With SE2 Digital Direct Life, insurers can simplify the application process and grow market share

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© 2018 SE2, LLC. Proprietary and Confidential Information

Digi�zing the Life Insurance Process Page 1

Middle Market: Reserva�ons and Opportuni�es Page 3

Page 5Evolving Expecta�ons

Page 7A Framework for Success

TABLE OF CONTENTS

The life insurance industry is facing a new impera�ve: Go digital or go home. Digital disrup�on has become a constant force for today’s insurance organiza�ons, and digital transforma�on is not an op�on. Our world is becoming increasingly digital, providing challenges – and opportuni�es. Life insurers now need to move from a product-centric model and transform into customer-centric organiza�ons in order to provide reliable and consistent communica�ons across all channels and via an increasing array of devices. Organiza�ons have harnessed the ever-increasing amount of data and have found ways to successfully leverage analy�cs to drive informed decisions and ac�ons. However, while these measures have increased digital enablement, they are not the only disruptors insurers face.

Today, it’s cri�cal for life insurance organiza�ons to make every customer contact count. Insurers must facilitate and improve every experience customers have with their current and prospec�ve insurers, across all touchpoints. Insurers that do not offer customers a pleasant, personalized and easy experience will become less rele-vant and less compe��ve. They will miss growth opportuni�es and lose sales to other organiza�ons that get customer experience right.

Making a great first impression is always important, but it’s essen�al in the life insurance process – and one of the best first steps an insurer can take is to facilitate the onboarding process. Life insurance applica�ons are tradi�onally long and unwieldy, with dozens of pages of detailed ques�ons about a poten�al insured’s lifestyle, health, medical history, credit standing and more, all designed to provide informa�on to help the carrier be�er understand the risk involved – and to enable the insurer to accurately price a policy. The exercise of filling out the applica�on can be daun�ng to poten�al insureds, especially in the digital world where services are delivered through a few clicks. Too o�en, customers put off comple�ng the applica�on because it is too �me consuming or they don’t have all the requested informa�on at hand.

LIFE INSURANCE PROCESS

DIGITIZING THE

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The applica�on process is so complicated and frustra�ng that many poten�al insureds abandon the task at completely different stages in the applica�on journey, resul�ng in lost sales for the carrier. And even if the consumer completes the arduous, mul�-step insurance applica�on, the insurer can reject the applicant at any stage, or offer a prohibi�vely high premium that puts the policy out of reach.

Wai�ng �me is also problema�c. When prospec�ve insureds finish filling out the myriad forms and they submit the applica�on to the insurer, either through an agent or online, it could take the insurer weeks to process the forms, work with the informa�on, assess risk, price the policy and get a final quote to the applicant. In that �me, the applicant might have given up and applied for insurance elsewhere – or he or she might have decided against applying for life insurance completely.

DIGITIZING THE LIFE INSURANCE PROCESS

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These issues have been par�cularly important for the middle market segment. According to Life Insurance Market Research Associa�on’s (LIMRA) research, fewer than half (46%) of middle-market households held individual life insurance policies as recently as 2014 – and those numbers improved. Even more alarming, about one in four middle-market consumers have no life insurance at all. While about 60 percent recognize the need for coverage and report that they’re willing to buy a policy, they don’t follow through.

Middle-market consumers might hesitate to approach a carrier for financial solu�ons or look to an agent for life insurance for many reasons. According to a 2015 Deloi�e report, Life Insurance Purchase Behavior, non-buyers cite a variety of reasons for not buying life insurance, including benefits that aren’t clear and a lengthy applica�on process. Others aren’t familiar with the products available to suit their circumstances. Others perceive life insurance as too expensive. And s�ll others shy away from buying because they feel like the products are too complex and difficult to understand.

Says a report from Society of Actuaries that looks at middle-market life insurance, middle market consumers don’t have a good understanding of the product type differences or how to calculate their life insurance needs. The report also notes that there are some contradictory forces at work in the middle market. For instance, while the industry believes it needs to streamline underwri�ng, some research shows that some consumers would be willing to go through a more thorough underwri�ng process for a lower price. However, with the right approach supported by the right technologies, insurers can offer customers an easy applica�on process – either through an agent or self-service, and a reasonably-priced policy.

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RESERVATIONS ANDOPPORTUNITIES

MIDDLE MARKET:

The middle market represents an impressive opportunity for life insurers. Life insurance organiza�ons that can successfully meet the needs of the high-opportunity middle market, with a combina�on of appropriate product offerings and a fast and efficient applica�on process, can capture significant market share.

LIMRA and Epsilon studied the middle market in 2014 and found that an es�mated 70 percent of the 50 million households with annual income between $35,000 and $100,000 lack life insurance or are underinsured. The study also found that insurers have the poten�al to add about $10 trillion in life coverage by successfully tapping this market.

In LIMRA’s 2015 Insurance Barometer Study, Todd A. Silverhart, Corporate Vice President and Director, LIMRA Insurance Research, reveals that four in 10 consumers don’t know how much they need or want to buy, and they’re in�midated by the life insurance buying process. So organiza�ons can go a long way in closing the life insurance gap between the life insurance haves and have nots by providing educa�on on life insurance benefits in general, with appropriate products, and by providing a pleasant and efficient customer experience throughout the buying process.

MIDDLE MARKET: RESERVATIONS AND OPPORTUNITIES

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Not surprisingly, two-thirds (68%) of the 35 life insurance organiza�ons surveyed for the LIMRA/

Epsilon study said that the middle market was their first priority and nearly three-fourths (73%) said this market would be their focus in the future. All of the

insurers surveyed said they hadn’t yet found the right strategy to penetrate this market.

Expecta�ons are constantly evolving, with consumers looking to have the same great, reliable and seamless experience whether they’re interac�ng with a company online, buying an item in person or making an inquiry from a mobile phone. Retailers like Amazon have raised the bar for businesses of all type, and now consumers expect the same experience regardless of business or contact channel. And today, consumers an�cipate that they’ll be able to apply for insurance quickly and efficiently. However, tradi�onally, because insurers need a variety of informa�on to evaluate risk, price a policy and present a premium, applying for life insurance has been a difficult and �me-consuming process.

But today, life insurance organiza�ons are falling short of mee�ng consumers’ expecta�ons, especially when it comes to the applica�on process. In fact, op�mizing the applica�on process is key to life insurers need to make the applica�on and underwri�ng process fast, easy and uncomplicated. According to the 2017 Insurance Barometer Study from LIMRA and Life Happens, simplified underwri�ng is key to ge�ng consumers across all market segments the coverage they need.

Streamlining the applica�on process is especially essen�al to approach and sell to the middle-market. Reaching this market is as simple as turning a “sell” model to a “buy” model, enabling a prospect to choose a suitable product to fit his or her current circumstances that could poten�ally grow and morph throughout a life�me. Today, life insurance is a sell model. Agents perform a needs analysis and then select the most suitable product from the range of available offerings.

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According to the 2017 Insurance Barometer Study from LIMRA and Life Happens, simplified underwri�ng is key to ge�ng consumers across all market segments the coverage they need.

EXPECTATIONSEVOLVING

But even if the agent is successful with the ini�al sale, the applicant is not automa�cally guaranteed a policy. Even if the applicant has gone through medical assessments, filled out mountains of forms and waited several weeks for a response from the insurer, he or she may s�ll be turned down for the desired coverage.

Historically, life insurers have not been able to offer applicants an easy way to facilitate ques�onnaire comple�on. Efficiency improvements within the insurance organiza�on have only been able to improve the applica�on process incrementally. Life insurers haven’t been able to op�mize the applica�on process – un�l now.

EVOLVING EXPECTATIONS

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SE2 Digital Direct Life enables carriers to offer suitable products to poten�al policyholders through a no-touch process. Digital Direct Life offers insurers an easy, efficient way to onboard applicants and allows consumers to nearly effortlessly apply for life insurance. Life insurance organiza�ons that leverage the Digital Direct Life will be�er assign risk and more accurately price policies while effec�vely and efficiently delivering acceptably-priced life insurance to applicants, boos�ng sales and similar to the way individuals can be pre-approved for credit cards, prospects could be poten�ally approved for Term policies based on a risk analysis from data available from informa�on in the industry and public domain. Then, each individual progresses through an automated underwri�ng process based on informa�on based on the risk analysis.

Digital Direct Life automates policy applica�on. In order to authen�cate his or her iden�ty, an individual merely provides several key iden�fiers – name, address, driver’s license number, social security number and date of birth – and then an esignature to authorize the insurer to access personal data. With this data, that includes an individual’s medical history, driving record, credit history and family rela�onships, the system goes through an automated underwri�ng process to assess risk, and then it offers the insured tailored coverage and premium amount.

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SUCCESSA FRAMEWORK FOR

SE2 Digital Direct Life is a game changer. Not only does the framework streamline the applica�on process, it speeds decisions to a small frac�on of the �me needed with tradi�onal policies. Within minutes – less �me than it would take a consumer to complete one page of an applica�on – the system delivers a detailed risk assessment and underwri�ng decision. Insurance organiza�ons can take the end-to-end applica�on process from up to a few weeks to mere minutes. If an ini�al product offered is not appropriate for the applicant, the system will innovate to create a tailor-made product match. Agents who take advantage of this process will be able to discuss the core needs of applicants and ensure that each client has the right combina�on of products instead of simply comple�ng a long applica�on. But SE2 Digital Direct Life is not only an enabler for agents. It also facilitates the direct- to-consumer model as well, easing and speeding the applica�on process for those like Millennials who prefer to apply for life insurance online.

A FRAMEWORK FOR SUCCESS

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Exhibit 1: Digital Direct Life

noApp Enter key client infoSSN / Driver licence / Name

orBlockchain enabled network

Fetch data from vendor services

Fetch data from internal systems

Applica�on ready forreview/eSignature

+

Applica�on & electronic data

Risk assessment & underwri�ng

+Auto start

eUW

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SE2 Digital Direct Life incorporates advanced digital technologies, mainstream services and components including Robo�cs Process Automa�on (RPA), Cogni�ve Compu�ng, Insight Driven Analy�cs and mobility. The framework uses a proprietary blend of mul�ple data sources that include but aren’t limited to medical informa�on bureau (MIB), prescrip�on drug database, motor vehicle records, credit reports and criminal records. and an automated end-to-end process. SE2 works with an extensive partner ecosystem including service providers that offer incen�ves to individuals who take measures to become healthier and associate the informa�on with their life premium, for example.

Partnering with SE2 to streamline the applica�on process can cut the �me needed to fill forms from days to minutes. Life insurers can op�mize underwri�ng while delivering right-priced policies. Individuals can go from ini�al applica�on to purchase and full coverage in under 10 minutes, ensuring that individuals have a fast and pleasant customer experience while insurers benefit from increased sales.

A FRAMEWORK FOR SUCCESS

Exhibit 2: SE2’s Digital Life Framework

MULTI PAYMENT CHANNEL

Case managementIGOs /NIGOssupplemental info

Evidence vendors: MIB, MVR, RxMedical vendors: Lab, APS

ComplianceSuitability compliance

Con�nuousstatus updates

Underwri�ng Risk assessment, requirements,ordering, evidence review, decisions/ ra�ng

Admin systemInforce processing claims,commissions, billing, etc.

• Risk assessment• UW workflow/ workbench• Agent licensing check• Data warehouse

• Risk evalua�on engine• Predic�ve analy�cs• Mul�-channel support• eUnderwri�ng

SE2

CARR

IER

CLIE

NTS

Customers

Producers

OCR/ ICR

eApp

Quick quote /Illustra�on /eApp; SE2 / aggregators — iPipeline / Ebix, etc.

Bots

SE2 NEW BUSINESS & UNDERWRITING CAPABILITIES:

SMS

SE2 new business & UW platform

© 2018 SE2, LLC. Proprietary and Confidential InformationFrom eApp to noApp

SE2, an Eldridge Industries por�olio company, is a leading technology and third party administra�on company focused on the North American life and annuity insurance industry. SE2 has an unmatched track record in op�mizing back-office opera�ons to future-proof insurance companies. SE2 combines peerless industry domain knowledge with a leading-edge administra�on technology pla�orm to help clients launch products rapidly, improve efficiencies, shi� to a variable cost model and maximize profits while drama�cally improving the customers’ experience. SE2 supports more than 20 direct clients, represents more than 35 carriers in North America and services more than 1,000 life and annuity products. SE2 has approximately $100 billion in assets under administra�on and has been recognized as an industry-leading innovator. In May 2017, SE2 was recognized as one of the “20 Most Promising Insurance Technology Solu�on Providers” by CIOReview.Visit SE2 at www.SE2.com, LinkedIn or info@SE2.com to learn more.