Some producers will always prefer the decidedly low-tech sales approach of simply bringing a pen and a notepad to meet with customers. No flashy sales illustration will be shown on an iPad. The only “app” used will be in the form of a paper application for life insurance coverage.
This old-fashioned approach has its merits, to be sure, and it’s hard to argue with the success it has brought many a successful producer. You are face to face, with nothing to distract your full attention from carefully listening to the needs of the client. Many clients no doubt still appreciate the simplicity of the pen-and-notepad approach.
In the span of perhaps six weeks from the time of the meeting, the paper app gets filled out, then probably gets kicked back a time or two for being “not in good order” (NIGO) and is finally submitted to the carrier. The policy is eventually issued, printed out and personally delivered to the client. The whole process isn’t exactly quick or easy for the client, producer or carrier.
Well, like it or not, the life insurance sales process really is evolving at many offices and kitchen tables across the country. The evolution is being driven by changing consumer preferences and carriers who realize they need to make it easier for today’s consumers to obtain coverage. Many producers — some willingly, some kicking and screaming — have modernized their sales process to integrate tablet technology, electronic application capabilities and social media. These new technologies and processes are primarily intended to:
• Meet modern consumer expectations by providing constant access to information and service through multiple channels.
• Reduce the cost of sales by eliminating NIGO submissions, simplifying application processing, reducing cycle times and increasing placement ratios.
• Allow the producer to spend less time on paperwork and more time selling, while also getting paid faster.
Let’s start with the consumer angle. Carriers today are competing in a market where average household expenditures on life insurance have declined by 50 percent over the past decade. It’s no surprise life insurers are anxious to transform their products and service models to better fit the needs and expectations of today’s consumers, particularly those who are under 50. Newer technologies are allowing consumers to access information and communicate with carriers and producers on their terms via multiple channels: email, Internet sites, call centers, social media, Skype and old-fashioned face to face.
A new study released in March by Conning found changing consumer demographics, lifestyles and preferences are creating both challenges and opportunities for life insurers. Mary Pat Campbell, analyst at Conning, notes that the speed at which new technology is being adopted by consumers has accelerated. “Most relevant to life insurers, consumers are more and more apt to conduct financial transactions as well as buy financial products online,” she says. “Some of those in prime traditional life insurance-buying ages have high usage of online banking, with 65 percent of those age 30 to 49 engaged in this activity in 2012, compared to only 25 percent a decade earlier. Being able to take advantage of this shift in consumer behavior is key for insurers.”
As for the carriers, they are increasingly investing in technology platforms that significantly streamline the application and fulfillment cycle. According to recent iPipeline-commissioned research from Celent, based on data from 20 carriers, the unit cost to handle new business by using e-apps dropped from $299 to $187 per application received. That represents a 37 percent reduction in unit cost. And unit costs dropped from $446 to $233 per policy issued from an application start point, representing a 48 percent reduction in unit cost. This means a potential $2.1 million in savings on every 10,000 e-apps submitted.
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That same Celent research revealed that the percentage of NIGO rates dropped from 70 percent to 16 percent for switching from paper to e-apps for term life and from 70 percent to 19 percent for whole life. The average new business cycle time was reduced from 50 to 30 days for term life (a 40 percent reduction) and from 49 to 24 days for whole life — a 50 percent reduction.
For their part, producers are integrating iPads into their workflows not only to display sales illustrations and generate quotes for clients, but also to submit electronic applications. Producers using e-apps eliminate point-of-sale mistakes, increase placement ratios and get paid faster. Tech-enabled producers are also making good use of ever-emerging smartphone and tablet apps designed to make them more productive and efficient.
The iPad effect
The first iPad was released in April 2010. The first Samsung Galaxy Tab was introduced in September 2010. Research company IDC estimates the total number of tablets sold worldwide in 2012 at 122 million. It predicts 172 million tablets will be sold in 2013. Pew Research Center’s Internet and American Life Project found 19 percent of U.S. adults owned a tablet as of January 2012.
LIMRA’s “From Connected to Mobile: Producer Use of Technology (2012)” found 21 percent of producers in North America own tablet computers for business use. Companies are seeking to support their sales force’s use of tablets by providing more apps for CRM, sales illustrations, quoting tools and e-apps.
The impact the iPad has had on the life insurance market was hammered home at the mid-March iPipeline Connections 2013 conference in Las Vegas. (iPipeline, for anyone still unaware, provides the process automation and seamless integration needed to make a sale by aggregating approximately 120 carriers, 1,200 distributors and 400,000 financial professionals in a single, Web-based environment, including the iGO e-app for electronic insurance application processing.) During a breakout session at the conference, speaker Rich Grisham, director of global solutions at iPipeline, said the introduction of the iPad changed everything.
“And when I say everything, I mean everything,” Grisham said. “We are seeing more and more folks using an iPad to close the deal. We’ve seen a dramatic uptake of apps being submitted via the iPad. This is a breakthrough not only for us, but also for the industry.”
Some carriers have had great success with pilot programs, providing iPads to agents and seeing significant increases. Aflac famously did so way back in 2011 when it provided 150 New York-area agents with iPads loaded with their “Launchpad” sales presentation app. The company saw an 18 percent increase in sales among those agents within 90 days. And many producers use their own iPads. (Although BYOD — “Bring Your Own Device” — presents some security and data ownership challenges.) They can show sales illustrations, draft quotes immediately, accurately fill out applications, take an e-signature, voice signature (and likely coming soon, a video signature), and submit the app electronically.
The e-app adoption campaign
Sarah Stewart, vice president and COO at Omaha-based insurance marketing organization Financial Brokerage Inc., shared a recent producer adoption success story with the audience at the iPipeline Conference. She said they approached an unlikely candidate who wasn’t enthusiastic about switching to iPipeline’s iGo e-apps and drop ticket models. But he committed to it and experienced, compared to his 2011 totals, a 39 percent increase in applications submitted and a 56 percent increase in annualized premium. He was the company’s top producer in 2012, and Stewart said the only thing he changed was using these tools.