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The Life Insurance World: Yesterday, Today and Tomorrow

The Life Insurance World: Yesterday, Today and Tomorrow. Susan Ghalili, CLU, FALU, FLMI Vice President. The Way It Was…. What we used to see: Average age: 35 Older ages: 65-70 Average face amount: $100,000 Hot products: Par WL, YRT, infancy of interest- sensitive products

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The Life Insurance World: Yesterday, Today and Tomorrow

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  1. The Life Insurance World:Yesterday, Today and Tomorrow Susan Ghalili, CLU, FALU, FLMI Vice President

  2. The Way It Was… • What we used to see: • Average age: 35 • Older ages: 65-70 • Average face amount: $100,000 • Hot products: Par WL, YRT, infancy of interest- sensitive products • Distribution: Career Agency • Large case: $1MM; Jumbo case $5MM • Multiple sign offs required

  3. The Way It Was (cont’ d) • Automatic pool: $3MM – $10MM • 20+ reinsurers available • No JUMBO limits • Greater retro coverage • Price war

  4. The Good Old Days • Age and amount requirements: • $500,000 face amount • Exam by MD • Blood • u/a • APS • Inspection • Financial • CXR • Stress test

  5. The Good Old Days (cont’d) • Impairments/Ratings: • Type 1 DM – decline • Type 2 DM – 6 tables • CABG – high substandard to decline • HIV- decline • Cancer – decline to high substandard • Treated HTN + build – high substandard • Co-morbidity – questionable offer

  6. The Good Old Days (cont’d) • Not to mention the BUSINESS DECISIONS…… • And the paper….

  7. Ok, maybe the good old days weren’tall good…

  8. Who Would Have Thought….. • Average age – 59 (brokerage) • Older ages – 75-90 • Product – Guaranteed UL, Long Duration TERM • Average face amount – $1 million • Large case – $10MM + • Single sign off?? • Distribution – BGA, Career, Producer Groups: mixed bag

  9. Reinsurance - Today • Currently about 12 North American reinsurers • Automatic – $50+ million • Hard coded JUMBO of $65 million • Less retro support • Audit focus on underwriting • Adherence to treaty • Little to no support for training or research

  10. Age and Amount - Today • Face amount $10 million, 70 year old • CXR – not applicable • NO ETT required • Paramed in lieu of Medical Exam • 3rd party financial verification

  11. You’re Sick With What ??? • Type 1 DM – possible Standard • Type 2 DM, age 60+ – possible Preferred • CABG – possible Standard • HIV – insurable • Cancer – Standard, possible Preferred • Co-morbidity – not a problem !!!

  12. ROS Factor - Rich, Old and Sick ! • Industry focus – high premium, older ages • But …

  13. A 90 Year Old Was A Lot Older 50 Years Ago…

  14. “Living to 100 will be common in developed nations, study says - Researchers see dramatic gains in life expectancies”1 1 Source: Associated Press, October 2, 2009 (Maria Cheng)

  15. Older Age Medical Underwriting Focus • ADL • Cognitive screens • KFTs • Comments re frailty, gait, history of falls • Less concerning would be expected chronic impairments of the aging process…

  16. And Just As Important…. • Financial underwriting: • The ability to pay • Liquidity • Verification of assets • Verifiable earned and unearned income • Source of financing • Insurable interest/anti-selection • Settlement vs. 1035 • Sounds familiar???

  17. Some Other Considerations • Availability of qualified underwriters was at a premium – treated like ‘Rock Stars’ • Streamlining of processes via use of APS summaries • Challenged with STOLI – IOLI business • Inventive new reflex testing – ProBNP, Ca++ • Remote underwriting • Focus on MORTALITY

  18. Post Crash of 2008 • Aging population • What happened to the guaranteed products??? • Revival of accumulation products • Focus on mortality protection • Glut of available underwriters • Emphasis on efficiency

  19. Retention / Reinsurance • Direct companies increase internal retention • Less reliance on reinsurance capacity due to pricing/favorable mortality experience • Question retention CAT Coverage • Super Pool phenomena

  20. Age and Amount Requirements • Challenge to traditional underwriting tools • Implementation of new tools: • Prescription database check • Internet search engines • Paramed vs. Exam • More finite lab testing

  21. Underwriting Focus • Elderly market • Managing multiple business models • Producing favorable mortality • Strengthening financial underwriting expertise • Jumbo limit challenges • 1035 vs. settlement • Heightened importance of each piece of business

  22. Efficiencies – What to Look For… • Tele-underwriting • File building • APS summaries • Revised underwriting requirements • Alternatives to ‘traditional’ third partyinformation gathering

  23. Conclusion • Keep doing what you are doing – but do it better and faster • Remember – at the end of the day, we are the gatekeepers for the Company • Good mortality is your number one priority

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