Provides an overview of what may be achieved through the digitalization of new business processing and the implementation of straight-through processing including the digital delivery of life insurance policies.

1. Presented by:Presented to:
THE NOLAN COMPANY
3.2 Straight-Through Processing:
More Than Just A Tweak To Your Operations
People, Process, and Technology
Steven M. Callahan, CMC, ChFC, CLU, FFSI, FLMI
March 28, 2014
Insurance Practice Director
2014 LOMA
Life Insurance Conference
Stop Tweaking ! Start Recalibrating!

2. 2 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Agenda
• Introductions
• Straight Through Processing Today and Into the Future
• AXA Case Study
• Questions
Session Summary:
• Overview and details of what may be achieved through the digitalization of
new business processing and the implementation of straight-through
processing including the digital delivery of life insurance policies.
• Insight from an insurance company representative on their successful
implementation of a digital solution.

3. 3 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Introduction
• Steven Callahan, CMC, ChFC, CLU, FFSI, FLHC, FLMI/M
Ø The Nolan Company is a Management Consulting Company helping insurance
companies with strategy, operations, and technology challenges for over 40 years.
Ø I’ve been In insurance 30+ years, former Admin (NB, POS) and IT exec for AXP,
GE, FFAL.
Ø As Practice Director at The Nolan Company, split time between research, papers,
and helping clients address service and operational issues.
Ø Lately biggest client focus has been inflight system project problems and smoothly
integrating technologies that have been rushed to delivery.
• Let’s connect on LinkedIn – send invite to www.linkedin.com/in/stevencallahan
Ø Follow my very rare tweets @stevenmcallahan
Ø Traditional email: steve_callahan@renolan.com
• Housekeeping
Ø The entire presentation will be posted shortly after the conference.
Ø The flow is informal, open to questions, meant to be relaxed and informative.
Ø Please be sure to fill out the survey at the end – or when you leave if earlier

4. 4 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Customer Diversity and Knowledge is Rapidly Growing
Ethnic Diversity
2014 Social Networking Resources
Courtesy of : wearesocial.ng slideshare.net
Workforce Generational Diversity & Shift

5. 5 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Web &
Social Media
Communications Methods have come a long way
Simple:
Complex:
Phone
Paper
Service Delivery Resolution
Phone
Paper
Service Delivery Process Resolution
Phone
Paper
Email
Text
IVR
Service Delivery Process
Self-Service
Resolution
Chat Video
Transfer Vendors
Fax
Fax

6. 6 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Customer Service Old News: Future is Customer Engagement
The “Big 3” measures of Customer Retention and EV?
- Will they come back / stay
- Will they recommend you (Net Promoter basis)
- Do they feel the got value that exceeds price

7. 7 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Customer Awareness and Empowerment is Significant
Tens of thousands of positive service touchpoints
a day, and yet one bad interaction…
And suddenly your company is at
the top of the tweets list telling
thousands followed quickly by a
Facebook “Unlike” Fan Page. Today’s Customer

8. 8 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Technology’s Adoption and Utilization Growth Rate Exponential
Every 60 seconds:
Ø168M Emails
Ø695k Searches
Ø370k Skype Minutes
Ø98k Tweets
Ø13k iPhone apps
ØThe current storage and processing capacity of the globally connected internet is currently
roughly the equivalent of one human brain.
ØUnlike the human brain, this synthetic global “brain” is doubling its capacity every 18 months;
by 2040, it will exceed the processing power of all 7 Billion human brains in existence.
------ Kevin Kelly on “The Technium”

9. 9 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Insurance has Growth Potential: Digital Companies have Advantage

10. 10 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
What Does This Have to do with Straight-Through Processing?
0
10
20
30
40
50
60
70
80
Millions
GI Swing Boomer Gen X Millennials
High TechLow Tech
Increasing Customers Demands
• Immediacy / 24x7 access
• Transparency
• Personal service relationships
• Language
• Driven within and outside the
industry
The Market is a Diversity of Communication & Technology Expectations
Digitalization of Insurance = Competitive Differentiation = Market Share

11. 11 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Customer Buying Patterns are Shifting: “Recalibration” is Key
Copyright:

12. 12 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
STP Approval and Implementation Faces Challenges
ü Streamline operations
ü Customer centric processes
ü Elimination of paper processes
ü Automate process / Reduce errors
ü Optimize process / Reduce costs
ü Cost effective scalability
ü Shift to near real time
ü Expanded accessibility
ü Multiple legacy systems
ü Data security concerns
ü Constant regulatory change
ü Insufficient forms standards
ü Still have manual steps
ü Cycle time hard to reduce
ü Inadequate ROI to do right
Well Run Implementations are proving Hard to Get Approved

13. 13 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Doing it Right
Fix The Processes First:
• Eliminate handoffs
• Eliminate duplication of effort
• Consolidate / simplify organization
• Reengineer practices for desired target end state
• Review STP parameters vs newly designed practices and processes; pick best
• Develop a roadmap from current state to reengineered end state
• Use Agile Sprints and Prototyping to implement in small steps
• Make sure full integration with existing environment is part of Day 1
• Start with greatest pain point / highest impact – usually New Business or Claims
• Leverage what you bought, comply with industry standards – customization risk

14. 14 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Take Small but Complete Bites: Fully Integrated Steps

15. 15 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
The Problem Is Partial Implementation and Partial Integration
LEGACY
MOUNTAINS
E-signature
E-apps and
State Forms
Output
System
Predictive
Risk Models
Image &
Workflow
Medical
Providers
UW
Review
Admin
System
Sales
Portals
Client
Portals
Online
Vaults
CRM /
Illustrations

16. 16 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Elements of Straight-Through Processing for New Business
Client
Data
CRM feed,
Illustration link,
Auto-fill / Reuse
Signature
Method,
Confirmability,
Lock
Forms
Channel,
Product,
State
IGO
Consistency,
Completeness,
Validity
Identity,
Licensing,
Suitability
UW
Initial Review,
Requirements,
Approvability
MIB & MVR,
Financials,
Script
SECURITY / ENCRYPTION
MULTI=PLATFORM COMPATABILITY
APP CAPTURE E-SIGN
PACKAGE
REVIEW
REQUIREMENTS
ORDER
DATA TRANSFER
APP SERVICES and RULES
SECURITY / ENCRYPTION
REMOTE CONTROL & ACCESS
HQ
HQ

17. 17 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
WHAT MIGHT BE POSSIBLE”
BEHAVIORAL
DATA
SOCIAL DATA
LIFESTYLE INFO
INSURANCE ADVISOR
HQ UNDERWRITING
INSURANCE BUYERS
PRIMARY PHYSICIAN
MEASUREMENTS
COGNITIVE TESTS

18. 18 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Straight-Through Processing is one Part of Future Business Model
Copyright:
STP

19. 19 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Future Success Depends Upon Digitally Transforming The Business

20. 20 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Shifting to a Customer-Centric Operation: Tailored & Transparent
“Reinvent customer
relationships” was the
top priority for the next 3
years given by 42% of
respondents in a recent
IBM Global C-Suite Study.

21. 21 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Characteristics of a Future Engaged Customer Relationship
• Desire for personal interaction – web only buying grew 1%
• “Digitally enabled personal service” is expected
• Advice and recommendations remain important
• Convenience and innovation are now expected, especially by younger buyers
• Younger buyers will switch carriers faster to get what they want
• Characteristics and psychographics of consumer segments are shifing fast
• Fewer and fewer of the traditional loyal long term customers
• Studies indicate the customer of the future is:
• Less price sensitive at market level but attentive to company differences
• Desirous of advice from friends, family, and company representatives
• Oriented towards personal interaction during the shopping process
• Expecting omni-channel engagement and service methods
• Interested in new and innovative product solutions
• Require simple convenience with personal and digital service options

22. 22 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Digital Maturity based on Customer Awareness and Interaction
Organization Centered Individual Centered Everyone to Everyone
Connectivity Asymmetric
Info asymmetry restricts
coordination
Flexible
Automated value
chain
Orchestrated
Collaborative and
seamless
Interactivity Incidental
One-time transactions
Integrated
Links individual and
organization, digital
and physical
Symbolic
Mutual
interdependence
Awareness Segmented
Individual unknown and
assumed
Tailored
Individual is known
and unique
Contextual
Experience is
calibrated and
relevant to immediate
actions and needs
Intelligence Transactional
Passive learning through
direct relationship
Responsive
Data-supported
learning and
decision-making
Cognitive
Self-supported
learning and
predictive capabilities
Source: IBM Institute for Business Value Analysis

23. 23 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Tips for Implementation
Strategic Alignment Implementation Approach
Ø Transformational Ø Customer centric focus – outside in
Ø Phablet Point-of-Sale tools critical Ø Agile methodology with prototyping
Ø Comprehensive approved business case Ø Disciplined change management
Ø Dedicated Resources Ø Distribution champions program
Ø Clearly defined integrated roadmap Ø Structured like a product launch
Additional Digital Opportunities – and Challenges - are Fast Approaching:
• Digitalized Underwriting Information
• Formalized Social Networking Data Integration
• Centrally available Behavioral Data Warehousing (lifestyle, shopping, travel)
• Digital Medical Records (EHR)
• Wearable Device Information Access (from Fitbits to Pacers)

24. 24 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Looking Ahead: Data, Data, and More Data
Copyright © Massachusetts Institute of Technology 2011. All Rights Reserved.
Online Personal Health Records.

25. 25 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Maybe Even Too Much Data…….
Toto's new Intelligence Toilet II monitors weight, blood
sugar levels, and other vital signs, transferring data to your
computer for analysis via WiFi.

26. 26 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Health Management is the Next Life Risk Management Opportunity

27. 27 LOMA Life Insurance Conference: April 7 - 9, 2014
3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation
Remember: Integrated Steps Is Key to Least Cost Success
E-signature
E-apps and
State Forms
CRM /
Illustrations
Output
SystemPredictive
Risk Models
Image &
Workflow
Medical
Providers
UW
Review
Admin
System
Sales
Portals
Client
Portals
Online
Vaults

28. Steven M Callahan, CMC®, FFSI
Insurance Practice Director
Steve_Callahan@renolan.com
206-619-7740
www.linkedin.com/in/stevencallahan
@stevenmcallahan
www.renolan.com