Paper apps: Love ’em or leave ’em

This industry sure kills a lot of trees.

While electronic applications are becoming more commonplace, paper applications still account for the vast majority of all apps submitted. A speaker at last week’s iPipeline Connections 2013 in Las Vegas estimated there were probably around 14 million paper life insurance applications submitted last year. In contrast, e-app market share leader iPipeline is expecting to hit its one millionth total electronic application sometime later this year.

Clearly, paper is still the way the vast majority of life insurance applications are submitted today. But it would be foolhardy to doubt the potential of e-apps to make a huge dent in the percentage of paper apps in the coming years.

The carriers — typically with the assistance of a partner like iPipeline — have the capability to take applications electronically and would prefer to have a much higher percentage of their applications submitted this way. It saves time and money, and the apps submitted this way are almost all in good order — barely any NiGO (Not in Good Order). But producers — and particularly those in the independent channel — are not exactly adopting at light speed to newer technologies like e-signatures, e-applications and e-policy delivery.

See also: Tablets and e-signatures: The future of life insurance sales?

Some just don’t see any reason to change their ways, even if doing so would save them time spent on paperwork and put more money in their pocket — money they would also receive a lot quicker. As iPipeline President Paul Melchiorre lamented numerous times during the recent conference in Las Vegas, independent producers cannot be forced to integrate these processes, unlike captive agents, who can be required to do so by their carriers. While some captive companies like Nationwide and Southern Farm Bureau Life have extremely high adoption rates, non-captive carriers still have a very low percentage of applications being submitted electronically.

The middle market is the sweet spot for electronic applications. It’s where the biggest impact has been so far, and it has the most potential to become the norm instead of the exception. In fact, for low-face-amount term policies, some carriers are already at the point where if the policy is not submitted electronically, they don’t even want to deal with it. On the other hand, expect to see little change in the near future in the high-net-worth market. With all the requirements associated with issuing more complex, high-value permanent products, electronic applications are just not seen as a viable alternative at this point.