The absence of an industry-wide electronic life insurance application (e-app) system has been a headache for years. CLIEDIS, the Canadian Life Insurance Standards Association, believes it will be able to finally create the template for working e-app system at its upcoming executive summit.

The organization has put out an invitation to senior decision makers at all levels of the industry, from the carrier level down, to hammer out a working solution to create standards for e-apps.

The technology to create an e-app system has been around for decades, but carriers have been reluctant to build a centralized system, because they claim competitive advantage in their application filing.

According to Byren Innes, senior vice-president and director of NewLink Group and a member of CLIEDIS’ executive, the average turnaround in completing insurance applications is just too arcane in an era of instant communications.

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    “We can lo longer tolerate a 36 day average to turn around a basic life insurance application. If you look at the actual work involved during that 36 day cycle, we’re talking hours of works, not days and weeks. It’s the back and forth that just kills us,” he says. “The technology exists [to create a standard system] — nothing we’re talking about is not beyond anybody’s technological capabilities.”

    CLIEDIS says the summit is going to be used to develop a cost/benefit statement for the industry moving to straight-through electronic processing of new business and ultimately other types of transactions.

    Ideally it will establish a short term co-ordination group to further discussion and begin the planning and analysis of the initiative, which Innes hopes will have an implementation plan by the end of the next year.

    Innes says industry-wide losses from inefficient application filing could be exceed $200 million each year.

    Carriers like Sun Life have had e-app filing for around 20 years. Over the last decade, independent advisors have overtaken captive agencies as the most important distribution channels for the majority of the carriers. The industry needs to find a way to service independent application filing.

    “We’re asking attendees to go do some homework before the meeting and come with real numbers that say if we were to process business electronically, we’d save X-amount of dollars,” he says. “We’re estimating it to be $200 million in savings for a year [for the industry]. Even if it’s only half that — it’s worth doing.”

    Innes believes the industry, particularly carriers, are willing to work to develop this initiative, because most are now developing internal e-app systems. There could be further cost savings by pooling resources to build one system for the industry.

    “We already have 45 versions of paper apps out there. We don’t want 45 versions of e-apps out there. I would be surprised if there is any insurance company that does not have something planned or in the works already on e-apps,” he says. “So let’s not make this a proprietary expense — because it’s very expensive. If we can share the cost and we can make the advisor’s life easier, then why wouldn’t we? As an advisor, I’d want to have one way of doing business, not 45.”

    Innes says carriers concerned about conceding a competitive advantage on their application process can still outperform competitors at the back and front office levels — not to mention they can differentiate themselves in the underwriting.

    “What I do with the application when it arrives in my office is where I can be competitive,” he says. “If I can get through underwriting faster, and deal with ratings or whatever more efficiently, that’s where a clear competitive advantage remains.”

    (12/11/09)