What Is Life Insurance Straight Through Processing?

I get asked all the time: “What is life insurance straight through processing (STP)?” The answer varies because there are different perspectives based on whether you are a carrier, vendor, BGA, agent or consumer. Life insurance STP has evolved quickly because of the advancement of insurtech, with each piece contributing to the next phase (Term Ticket Model, Accelerated Underwriting—Predictive Automated Underwriting, Digital Sales Platform). So, let’s explore the different types of STP, the benefits today and the trends for the future.

Term Ticket Model
In the Distribution world, Straight Through Processing was defined as a Drop-Ticket or Term-Ticket during its peak years from 2011-2016—running a term insurance quote, then clicking a button to do an abbreviated eApp, and then ePolicy delivery. A term ticket is not a full eApp. The term ticket platform may be a proprietary platform like Legal & General AppAssist or a multi-carrier platform like iPipeline iGO. Basically, it involves filling out questions for most of a Part 1 and replacement information, then asking the best time to call your client. The data and pre-filled forms are sent to a call center at the carrier or a third-party service provider like ExamOne for example. The client gets a call that typically lasts 30 minutes or less. The person conducting the tele-interview asks questions to complete the Part 1 and the medical questions for the Part II of the life insurance application. The interviewer follows a reflective script. Signatures are captured for the medical authorization in some cases, and for all the relevant forms, via Voice Signature. The interviewer also schedules the Paramed exam.

Once the underwriter receives the lab slip from the exam, with the results from blood drawn from the client, and reviews all the necessary information captured in the interview, then they approve the case—unless the underwriter determines additional information is needed like a copy of medical records from a doctor or hospital (APS). If the case is approved as applied for, and the client has provided his or her email address and opted in for eDelivery, then a notification either goes out to the BGA, agent or client via email depending on the eDelivery workflow setup. The eDelivery process for the client is a ceremony of consenting to eDelivery, even though they already opted in, reviewing the policy, paying the balance of premium due either by credit card or EFT, and then eSigning the delivery requirements like an amendment or delivery receipt. The client then saves or prints their policy. The agent is notified, the case is placed in force, and commissions are paid. This is one example of Term Ticket STP, however each carrier has slight variations of the process described above, and different distribution channels, like direct marketers, have a modified version of a Term Ticket STP. Essentially, it’s the same model.

Benefits to the BGA and Agent:

  • Cases submitted in good order;
  • Handing off fulfillment to focus on sales;
  • Faster cycle time;
  • Higher placement ratio;
  • No chasing down delivery requirements—especially premiums;
  • Commissions paid faster;
  • Reduce travel costs in delivering a policy; and,
  • Seamless experience.

Benefits to the Carrier:

  • Cases submitted in good order;
  • Control over the fulfillment process;
  • Higher conversion rate from interview to exam;
  • Faster cycle time;
  • Higher placement ratio;
  • Ease of doing business; and,
  • Reduced costs of mailing and printing policies.

Accelerated and Predictive Automated Underwriting
The carrier’s secret sauce has always been their fulfillment process—which helps differentiate them from their competitors. Accelerated underwriting is a different fulfillment process than term ticket. It began with a process whereby the agent would fill out a complete Part 1 of a life insurance application, including some medical questions, on a carrier eApp platform or a multi-carrier platform like iPipeline iGO. The client and agent would eSign the application. There would be a tele-interview conducted, typically by a carrier’s underwriter. Based on the information captured on the eApp and the answers on the interview, a decision would be made by the underwriter whether a Paramed exam or additional requirements like an APS were needed. The interview includes information provided by services like MIB, MVR and RX to help the underwriter know if the client has any history of medical issues, driving violations and/or is taking prescription medication. These services were pinged during the eApp process. If approved as a non-med, then the policy would be eDelivered within 48 hours.

Many carriers created similar accelerated underwriting programs with criteria to qualify for a non-med including: Specific age range, face amount limit, no tobacco, certain height/weight, blood pressure, cholesterol, and even lifestyle considerations like no DUI. For term insurance, you can get 10, 20, and 30-year term coverage with issue ages up to 60 years old and up to $1 million of death benefit with some carrier products. These programs are not just for term products, but they have expanded to include UL products like index universal life. These accelerated underwriting programs started to grow in popularity in 2017. Some carriers with accelerated underwriting programs include Lincoln Financial LincExpress and TermAccel, Protective Life PLUS, Mutual of Omaha Express, Legal & General APPcelerate, and John Hancock’s Express Track. Other carriers with accelerated underwriting programs are Brighthouse, Principal, SBLI, Nationwide, Transamerica and many more.

Predictive Automated Underwriting is the next step in this evolution. Many of the carriers listed above have modified or created new underwriting programs around specific life products for predictive automated underwriting. What changes in this next phase is that there is no human person touching the case. There is still an eApp submitted with eSignatures, and the MIB, MVR and RX services are automatically ordered, however the results are going into an underwriting scoring system. If the score is favorable than the policy is automatically approved, issued and eDelivered within 24 hours. There are many underwriting systems that can do this scoring such as iPipeline Resonant, SwissRe Magnum, RGA Aura, and ExamOne Risk IQ just to name a few. The science and risk formulas are interesting, but we will save that for another article. To sum it up, life underwriting is the review of a person’s medical history, occupation, lifestyle, and financial status to determine overall life expectancy relative to standard mortality, and that does not change—just the process changes. Accelerated underwriting and predictive automated underwriting are faster, less invasive and easier processes for life insurance, improving the overall straight through process.

Sales Digital Platforms
As we quickly turned the corner from 2018 to 2019, vendors have taken the latest STP (quoting, eApp, predictive automated underwriting, and eDelivery) to another step forward by creating and marketing an end-to-end digital sales platform. Vendors like iPipeline and Insurance Technologies have added a pre-sales component and a post-sales component to the STP. Pre-sale can include integration with CRMs, sales tools and carrier pre-sales workflow. On the post-sales side the platforms are being leveraged for single carrier or multi-carrier inforce services like beneficiary changes, address changes, switching banks for ACH premium payments, and even claim requests. This is just one model of a sales digital platform. New companies are popping up with new sales digital platform models for STP like Quotacy, and Quote & Apply by BackNine Insurance.

NIMBUS has created a digital experience for a straight through process (STP)–Life Click-to-Buy. What’s different from the traditional term life STP is that this digital platform has a flexible design to fit several sales models. The end user is the consumer, not the agent, with the same new business STP (no meds, no underwriter, instant policy approval, instant issue and delivery). There are several types of insurance, like term insurance and final expense products, being offered, some of which are specifically designed for the platform by many top life insurance companies.

The user can run a multi-carrier quote for example and fill out the application, eSign, and submit the premium payment. The system will qualify the client for the insurance they are applying for from the answers to some basic medical questions and the automatic ordering of RX medication prescription check, Medical Insurance Bureau check (MIB), and motor vehicle report (MVR). The results are instantly scored. This is a predictive automated underwriting process that we discussed above. The user experience takes about 13 minutes from quote to issue. If the score does not come back favorably for an instant issue, then there is a workflow that can redirect the customer to alternative life products.

This truly is a sale-to-issue process in the cloud, optimized for both laptop and mobile devices automatically. It is designed to plug via API easily into any website. The foundation from a sales perspective is to fit multiple sales models, therefore distribution channels like financial institutions, brokerage general agencies, direct marketers, and retail life insurance agents can all take advantage of the platform. The uniqueness of NIMBUS is that they have removed the barrier of the technology cost! Their revenue model is to participate in the commission hierarchy. They only get paid when business is placed. There are no setup fees, no license fees, no maintenance fees, and no transaction fees to using the base platform and training. There are consulting services you can purchase for additional customizations. Learn more about NIMBUS at nimbusinsurance.com.

Future of STP
The adage that life insurance is sold and not bought is getting redefined. The reason is two-fold: One, life products have been simplified; and second, the streamlining process. Because of the low cost, quickened experience, and easy accessibility from any device all stemming from the advancement in insurance technology (insurtech), STP will continue to disrupt the traditional sales process. The timing is perfect, as the biggest buying group of life insurance will be Millennials who prefer self-service! These new consumers still need advice from an agent, however as an on-demand model. Selling and processing life insurance applications with a straight through process will continue to grow and evolve. To learn more about life insurance straight through processing, please visit InsurTechExpress.com and then select STP under “Solutions.”

Ken Leibow is CEO of InsurTech Express. He has enjoyed a career spanning more than 32 years with an extensive background in insurance technology for distribution and back office systems. Leibow previously worked for Genworth Financial, Mutual of Omaha, and as vice president of operations at Diversified Underwriters Services, Inc. As COO of Integrated Insurance Technologies, he built the largest life insurance data exchange hub in the industry, processing over one million policies per year and $30 billion of annuities, now owned by Oracle, Inc.

Innovation in quoting and illustration tools, CRM’s, agency management systems, eApp platforms and ePolicy Delivery are some key initiatives implemented by Leibow during his career. He is a leader for industry technology standards, working with ACORD, LBTC, LIDMA, NAILBA, LIMRA, LOMA and IRI. In 2019, Leibow was appointed to sit on the ACLI Innovation Committee. He is a past winner of the NAILBA Chairman’s Award.

Leibow can be contacted via email at ken@insurtechexpress.com.