Improving the New Business Process

A Report from The SOA Committee on Life

Insurance Mortality & Underwriting Surveys

Members of the Survey Subcommittee

• Sharon Smith, FALU, Chair

• Ev Kunzelman, FLMI

• Mark Swanson, FSA

• David Wylde, FSA

• SOA Staff:

– Jack Luff, FSA

– Korrel Rosenberg

Overview of the Survey Report

The New Business Process

1. Application is sent to the company

2. Additional requirements are gathered

3. Underwriting is performed

4. Policy is delivered to approved applicants

Overview of the Survey Report

The Report

1. Respondent Demographics

2. The Application Process

3. Changes to Underwriting Requirements

4. Underwriting Systems

5. Underwriting Resources

6. Effect of Past Changes on New Business Practices

7. Delivering the Policy

The Application Process

For paper applications, what is the average number of days from

signature to received date?

The Application Process

For paper applications, what percentage are received not in good order

(NIGO)?

The Application Process

Any plans to introduce an electronic application in the future?

Changes to Underwriting Requirements

How long ago was a change made to the company’s age and amount requirements?

Changes to Underwriting Requirements

What was the effect of the change in requirements?

0 5 10 15 20 25 30 35 40

Cognitive or Functional Testing

Oral Fluid

Prescription Database Query

Tele-interview/Tele-application

Urinalysis

MVR

Blood Profile

APS Guidelines

Non-medical

Inspection Report

Paramedical

Resting ECG

Stress ECG

Medical Exam

Number of Responses

Increase (More Liberal) Decrease (More Conservative) No Change Not Applicable

Changes to Underwriting Requirements

When will the company consider next reviewing or changing underwriting

requirements?

Changes to Underwriting Requirements

What will be the effect of anticipated requirement changes?

0 5 10 15 20 25 30 35

MVR

Cognitive or Functional Testing

Oral Fluid

Urinalysis

Blood Profile

Prescription Database Query

Inspection Report

Resting ECG

Medical Exam

Stress ECG

Non-medical

Paramedical

Tele-interview/Tele-application

APS Guidelines

Number of Responses

Increase (More Liberal) Decrease (More Conservative) No Change Not Applicable

Changes to Underwriting Requirements

What requirements have been added in the past 5 years and what

was the primary reason for the addition?

0 2 4 6 8 10 12 14 16 18

Stress ECG

Medical Exams

Chest X-Ray

Blood Test - CEA

Other: MVR

Other: Database e-Searches

Other: Hepatitis

Blood Profile Test - hsCRP

Other: PSA

Urine Test - Microalbuminuria

Other: Prescription Database

Blood Profile Test - Glycohemoglobin

Tele-interviewing/Tele-application Limits

Blood Profile Test - NT-proBNP

Cognitive/Functional Tests

Number of Responses

Protective Value Faster Competition

Changes to Underwriting Requirements

What requirements have been deleted in the past 5 years and what was

the primary reason for the deletion?

0 2 4 6 8 10 12 14 16 18

Urine Test - Microalbuminuria

Cognitive/Functional Tests

Blood Profile Test - NT-proBNP

Blood Profile Test - hsCRP

Blood Profile Test - Glycohemoglobin

Blood Test - CEA

Other: Not Indicated

Other: Meth Testing

Tele-interviewing/Tele-application Limits

Other: Oral Fluid

Medical Exams

Stress ECG

Chest X-Ray

Number of Responses

Protective Value Faster Competition

How Evidence is Received

How is underwriting evidence received?

0 10 20 30 40 50 60 70

MVR

Lab Results

Stress ECG

ECG

Paramedical / Medical

APS

Number of Responses

Electronic Image Mail / Courier (paper) Fax Electronic Data

Underwriting Systems

• Are applications and underwriting evidence imaged as part of

the new business workflow?

– Yes (front end)…83%

– Yes (back end)…10%

– No…7%

• For those companies with front end imaging, can the

underwriters choose which case to work on next?

– Yes…70%

– No...30%

Automated Underwriting System

• Does the company have an automated underwriting

system that can make underwriting decisions?

– Yes…34%

– No…66%

• If you do not have an automated underwriting system,

are you planning to install one in the near future?

– Yes…38%

– No…62%

Remote Underwriters

Do any of the company’s underwriters work remotely from home at least some of the

time? Yes…62% If yes, what percentage of underwriters?

0

1

2

3

4

5

Num

ber o

f Res

pond

ents

Percentage of Underwriters

Underwriting Resources

Does the company have any specialized underwriting teams? (check all that apply)

Effect of Past Changes to New Business

Practices

Effect of Past Changes to Expected Mortality

What was the impact on expected mortality?

0 2 4 6 8 10 12 14 16 18 20

Urinalysis

Tele-interview / tele-application

Stress ECG

Resting ECG

Prescription Database query

Paramedical

Oral fluid

Non-medical

MVR (motor vehicle report)

Medical exam

Inspection report

Cognitive or functional testing

Blood profile

APS guidelines

Number of Responses

Increase Decrease No Change Unknown

Effect of Past Changes to New Business Practices

Which changes increased the percentage of cases approved within 30 days? (check all that apply)

Delivering the Policy

How are policies delivered to the policyowner? (check all that apply)

Delivering the Policy

• For policies mailed directly to the policyowner or the agent, what

was the method of delivery? (check all that apply)

– Regular mail…86%

– Courier service…40%

– Express mail with confirmation…23%

• For policies delivered via regular mail or courier service, how is

delivery confirmed? (check all that apply)

– Signed delivery receipt…58%

– Delivery is not confirmed…55%

– Mail-back delivery receipt…18%

– Other…3%

• For more information about this survey

– www.soa.org/research/experience-study/bus-practice-surveys/

• Contact me directly at

– sharon.b.smith@sunlife.com

• Thank you!

Improving the New Business Process

Hélène Chatelain VP NB & Chief Underwriter Transamerica Life Canada

Distance

Underwriting

STP

Transamerica Life Canada

CRC April 2013

Going Paperless

What began as an effort to be competitive in the insurance

industry to retain our underwriters from being swayed

over to our competitors, who offer remote underwriting

possibilities has evolved into a paperless workflow system to

then focus on a WORKBENCH for all the staff.

The phylosophy and advantages

The goal of an upfront paperless office is to use paper more efficiently, not eliminate it altogether.

The most common advantages of going paperless upfront are:

• Increasing productivity

• Eliminating storage space

• Reducing expenses

• Working remotely

• Enhance customer service

Advantages for Transamerica

First Implementation without a proper workflow engine:

All mail is received at Head Office no longer in the regional office

Any cheques to be deposited are done the same day instead of the day after.

No more mail cutoff time for mail deliveries to underwriters, we have a continuous workflow.

Easier to coordinate a business recovery plan.

Reduction of mail cost and office supplies.

Better control on work received that requires processing.

An easier overview of the business unit’s workflow status for management

First step towards becoming paperless

Stage 1…Creativity workflow

Project started September 2011 – name NULIFE

Phase 1:

Establish a solid foundation (both business and technology)

In order to build our capability to support our straight through processing effort and being able to provide solution for further development STP process and vision

NULife Phase 1

• We leverage our front end scanning of documents into the new platform

• Automatically matches inbound documents

• Proper follow-up training where needed, and coached.

• Getting used to NULife’s operation system and workflow

• We moved from a paper based New Business process to an electronic based process.

• We established a single consistent approach to underwriting processes and establish a platform that will leverage underwriting process efficiency.

NU LIFE Phase 1

• First steps in improving the application workflow and consistency in our Underwriting decision making steps.

• Contributing to our Must Wins:

• Communication consistency – we all talk the same language

• Improving our operational processes and streamlining how we accomplish tasks

• We have standardized how decisions are made and are creating a consistent decision making environment

DTEE

NULIFE PHASE 1

• We did not anticipate the extent of the learning curve associated with front end scanning documents

• While we had identified the processes and trained staff and provided practice sessions some staff still struggled with the realization of ‘where’ and how documents flowed.

• Early break out or business process review sessions with staff helped

We had plans, we had newsletters, we even had wacky Wednesdays but there were still struggles in gaining a clear idea of what was being delivered, what the NU world would look like, how it would impact them and why it was significant to TLC.

Now time to do phase 2

Milliken’s Law or The Law of Life Insurance

NULIFE Phase 2

Same Vision of STP at Transamerica We will use electronic processes to automate and streamline our business from acquisition through to in-force administration, supporting our market and increasing the ease of doing business, improving our profitability.

“Insanity is doing the same thing, the same way and expecting different results.”

NU Life Phase 2

It will do the easy clean cases; thus freeing up the talented underwriters to

really solve problem cases.

Development of rule Vendor Integration Other efficiency

Teaching the young underwriter how to carry the load of underwriting

Intent is Gain Momentum Consistently Deliver High Value Quick Wins Leverage our foundational work: Building rules Ingestion of data Integration of information further streamlining how our information flowing in from our external providers (Labs, Para’s etc) Working Together & Bringing Clarity to our processes and decisions further gathering data analysis and working with rule engine.

Auto decision for clean cases: Created a “Proof of Concept” (POC) associated with rules for

“clean case underwriting” -We need to know that the rules engine is working as expected,

and is capable of making U/W decisions. -We need to ensure that we can move forward with more

complexity rules, and that we can visibly demonstrate our capability to deliver this.

Ingestion of data -Ingestion of vendor data (e.g., Lab test results, Parameds) and

further development of the both UW & business rules to support this.

• Minor cycle time benefits and productivity improvements are expected.

NU Life Phase 2: Approach

• Extension of complex rule:

– The extension of the POC to include additional classes of data (e.g., Lab test results) and further development of the business rules to support this.

– The increased extension of the application data capture capabilities so that a percentage of incoming cases will be auto-decisioned / assisted-decisioned once they reach LifeSuite.

NU Life Phase 2: Approach

• Ingestion of Data and on going…

– eApp – ingestion commences

– Underwriting support for inForce (Policy Change) ?

– Percentage of incoming cases that will be auto-decisioned /assisted-decisioned within LifeSuite

should increase overtime

NU Life Phase 2: Approach

NU Life Phase 2 : Requirements

• Similar to phase 1 we need to review the following:

• Review and streamline the integration process and users

• Approval and review of automated underwriting rules

• Internal approvals and governance

• Communication (internal & external)

• Training of Head Office Business staff

• Change Management

• Process/Procedures Analysis and Documentation

• Updates to DRP/BIA plan

• Support of addition of new products eg Critical Illness program

• Our VISION of STP has just started !

Questions ????

Jay Sankoff

Director, New Business and Underwriting Operations

RBC Insurance Company

Distance

Underwriting

Infrastructure

Underwriting Resources

Underwriting Requirements

E-apps

Learnings

What is Next

Infrastructure

• We were already in the process of examining our legacy underwriting and administration systems

• Recognized that one of the leading causes of ‘wastage’ was slow cycle times

• Always looking for ways to do ‘more work’ with ‘less’ staff

• The opportunities for ‘continuous improvement’ and ‘improved workflow’ in a paper environment were pretty much exhausted

• To be competitive we needed to get to the next level – ‘e-app’

Infrastructure

- Closed our Burlington Living Benefits office in 2008

- Out of necessity introduced a strict ‘work from home’ program while still operating in a paper environment

- Competition for Life Underwriters

- Over 3 million pieces of paper

Infrastructure

• Embarked on a 2.5 year project – Underwriting Imaging and Workbench

• Examined roles and responsibilities

• Examined workflows introducing LSS best practices of reducing waste (tasks)

• Looked for opportunities to introduce automation where possible

• Connectivity to the vendors and reinsures

Resources

• The introduction of an Underwriting Workbench introduced great opportunities for the underwriters

• Not only for those working from home locally, but across Canada as well

• We were able to re-open and manage our Montreal underwriters more efficiently

• Began engaging contractors and full time staff from Vancouver to Gatineau

Underwriting Requirements

• Stress ECGS - > ECGs

• Medicals - > Paramedicals

• ECGs

• MVRs

• Inspection Reports

But what of the relationship between APSes and Tele-interviews?

Tele-interview

• Tele-interview allows you to remove non-medical questions from your application

• Allows for a shorter e-app

– Easier adjustment for the field

• Fewer errors on applications

– Second most common outstanding requirement?

• Better take up rate

Learnings

• Customer Service Commitment

– 15

– 45

– 20

• Look to your partners to assist in moving the business

– Sales – they own the front end and the back end

– Vendors – what can they do for you

Learnings

• Continuously build upon your successes and your failures

• Sky is the limit – don’t reject any idea

What is Next?

• Always looking at our age and amount reqts, new products, new process opportunities

• Automate more – Review of the labs to the level of preferred

categories

– Automatically evaluate the preferred underwriting criteria

– Improve communications to the field

• Continue to engage our Sales, Product, Pricing and Reinsurance partners

Sharon Smith Chief Underwriter Sun Life Financial

New Business Transformation

• Multi year, multi phase, multi million dollar initiative

• Regionalized underwriting teams & large case team

• “In Box” for underwriters to sort their work

• Changes to Underwriting requirements

• Updated electronic application with drill down questions

• Integrated tele-interview offering

• Installation of new underwriting rules engine

• MIB all business

How it all fits together

Learnings

• It takes more than three months for three underwriters to build life and CI application and drill down questions

• Stay focused and not allow “scope creep” to derail the project

• Senior leadership active involvement is critical

• The transition to results may take longer than you’d like

• Data analytic support is an absolute must to maximize the power of the technology

• There will always be some resistance to change

Where Next?

• Quarterly up-dates for the forseable future

– Look externally once we’ve maximized what we can do

• Ongoing review of underwriting guidelines

• Significant revisions to underwriting requirements – Focus on tools that can be received and reviewed

electronically

• Reap benefits of tele-interview recording

Summary

• There are a number of components to the new business process, each of which needs to be examined

• Trends

– Electronic applications

– Image and underwriting workflow systems

– Underwriting rules engine

– Underwriting requirements reviewed more regularly