Canadian insurer Western Life Assurance Company wasn't looking for too much from a software solution, just a simpler business process for underwriting life insurance policies, according to Bruce Ratzlaff, CEO. "Typically with the smaller-size policies, for the money you get, the traditional processes were just too long, complicated, onerous, and expensive," he says. "That was the core issue for us."
When Western Life began the process of finding a technology solution for its problems, the carrier was unsure where the process would lead. Ratzlaff gathered a group of creative people who were charged with finding a way to do things differently and better. "Over the course of a year, we got the right people involved, were able to dispose of some old paradigms, and invented a new approach to [e-commerce]," he says. Ratzlaff was pleased with what developed because, as he puts it, "typically the life insurance industry isn't particularly creative."
It was essential the new system operate in real time, be electronic, and be accessible to the Web, Ratzlaff explains. "We didn't want to have resident software we were going to have to distribute and maintain," he says.
The old way of operating was incredibly paper oriented, Ratzlaff adds, and depended on one human to pass the paper off to the next human and so on down the chain. "We thought we could speed that up substantially through electronics, but what we wanted to do differently was end up with a transaction we could close and issue with electronic loops that were built into it," he says.
Earlier this decade, when Western Life was known as Federated Life Insurance Company of Canada, the insurer and technology provider MFX were sister companies, although Ratzlaff notes the two siblings never had worked together. "So, there was some provision originally to get us together and share resources," he says. "We had some casual discussions with various people [to gather information]."
Western Life was created a year ago when parent company Fairfax sold Federated to Western Financial Group. "But the relationship has lasted beyond the sale," says Ratzlaff.
In the old paper-based days, Ratzlaff claims the fastest Western Life could issue a term policy would be within approximately two weeks, and everything would have to work perfectly to get it done that quickly. Today, that very same quality of applicant has a policy in about six minutes. "We get the data transferred to us electronically, it gets inserted directly into our policy admin system, and there hasn't been a human in our company touch the thing," he says. "So, what used to be an incredibly labor-intensive two-week process of shifting paper around is completed for us."
The value for Western Life comes from taking small term policies–with an average premium in the $300-per-year range–and making them profitable for the carrier, according to Ratzlaff. "Before, there wasn't enough margin to do anything with a transaction of that kind of value," he says. "This [solution] makes our business profitable."
Western Life reports there have been no fundamental problems with the system; any issues have involved fine-tuning. "Essentially, the concept hasn't changed over the last few years," says Ratzlaff. "We've increased the size of policies we can process. We can go up to $3 million face amount. Originally, we were capped at $250,000."
Western Life's agents connect to the carrier through a Web browser, so there is no worry about updating software on the agents' desktop, states Ratzlaff.
The policy transactions are completed within the MFX software, and when the policy is issued, it comes to Western Life electronically. "Our policy system picks up the ball from there and takes care of ongoing billing and maintenance for that customer," he says.
"We added an underwriting desk to it, which was a fairly major upgrade," he indicates. "We enhanced some of the data captures that go on within the system. It's a great partnership, and it's been a good marriage of e-commerce brains and some life insurance brains. The mixture there has been very effective."
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