A new and innovative way to issue life insurance? Is that possible?

Nov 11th, 2011 | Posted by

Hartford Life just introduced Issue First, a new way to provide immediate life insurance protection. Get this . . . the policy is issued before underwriting. The upper limit on face value and age is $2 million and 66, respectively, so they are not just targeting small policies or young insurers. The Hartford estimates that on average it takes 48 days to issue a permanent policy; that’s almost two months! But with Issue First, the policy is issued in as little as five days if the answers to eight medical questions meet the eligibility requirements. The Hartford’s agents must be loving this.

Five days. That’s a huge reduction in time for the prospective policyholder. For The Hartford it means fewer withdrawn applications. And, from what they have found in a historical review on non-Issue First cases that 95% of the time, a final Issue First rate would have been the same or better than originally illustrated. For the policyholder it means immediate life insurance coverage without a higher price tag. At the completion of underwriting, the policyholder can accept the final rate, which may be the same, higher or lower than the initial illustration, or exercise a free-look and receive a full return of premiums.

So why is this so new and innovative? Well, first I don’t know that anything like First Issue has been done before. It’s changing the way that insurance has been issued for decades. Second, the Hartford analyzed the wealth of data they had to determine that the risk of this process was worth undertaking to speed up the policy issuance process and to grow their business. Lastly, they are changing a process that they see is unfriendly to prospective policyholders even if it means that they are disrupting the way they have always done business.

Disruption. Innovation. Words that are not normally attached to insurance. Celent recently hosted a Creative Disruption Workshop in Boston where this topic was discussed. See the video: http://vimeo.com/31409934 Although innovation and disruption are not typically associated with insurance, there were several examples presented where both have happened. For example, Progressive changed the way car insurance is priced which in turn has had a lasting effect on the industry. Telematics and ‘pay as you drive’ is changing how car insurance is underwritten and priced. Forward looking ideas like replacing a call center with a Watson like system were suggested as potential future disruptions. Hartford Life’s Issue First can be considered another such example. Can you think of other examples? I’d like to hear of them.

And if your example has an IT project associated with it and you think it is worthy of an award, why not nominate your insurer and the project for Celent’s 2012 Model Insurer Awards. Nominations are being accepted now at https://oliverwymangroup.wufoo.com/forms/celent-model-insurer-2012-selfnomination-form/.

  1. Nelson Barrera
    Nov 15th, 2011 at 06:48
    Reply | Quote | #1

    This Innovative way to issue Life Insurance, will it not compromise the process for financial and health underwriting?? Something that might be an issue at the time of filing a claim?

    Thank you

  2. Surety Bonds
    Nov 17th, 2011 at 20:22
    Reply | Quote | #2

    This is interesting, Karen. We’re trying to do the same think with surety bonds. That is, we want to issue bonds immediately after receiving the electronic app, as opposed to the usual delay of hours or days.

  3. Alok Ranjan
    Nov 29th, 2011 at 02:15
    Reply | Quote | #3

    This is pathbreaking initiative from Hartford and am sure the foeld force would be loving it. It reamins to be seen thier claim expereince out of this initiaitive, I trust Harford would have prices risk of Moral Hazard adequately.

  4. shrinivas
    Dec 2nd, 2011 at 23:03
    Reply | Quote | #4

    can you please elaborate on
    “Forward looking ideas like replacing a call center with a Watson like system were suggested as potential future disruptions”

  5. Raghav Jain
    Dec 24th, 2011 at 22:15
    Reply | Quote | #5

    Hartford Life’s innovative strategy to write policies seems luring to the prospective policyholders. But the validity of the decision can only be judged after a couple of years.
    Insurance has been always affected by Moral Hazard. It would be interesting to see how they manage this problem.

  6. Karen Monks
    Jan 31st, 2012 at 14:46
    Reply | Quote | #6

    @shrinivas
    Shrinivas, the following article expands on this idea of using the IBM Waston technology in collaboration with a website to replace the need for part of a call center. Proactively helping online and eliminating the need to call. http://domino.research.ibm.com/comm/wwwr_thinkresearch.nsf/pages/cybercoll398.html

  7. Sharon Ireland
    Jun 3rd, 2012 at 08:06
    Reply | Quote | #7

    In Canada, we have Canada Protection Plan, and several other carriers that offer life insurance with non medical or simplified issue prior to underwriting unsing an 8 – 14 question application. However, the age and face value are nowhere near the Hartford offering. With many carriers cutting back and increasing COI & YRT premiums it will be interesting to see if this will stand the test of time.