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

A new and innovative way to issue life insurance? Is that possible?
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 For The Hartford it means fewer withdrawn applications.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/.

Celent Model Insurer 2012 – Submissions being accepted

Celent Model Insurer 2012 – Submissions being accepted
Innovation: The term innovation derives from the Latin word innovatus, which is the noun form of innovare “to renew or change” . Innovation generally refers to the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets and society. Innovation differs from invention or renovation because innovation generally signifies a substantial positive change compared to incremental changes.
Is that possible in Insurance technology? Celent thinks it is and that is why every year we recognize insurers who have effectively used new technology in areas such as policy administration, claims, distribution, or underwriting (to name a few) in an innovative and successful way. Innovation in insurance may not be as world changing as the cotton gin, the microprocessor, or the iPad, but if a technology change has a substantial and measurable change on a company’s revenues, expenses, processes or people, then it is innovation and we want to know about it.
Therefore, again this year, Celent is gathering leading real world examples of the effective usage of technology in an insurance company. These case studies are presented as “Model Insurer Components” — components of a theoretical model insurer’s IT systems and practices. These components help insurers improve performance and meet market demands. In general, they represent the way things should be done. To nominate an initiative at your company as a model insurer component, please use the following link to the submission form. Please note that vendors are welcome to assist their client insurers with their nominations. However, all nominations must include insurer contact information, and all follow-up will be done primarily with the insurer, not the vendor.
We hope to hear from you soon! Award winners will be announced at Celent’s Insurance Innovation & Insight Day in Boston in January 26, 2012.