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Celent: Application Costs Vary Widely

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Life insurers should try to do a better job of using electronic applications to reduce the cost of processing new business.

Researchers at Celent L.L.C., Boston, a consulting firm, report that the average cost of processing a life insurance application at 11 carriers studied averaged $461 per policy and ranged from $29 to $763, or $3.11 per $10,000 in death benefits to more than $13 per $10,000 in death benefits.

The average unit cost per policy issued was $1,058, the Celent researchers report.

The carrier units that sell policies through agents get only about 20% of their new business through electronic applications, while the carrier units that sell through wirehouses and banks get about 35% of their new business through electronic applications, the researchers report.