1. Life Underwriting Reality An Independent’s Assessment Hank George, FALU, CLU, FLMI Educator, Consultant & Curmudgeon Presented at ACLI Reinsurance Executive Forum January 10, 2012 in Naples, Florida

2. Hank who?
Lay medical officer/medical manual writer at Northwestern Mutual,
Senior Vice President/Client Support at HORL/LabOne,
President of Hank George, Inc., 2002-present
175 medical underwriting courses; mean 25 pages and 100 literature references
400 books and articles; only books ever for producers about underwriting
Creator of world’s only super-simplified medical manual
Hank’s Rx Guide on-line pharmaceutical underwriting resource
50 seminars for Society of Actuaries
150 insurance and medical organizations addressed on 5 continents
2-time MDRT main platform speaker
Founder and first chair, LOMA International Underwriting Congress
Author of free 30-page monthly Hot Notes with 1700 subscribers in 55 countries
Free information clearing house site InsureIntel with 1500 registered members
2 life underwriting study groups; 60+ members
Columnist in NAILBA Perspectives, Best’s Review, ALUCA Risk-e-Business, On the Risk
Annual “Developments in Underwriting” lead article in LOMA Resource

3. This Roadmap is available free on-line

4. Every reinsurance underwriter should spend 3 months working for a brokerage market insurer. Then, another 3 months working for a brokerage general agency.

5. Life Insurers and “Engines”
Revelations from the 2011 Underwriting Engine Survey

6. Engine Use Status

7. $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
Why are n + 1 software firms, service vendors and reinsurers SALIVATING over the engine market?

8. “Where did/will you get your engine?”

9. “Why do you covet an engine?”#1
Reduce
“app-to-issue”
cycle time
#2 Lower acquisition costs
#3 Improve underwriting data
As ranked by respondents

10. Miles to go…
% “fully-underwritten” accepted by engine without intervention by Homo sapiens

11. Engine Peddler Snake Oil
“Customizing our generic rule sets is a snap!”
“You can make your own rule sets…it’s easy!”
“You’ll have it up and running in no time!”

12. Purchase-to-Operational Interval
Designated as #1 Engine Drawback
“Time to and cost of implementation”

13. SUPER-SIMPLIFIED LIFE

14. YES! 60.4% of Study Group Member Respondents
“Do you offer or plan to offer within the next 3 years a super-simplified life product for the middle market?”
YES!
60.4% of Study Group Member Respondents

15. Super-Simplified Formula
7 to 14 risk-related questions
Drivers: teleinterview, Rx profile, MIB, MVR
Preferred, standard and one rated class
(At least) $ K to age 40/45
Price competitive with fully-underwritten
Targeting “middle market”
Alternative distribution prominent

16. What would YOU say to reinsurer CEOs?
“Reinsurers need to be on the cutting edge in partnership with their clients re: reaching the middle market with super-simplified. I think they will see even more small and middle-sized companies looking to increase retention without such support.”
Chief Underwriter

17. PREDICTIVE MODELING Lab Test/Paramedical Measurements
Personal Purchase Records
Social Media Sites

18. Open Mortality Scoring System**
Lab/Paramed Risk Scoring
ExamOne
Risk IQ*
CRL
Smart Score*
Heritage
Open Mortality Scoring System**
* Being Piloted
** In Development

19. Lab/Paramed Scoring in a Nutshell
10%
10%
80%

20. The 5 Horsemen of the Lab/Paramed Scoring Apocalypse

21. “Are the vast majority of the other 80% merely redundant?”
“If preferred mortality is already profitable, why shell out $$$$ for this?”
“Are the vast majority of the other 80% merely redundant?”
“How can I sell standard/rated to a producer whose client meets our preferred criteria?”
“How can I avoid hell to pay on reinsurer audits if I gave preferred (or better) rates to applicants who do not satisfy our treaty preferred criteria?”
and…

22. “All ‘normal’ tests are ‘normal,’ but some ‘normal’ tests are ‘less normal’ than other ‘normal’ tests.”
(with apologies to George Orwell)

23. Social Media Site Foraging will be Rampant
Will antiselection be rampant as well?

24. “It would be a HUGE BLUNDER for insurers to use personal purchase records in life underwriting!” - Hank George

25. R.I.P.
Treadmills
ECGs
M.D. Exams

26. Already Using Will Soon Rx Records NT-proBNP
78%
22%
NT-proBNP
40%
44%
Preliminary responses to Requirement Survey
and a
25-company Study Group Survey

27. Resistance is futile; Either lead…or get out of the way!
Take-Home Message
Resistance is futile; Either lead…or get out of the way!