
• Applied UK experience and P&C lessons
• Simpler, yet more flexible than current products
• No medical evidence referrals
• Online, with offline support if needed
• On cover in 15 minutes or less
Full UW + Lower cost = Lower premium
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30. T10 - $18.65
T20 - $24.80
Online Quote and Application
Simplified and Manual Underwriting
T10 - $20.00
T20 - $26.04
Online Quote and Application
Basic auto and Manual Underwriting
T10 - $20.10
Online Quote and Application
Basic auto and Manual Underwriting
T10 - $20.30
T20 - $30.69
Online Quote
Manual Application and Underwriting
Where did this put Teachers Life?
Insurance
T10 - $13.42
T20 - $21.08
Online Quote, Application and Buy
Automated underwriting immediate
decision including rating if applicable
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31. Do we need to innovate?
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32. $3T
uninsured
New
Entrants?
Synergy
$2.7 b
term
market
$14.5 b
protection
market
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33. 33
www.acceptiv.com/LAS2015

34. Thank You
Kevin Pledge
CEO and Founder, Acceptiv
kevinpledge@acceptiv.com
416 949 8920
www.acceptiv.com/LAS2015
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