The life insurance and annuity sales and new business process has gone through technical changes this year. What’s trending? More carriers are rolling out accelerated underwriting, which significantly simplifies and speeds up the life new business submission and issue process. Moving your agency’s technology to the “Cloud” is a best practice not just for data security, but it will also save you money and help place more business. You may also want to make use of Servere VPN services since your business is undergoing its digital transformation, keeping everything encrypted and secure. The new DOL fiduciary ruling is impacting how products using qualified money are being sold resulting in agents and agencies needing specific financial planning sales tools to satisfy the best of interest contract requirements (BIC).
Accelerated Underwriting
Several carriers this year have launched accelerated underwriting programs allowing the insurance company to underwrite and approve a life insurance application without an exam or lab work. Principal Financial Group first launched accelerated underwriting to BGAs more than a year ago. Now several carriers like Banner Life/Legal & General America and SBLI have accelerated underwriting programs as well as others. In the next 12-18 months, the trend is that at least 75 percent of brokerage life insurance companies will have some type of accelerated underwriting automation. “We have to be smarter in the way we process business. As an agency with a high touch’ value proposition, we found that we needed to identify ways to cut down processing time and costs. Every time a case manager in our agency touches a case, we discovered it costs us $35 per touch. You can easily do the math, and realize that a $1000 premium would be a loss for us if we don’t process it more efficiently,” explained Lynne Rosenberg, president of Innovative Solutions Insurance Services, LLC, El Segundo, CA.
Technology is the foundation of the accelerated underwriting process. Carriers use their proprietary eApp/drop ticket platforms, or to gain more adoption plug into multi-carrier platforms like iPipeline’s IGO and Applicint’s ExpressComplete. The accelerated underwriting process automatically pulls the client’s MVR, MIB and RX reports by first getting an electronic authorization from the client. eDelivery makes it a complete straight through process using a carrier’s ePolicy system or multi-carrier eDelivery system like iPipeline’s DocFast. Voice and eSignature play a significant role in specific steps in the process. Vendors like DocuSign not only authenticate the signer but also utilize their workflow platform in the process. “Lincoln’s new TermAccel program is the next step with straight through processing. The ticket is dropped through an electronic platform on Lincoln’s website, iPipeline’s iGo platform, or a link on the BGA’s own website. Upon approval the policy is issued electronically and delivered electronically, thus providing us the opportunity to place cases faster,” noted Rosenberg.
“We offer a multi-carrier platform allowing our brokers to run term quotes and submit an electronic drop ticket with the top carriers in the term market. We increased the number of drop ticket submissions from 20 percent to 50 percent by requiring term applications with a premium under $500 be submitted electronically. Drop ticket is an easier process for brokers to submit an application as it creates an in good order’ application, provides a more detailed medical history, and allows our brokers to work on selling rather than administrative work,” explained Carolyn Sampson, senior vice president, National Benefit Corp., Des Moines, IA. This new evolution in the eApp/drop ticket process dramatically speeds up cycle time using accelerated underwriting, which translates to placing much more business. Sampson exclaimed, “The introduction of accelerated/lab-free underwriting this year is taking the drop ticket one step further. Carriers are using a personal history phone interview, running a prescription database check, pulling the MVR and checking MIB codes to underwrite the application. We have had great success with clients ages 20-40, in good health, applying for under $1,000,000 death benefit. I am most excited about our ability to reduce the time it takes to issue a life insurance policy from 30 days to less than seven days!”
Cloud
Saving money and securing your data is what an agency should be focused on when moving to the Cloud. Let’s start with reducing your agency’s expenses. Most of your vendors are offering access to software online as Software as a Service (SAAS). You should be asking, “What’s your footprint?” It is important to know if the software vendor is using Platform as a Service (PAAS) and Infrastructure as a Service (IAAS). The benefit for the vendor of using PAAS and IAAS is that they have incremental costs regarding hardware and hosting software compared to a high fixed cost doing it in-house. The savings of the incremental cost can be significant, which is passed down to the customer.
New Cloud services are being launched and used by life insurance companies and BGAs. Many businesses use cloud-based applications like EZLease when it comes to lease accounting and helping to improve their workload in financial matters. SuranceBay is developing an agency management system (SureAMS) hosted on a privately held Cloud. What’s new about SuranceBay’s AMS is that it will be fully integrated into their licensing system (SureLC), which is widely used by BGAs today. The new AMS by SuranceBay will also be integrated into their eApp system (SureNB). A good example of another “new” service that was born in the Cloud is PaperClip’s Mojo. The benefit of a cloud service like Mojo is that if an agent sent in a paper life insurance application instead of using eApp or drop ticket, then the BGA can scan the life app into Mojo. This would essentially turn the handwritten app into data to be used as an app upload to the carrier as well as automatically creating a case in the BGA’s agency management system. The service itself is affordable because it is Cloud-based and provides savings because it reduces a case manager’s data input time by more than two hours per day. Companies also have the option of availing various consulting services (like GCP consulting services) from IT companies, which might help them get a clearer idea of how Cloud data services can elevate their productivity by personalizing their service for that particular organization. Moreover, an increased number of businesses will get placed because of faster cycle time on par with an eApp providing the quicker processing time compared to manually typing in the life insurance application. Faster cycle time using data versus paper increases placement ratio on average of up to eight percent to the bottom line according to studies by the Life Brokerage Technology Committee (LBTC).
BGAs should be using a Cloud data service to store their data. Cloud data services have physical security that keeps their machines in a secured location with security cameras at facilities located away from cities and other risky places. The machine’s operating system and software security are kept up to date. Your data is securely accessed remotely from any location. BGAs should have platforms in the Cloud so that they can continue their business with minimal interruption in the case of a natural disaster for example. “Four Seasons has taken the approach that even if disaster hits locally, our customers in other parts of the country expect us continue operations! By taking a cloud-based approach, we keep our core functions active even from remote locations, thus assuring our customers they can depend on us to be there when they need us,” explained Joann Mattson, FLMI, AALU, vice president, administrative solutions, Four Seasons Financial Group, Marlton, NJ. Agencies also need to have a data security policy, which includes Cloud data storage. “Obviously, security policies have been updated to take new technology into account. These days, we’re more concerned with email encryption and firewall protection versus locked file cabinets. But agencies must be mindful that their security policies are not static documents. These policies must be reviewed at least annually to assure they comply with current regulation as well as technology enhancements/changes,” stressed Mattson.
DOL
If your agent:
Recommends funding an annuity using qualified funds;
Recommends using qualified funds for life insurance premiums; or
Recommends a rollover from a qualified retirement account.
Then you must be able to show that the product/strategy recommended is in the client’s best interest and will improve their situation. It may also be necessary to complete the Best Interest Contract in cases where the Best Interest Contract Exemption does not apply (i.e. If you receive variable compensation for a product sale). In addition to any enforcement action taken by regulators or internal compliance, many experts believe the DOL fiduciary rule will make it easier for individual investors to prove wrongdoing in court/arbitration. For this reason, it will also be very important to document the information used as the basis for your recommendations. If an agent is using an annuity research and comparison tool like Ebix’s Vital Annuity, then the BGA should encourage the agent to save and store their reports. Vendors like Ebix are making the storage of quotes easy by integrating it into the agent’s CRM like Ebix’s SmartOffice. Whether the report or quote was generated in a BGA’s back office or by the agent at point of sale, the best practice for DOL is to save the PDF and store it where it can be accessed easily to verify what was presented to the client.
Life insurance agents and financial advisors need to take a comprehensive look at the client’s overall financial situation (retirement accounts, savings, expenses, taxes) to determine the best course of action. Compare the client’s “current” and “proposed” situation to illustrate the basis for the agent’s recommendations. Best practices would include tools that have business rules that can be customized to fit a specific planning methodology to ensure consistency in the product recommendations. Saving cases locally, CRM integration and/or automatically uploading a client’s cases to a BGA, broker/dealer or carrier database for record keeping purposes are critical best practices for DOL. Impact Technologies Group’s (Impact ) PlanFacts financial planning sales tools for example are being used to satisfy the best of interest contract requirements with features like comparing a client or couple’s current financial situation to a scenario proposing life insurance and annuities. Impact’s PlanFacts can also be implemented for DOL to offer product recommendations based on best interest rules. Below are key features that planning tools need to have in order to satisfy DOL best of interest requirements (BIC).
Financial Planning Needs Analysis Planning Tools – Key Features for DOL
Compare current financial situation to a scenario with proposed life insurance and annuities.
Compare scenarios using different hypothetical rate of investment returns.
Compare using qualified money versus after-tax money to fund life insurance.
Illustrate using life insurance to pay for Roth conversion following death of first spouse.
Compare current financial situation to a scenario with proposed life insurance, annuities.
Save locally and/or upload of client cases to company database for record keeping purposes.
Business rules customized to fit your methodology.
Monte Carlo simulation.
Automatically generate BICE contract, disclosures, etc.
CRM integration.
There are three agency best practice takeaways:
1. Place more business by directing your agents to sell products and submit business on eApp platforms that are plugged into an accelerated underwriting process.
2. Save money by moving your agency to the Cloud and making sure your vendor’s platforms are based in the Cloud.
3. Provide financial planning sales tools that offer the necessary functionality to help those agents and advisors who are fiduciaries under the new DOL ruling with their best of interest requirements.
