Life insurance applications: Efforts made by advisors with Generation Y paying off

par Alain Thériault | March 21 2017 07:00AM

Lee Oliphant

Despite a decline during the second quarter of 2016, growth in the number of life insurance applications for individuals under the age of 45 in the United States has been steady over the past three years and is likely to continue, according to MIB Group. This trend reflects efforts by insurers to get closer to young consumers.

MIB, an information centre which compiles and analyzes medical information provided to insurers, has produced the MIB Life Index for 16 years. This index tracks 90 per cent of all individually written life insurance applications in the United States. In its 2016 annual report, the index showed a decrease during the last two quarters in the number of applications for people under 45-years-old. This decline clashes with the past few years which saw an increased demand for life insurance in this age group.

Recent months have seen volatility

“What we’ve seen in the last five to six months is volatility,” says Lee Oliphant, CEO of MIB Group, in an exclusive interview with The Insurance and Investment Journal. “The five year overall trend for the under 45 age group is very positive, and reflects many years of technology, marketing, product and distribution investments from the insurers. There has been a real strengthening of that age group for several years. In 2016, the number of under 45 applicants represented 55 per cent of the overall index; a nearly one per cent growth rate in size over the last three years. It’s quite a significant increase,” says Oliphant.

Over the last five years, the industry has invested significantly in social media and technologies to extend their reach to Gen Y and Millennials, says Oliphant. “They’ve made a great effort to simplify the workflow and issue policies much, much quicker. You can now answer 10 medical questions and receive your policy within 24 to 48 hours, and even less. That’s in line with this age group’s demand for quicker answers and results.”

Letting go of traditional underwriting

To reduce workflow, Oliphant says that in many cases, with simplified issue policies, insurers are letting go of more traditional underwriting requirements that slow the process such as labs. Instead, they are just using MIB and other real-time underwriting requirements in conjunction with the medical questions on the app.

Analytics is also becoming an increasingly critical source of underwriting information, he says. As an example, big data plays an important role in non-medical underwriting for simplified issue and small amounts of insurance. “I believe this positive trend will continue. As younger demographics are asking for a faster, more expedient buying experience, insurers will become increasingly more effective with social media, analytics and their workflows,” says Oliphant.

Less buyer’s remorse and more conversion

This trend will inevitably be reflected in sales. “The Life Index shows a fairly consistent correlation with actual sales. Using LIMRA and the American Council of Life Insurers (ACLI) data on policy counts, I believe that approximately 1.2 Life Index applications convert to one issued policy, with maybe a 5 to 7 basis points variation. As insurers reduce their workflow, there will be less buyer’s remorse and more conversion,” he says.