Kevin Pledge presented on emerging technologies and the future of insurance distribution. He discussed how technologies like automated underwriting and data analytics can speed up the distribution process and increase acceptance rates. Technologies are shifting control to business users by allowing for rapid product development, deployment across channels, and flexible underwriting approaches through configuration rather than customization. Predictions included more sophisticated data analysis and connectivity to external data sources, as well as greater control given to distributors who may present underwritten cases directly to insurers.

1. Presenter:
Kevin Pledge, FSA, FIA
EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE
DISTRIBUTION
SESSION 90
OCTOBER 19, 2011
Primary Competency: Strategic Insight & Integration

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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

3. “the future is already
here - it just not very
evenly distributed”
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

4. North America
currently have
automated UW
considering automated
UW
not considering
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION
Source: 2011 Underwriting Survey - Hank George Inc., Select X Ltd.

5. Elsewhere
currently have
automated UW
considering automated
UW
not considering
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION
Source: 2011 Underwriting Survey - Hank George Inc., Select X Ltd.

6. different products
regulations
market pressures
technical barriers
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

7. electronic applications
face amount threshold for lab and paramed
preferred pricing
MIB and MVR
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9. 47 days
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Source: 2009 LOMA Service Turnaround Times Survey – Term Products
EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

11. • key drivers:-
• issue time
• cost
• consistency
• minimize invasiveness
• new channel / market
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12. COPERNICUS SS/G
URE BUSINESS OBJECTIVES
 Management of Risk
 Complete, objective & consistent risk assessments
 Minimising Underwriting Costs
 Maximising immediate acceptance, reducing need for medical evidence
 Philosophy contains over 10,000 Rules and 40,000 Assessments
 Improving the Customer Experience
 Configurable process allowing continual improvement through experience
 Configured for each distribution channel
 Maximising Business Opportunities & Conversion Rates
 Immediate acceptance at POS maximised at ordinary rates, rated or with exclusions
 Intelligence gathered used to help Up-Sell, Cross-Sell, Alternative Terms, Buy-Now
 Enhanced Management Information
 Full real time data analysis by distribution channel
 Day to day portfolio management

13. obvious statement:
slow decision = attrition
by how much?
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

14. 0
20
40
60
80
100
Immediate Delay
percent who said they
would return
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0
20
40
60
80
100
Immediate Delay
percent who actually
did return
EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

15. OUR MARKET
STP RATES IN A PRICE DRIVEN MARKET
0%
10%
20%
30%
40%
50%
60%
70%
80%
2002 2004 2005 2007 2009
Acceptance Levels
75%
of customers
wasting time
With SS/G
70%+
of customers get
immediate
decision

16. Products & Services
Example Benefit
Little ‘t’ Tele-U/W’
Little ‘t’ tele-UW30% 4%
POS/Big ‘T’
Initial Underwriting
Reflexive Underwriting
20%
Rated
Acceptance
100%
72% 42%8%
Original
Acceptance DeclinedNPWs
0%0%
Medical Evidence
GPR/MER 6%15%
68%18% 4%10%Total =
Refer to
Underwriter
Tele-UW
8%
22%
11%
Manual
Decision
20% 6%10% 4%
0% 0%0%
Evidence
15%
Carry Forward
9%

17. change of emphasis
tactical  strategic
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

18. New ways to
interact
New information in
risk assessment
Using data more
effectively
Underwriting
speed
Ease of case
submission
Sales support
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION


19. Acquisition Features
 ‘Up Sell’, ‘Cross Sell’ and ‘Buy Now’
 Revision of Terms at Point of Sale
 POS Acceptance levels
 70% + for Life
 70% + for Critical Illness
 45% - 55% for Income Protection
Product Development
 Rapid Product development through Configuration
Deployment
 Customer Website, Broker Website, Call Centre, Traditional Back Office
Branding
 Ability to white label within hours (through style sheets) and configuration
 Ability to configure process and products rules according to channel/brand
Copernicus SS/G - Business Acquisition
Summary

20. control
has
shifted to
the
business
user
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

21. Control of Product
 Product Design - multi-life, multi benefit
 Products Launch - speed of product launch
 Rates - rapid re-pricing
Control of Proposition
 Access to Distribution – multi channel
 Ability to Flex - to suit the way your customers want to do business
Control of Process
 Deployment - Self Serve, Call Centre or Back Office
 Processing - data capture, screen sequencing, process sequencing
 Underwriting Approach - POS U/W, Tele U/W, Back Office U/W
Copernicus SS/G
Business Control
By Configuration – not Customisation

22. • Impact of immediate acceptance
• 40% change mind
• Impact of alternative offers 20% vs 40%
perception
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

23. predictions
for discussion
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

29. 29
Michel de Nostradame
1503 - 1566
King Henry II of France
1519 - 1559
EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

30. predictions– data….
• more sophisticated data analysis
• greater connectivity to external data
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

31. predictions– distribution…
• greater control given to the distributor
• more underwriting knowledge at point of
sale
• distributor presenting underwritten
cases to insurance co.s
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EMERGING TECHNOLOGIES AND THE
FUTURE OF INSURANCE DISTRIBUTION

32. • Kevin is CEO and Co-Founder of Insight Decision Solutions.
• Kevin has written several articles and is co-author of “The Analysis of
Insurance Earnings” (2008).
• He has served on three SOA section councils and Microsoft’s Partner
Advisory Council for 5 years.
• Kevin qualified as a Fellow of the Institute of Actuaries (UK) in 1992
and a Fellow of the Society of Actuaries (US) in 2004.
kpledge@insightdecision.com
905 475 3282 x 224
@kevinpledge
http://ca.linkedin.com/in/kevinpledge
KEVIN PLEDGE
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