21Aug2012
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SOA Blog
Category
Life
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How do we sell profitable life insurance products?

by Paul Klimek, CEO, Apptical Corp.

Paul KlimekIs the goal to design products or to sell products? I guess the goal is to design products that sell for a profit.

Who is a life insurer’s client? Is it the proposed insured or the selling agent? The most accurate answer is probably both. The agent is clearly the insurer’s customer before the policy is issued. After the policy is issued, the insured is the client.

Now that we’ve got that settled, how do we sell lots of profitable products? The answer is simple but the execution isn’t. As you already know, your job as an actuary is to walk a tightrope. Too much or too little protective value, commission, questions on the app, etc., and the product will fail.

Even if you successfully walk the tightrope and design a product that agents will sell, you can still fail miserably if your company doesn’t provide good service to the agents and the insured. In today’s world of instant fulfillment that means faster decisions and more importantly, faster payment of commissions. But how do we accomplish that? By using companions to risk selection such as electronic applications, telegibility and rules engines.

Electronic applications must be easy to configure, product centric, powerful, flexible and user friendly. If used properly, they can eliminate Not In Good Order (NIGO) applications, and be the catalyst for instant underwriting and same-day commission payment.

Telegibility (formerly teleunderwriting) is the use of a telephone interview in conjunction with a rules engine to provide eligibility guidance, usually at the point of sale. In order to execute successfully, the telephone interview service must be highly available, which means a wide span of days and hours coupled with virtually no hold times.

Finally, you will need a configurable, product-centric rules engine where the underwriters, with the support of actuaries, can constantly improve the rules to make decisions ever more precise and reliable. The rules engine must be able to be configured without the need for a programmer. Users must be able to easily write rules against data from: the application, the telephone interview, the MIB, prescription histories, motor vehicle reports and anything else the actuaries can come up with. The engine must be able to connect with these sources on demand and rate, refer or decline an application instantly. It must also be able to provide for reflexive questioning off of a rule hit. Additionally there must be an environment for regression testing as new rules are added.

See what I mean? Execution ain’t easy.

To learn more about how to make life insurance products more attractive for distribution professionals, join our webcast, Underwriting Resources: Critical Companions in Life Insurance Risk Selection, on Aug. 29.

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Discussion

2 responses to "How do we sell profitable life insurance products?"

  • Dan Solter says:

    I think the above quote contains the main thing. The best promotion method and marketing strategy is to have a great product with great support. Attract people by good terms, stick to your terms and have great support, have your customers satisfied – and you’re in it long-term.

    Great write-up Paul, thanks for making this public.

  • Tim says:

    It is good to see it from an insurers point of view on product creation, from a brokers point of view it often feels like a battle trying to get insurers to agree to write a policy which is a little bit different to normal. A lot of products seem to be to inflexible and whilst catering for the majority they often seem to miss out on a lot of profitable business because the business is a little bit different.

    Interesting point about faster commission payments however this might help in the negotiation period, higher commission payouts probably count as much if not more, however to the brokers on the counter selling the policies this makes no difference. Sounds like a case of the people in the office making the decision and the brokers (and insurance staff) getting stuck with them.

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