GUAA Action Sheet

Fall 1999

Life Committee Review

by Joe Malone
Munich American RE

The Group Life Committee sponsored 5 workshops at the June GUAA meeting with great membership participation. Joe Malone from Munich American Reassurance Company, Barbara Bain from Canada Life and Donna Burks from Group Life and Health Insurance Company led a lively discussion of underwriting techniques and guidelines.

Four sample cases that would be a challenge to any Group Underwriter were discussed and debated in detail. The debates focused on Group Life Maximums, Guarantee Issue Levels, Retiree Life Schedules, and Waiver of Premium Benefits and Flexible Benefit Plan Underwriting.

The hour slipped away before we could get through all of the case studies that were included in the GUAA Meeting Binder. There was great audience participation, and many ideas were presented on how best to underwrite the sample cases. The case studies presented can be taken back to our companies and shared with our staff as training tools. The Group Life Committee appreciated everyone's participation in this session.

Group Nonmedical Insurance CEO Survey

Sol Goodman, an FSA with Tillinghast - Towers Perrin, presented an overview of his company's Group Nonmedical Insurance CEO Survey that was undertaken in June 1998. This was the first Tillinghast - Towers Perrin survey that specifically focused on the CEOs of the Group Nonmedical Insurance industry. The survey was based on responses from 27 CEOs from a broad cross section of small, medium, and large Group Insurance companies. Nearly 30% of the CEOs that responded also do business in the international market.

The executives were asked to identify the key strategic issues facing their companies in their Group Nonmedical Business and what actions they are taking, or planning to take, to respond to these challenges. The top 4 strategic issues facing their companies were identified as follows:

Profitable Growth
Increased Competition
Changing Market/Customer Demands
Underwriting and Claim Effectiveness

The challenges that face CEO's and also Group Underwriters in the next millennium will be significant. In order to face these challenges, Non-medical Group Insurers must take some of the following steps to improve or maintain their competitive position in the marketplace: improve claim management, broaden product line, improve the use of technology, and develop new distribution channels.

The Tillinghast - Towers Perrin Report provides valuable insight into what CEOs of small, medium and large group nonmedical insurance carriers are thinking about as they plan to face the challenges of the next century.

Automated Proposal/Policy/ Booklet Generation

This educational and entertaining session was presented by Alan Levson, a Product Manager with Insystems Technologies, Inc. Document assembly software can cut costs, improve service and response time, and increase a company's productivity by as much as 500%. Alan spoke of the changes and challenges in the insurance industry, the benefits of a document assembly solution and our future direction utilizing the Internet. We have all experienced our customers demanding faster service, and felt the pressure to reduce costs and improve efficiency.

The carriers that can provide fast, efficient, cost effective service will be the leaders in our industry. In the competitive world in which we underwrite, it is difficult to raise rates, so we must look for ways to cut costs instead. The life insurance industry can utilize automated document assembly solutions to reduce costs and improve service in many aspects of its operations. Automated document assembly is based on a model document with fixed and conditional text that can incorporate business rules. This process can produce consistent, accurate, error free documents such as contracts, booklets, proposals and state filings.

Alan provided an overview of the Insystems approach and presented several convincing case studies with documented service improvements and cost savings. Insystems' Mosaic, Fandango, Calligo and Tracker software are completed solutions to enable insurance organizations to redefine the way they create and manage their business document assets. Alan provided a demonstration of the Insytems software after the session.

Joe Malone from Munich American Reassurance Company and Donna Burks from Group Life and Health Insurance Company led a discussion of market trends and issues in group life insurance. A list of topics was included in the GUAA Meeting Binder to help initiate discussion. Everyone was encouraged to participate and share thoughts with their peers on general underwriting topics. Some of the interesting topics of conversation were:

Waiver Of Premium Benefits and when they should terminate;
Portability of Basic Group Life Insurance underwriting techniques;
Accelerated Death Benefits: offering a 75% or 100% benefit;
Multiple Year Premium Rate Guarantees; and
Should the industry develop a standard, comprehensive format. Some software vendors are moving in this direction, and the Internet could facilitate this process.

Trends in Voluntary Group Insurance Benefits

Warren M. Cohen, an FSA from CIGNA Group Insurance, presented the results of an informal survey that the Group Life Committee undertook at the fall GUAA meeting in Atlanta last year. Responses from 12 carriers were received and compiled. The focus of this survey was on determining which factors have the greatest impact on participation and persistency of Voluntary Group Life and AD&D Insurance Plans. Key criteria that influence employee participation include employer support for the product offered and mandatory enrollment meetings. Some carriers are currently utilizing technology in the enrollment process, and many carriers are considering the use of Interactive Voice Response or Internet/Intranets in the future.

Warren M. Cohen also gave a presentation that compared and contrasted voluntary group benefits with individual insurance products. His analysis focused on differences in pricing, portability, distribution systems, and future trends. The product of the future could be a group, individual or a hybrid model. E-Commerce and the Internet will undoubtedly facilitate the development of new voluntary insurance product models.

Patrick T. Leary from LIMRA International discussed the findings of LIMRA's recently completed voluntary benefits surveys of 700 employers and 42 group insurance carriers. LIMRA's survey shows that more employers are offering voluntary benefits now, especially the larger employers and group voluntary benefits will have a significant role in the next millennium. Many employers offer voluntary benefits to improve employee satisfaction and because it helps attract and retain good employees. Many group carriers are now offering 4 or 5 different voluntary benefits. Their target markets are manufacturing, communication, and services industries, with a focus on small to mid-sized firms and employees with low to middle incomes. There is a trend to target blue and gray collar employees. Some of the keys to success in marketing group voluntary benefits are: get the buy-in of the employer and their agreement to see employees on company time; technology will play a key role (and challenge!) in enrollment and service; don't forget about re-enrollment; ongoing service is critical; and keep it simple.

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