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TRANSCRIPT
The Large Case Life Cycle…With a Life of Its Own
Graham Carter – President and CEO, CAP Advisors
Selena Puttick – AVP and Associate Chief Underwriter Retail & Affinity Markets, Manulife Maureen Davis – AVP, Individual Life Underwriting Operations, Munich Re
April 13, 2016
The Large Case Life Cycle…
1. What is a large case?
2. Statistics: Life Cycle and Placement
3. Advisor, Direct Writer, Reinsurer
4. Insured: why and how?
5. Questions for the future
Large Cases Defined…
The Reinsurer
• Face amount of $10,000,000+ with no other insurance inforce or pending applications or total line exceeding $10 million
The Direct Writer
• Large Life Case Face Amount >= $5,000,000 or >= $25,000 premium
• Premier Case Face Amount >=$10,000,000 or >=$500,000 in the first 5 policy years
The Advisor
• 3 glasses of wine vs 1
The Large Case Life Cycle…
Munich Re’s 2014 Individual Insurance Survey – Individual Life 2011 2012 2013
Number of policies placed 340 314 300
Total premium for policies placed (000,000s) $81.5 $96.4 $58.5
Average premium for policies placed (000s) $139.6 $307.0 $195.1
% of large case NB* policies over total 0.05% 0.05% 0.05%
% of large case NB* premiums over total 6.2% 7.5% 4.6% Large case = policies with face amount ≥ $10 million. *NB = new business
The Reinsurer
The Large Case Life Cycle…
Munich Re’s 2014 Individual Insurance Survey – Placement for large cases
• 49% compared to 77% for the total individual Life market
• When including policies placed with face amounts greater than $5 million in the large case segment, these policies represented 8.9% of new business premiums and 0.18% of policies placed
The Reinsurer
The Large Case Life Cycle…
Munich Re’s 2014 Individual Insurance Survey – Facultative reinsurance
• Just over 60% of companies surveyed provided submitted and placed statistics:
• The $1,000,000 to $4,999,999 face amount band had the most business representing 36% of placed facultative business by face amount and 17% of placed facultative cases by count
• This band also had the best placement rate – 58% of cases and 64% of face amount were placed
The Reinsurer
Munich Re’s 2014 Individual Insurance Survey
The Reinsurer
2013 Individual Life Placement Time
Munich Re’s 2014 Individual Insurance Survey
2013 Individual Life New Business Placement Breakdown
The Reinsurer
Munich Re’s 2015 Individual Insurance Dashboard
The Reinsurer
2014 Individual Life New Business Placement Breakdown
Policies Sold – 2015 Insured Face Amount
Male 47 $5,000,000
Male & Female, Age 49, J&L $20,000,000
Male 57 $2,000,000
Female 54 $2,000,000
Female 22 $200,000
Female 20 $200,000
Female 18 $200,000
Female 53 $11,000,000
Female 60 $11,000,000
Female 57 $11,000,000
Male 44 $1,500,00
Male 44 $500,00
Male 50 $1,000,000
Male 66 $600,000
Female 40 $30,000,000
Male 56 $25,000,000
Male 56 $31,000,000
Total $152,200,000
The Advisor
Policies Sold – 2015 Insured Face Amount Product
Male 47 $5,000,000 UL
Male & Female, Age 49, J&L $20,000,000 Whole Life
Male 57 $2,000,000 Term 10
Female 54 $2,000,000 Whole Life
Female 22 $200,000 Whole Life
Female 20 $200,000 Whole Life
Female 18 $200,000 Whole Life
Female 53 $11,000,000 Whole Life
Female 60 $11,000,000 Whole Life
Female 57 $11,000,000 Whole Life
Male 44 $1,500,00 Term 10
Male 44 $500,00 Term 10
Male 50 $1,000,000 Term10
Male 66 $600,000 UL
Female 40 $30,000,000 Term 10
Male 56 $25,000,000 UL
Male 56 $31,000,000 UL
Total $152,200,000
The Advisor
Policies Sold – 2015 Insured Face Amount Product Annual Premium
Male 47 $5,000,000 UL $235,631
Male & Female, Age 49, J&L $20,000,000 Whole Life $427,296
Male 57 $2,000,000 Term 10 $6,612
Female 54 $2,000,000 Whole Life $76,995
Female 22 $200,000 Whole Life $2,417
Female 20 $200,000 Whole Life $2,267
Female 18 $200,000 Whole Life $2,199
Female 53 $11,000,000 Whole Life $723,835
Female 60 $11,000,000 Whole Life $841,645
Female 57 $11,000,000 Whole Life $794,125
Male 44 $1,500,00 Term 10 $1,278
Male 44 $500,00 Term 10 $501
Male 50 $1,000,000 Term10 $1,678
Male 66 $600,000 UL $19,740
Female 40 $30,000,000 Term 10 $14,030
Male 56 $25,000,000 UL $409,531
Male 56 $31,000,000 UL $507,820
Total $152,200,000 $4,067,599
The Advisor
Policies Sold – 2015 Insured Face Amount Product Annual Premium Sales Credits
Male 47 $5,000,000 UL $235,631 38,365
Male & Female, Age 49, J&L $20,000,000 Whole Life $427,296 197,818
Male 57 $2,000,000 Term 10 $6,612 1,858
Female 54 $2,000,000 Whole Life $76,995 38,498
Female 22 $200,000 Whole Life $2,417 1,209
Female 20 $200,000 Whole Life $2,267 1,134
Female 18 $200,000 Whole Life $2,199 1,100
Female 53 $11,000,000 Whole Life $723,835 201,474
Female 60 $11,000,000 Whole Life $841,645 249,339
Female 57 $11,000,000 Whole Life $794,125 231,246
Male 44 $1,500,00 Term 10 $1,278 511
Male 44 $500,00 Term 10 $501 200
Male 50 $1,000,000 Term10 $1,678 671
Male 66 $600,000 UL $19,740 11,469
Female 40 $30,000,000 Term 10 $14,030 5,612
Male 56 $25,000,000 UL $409,531 204,765
Male 56 $31,000,000 UL $507,820 253,910
Total $152,200,000 $4,067,599 1,439,177
The Advisor
CAP Advisors Life Book
• Total Life policies 450
The Advisor
CAP Advisors Life Book
• Total Life policies 450
• Total face amount $990,000,000
The Advisor
CAP Advisors Life Book
• Total Life policies 450
• Total face amount $990,000,000
• Total cash value $71,000,000
The Advisor
CAP Advisors Life Book
• Total Life policies 450
• Total face amount $990,000,000
• Total cash value $71,000,000
• Policies > $5M 51
The Advisor
CAP Advisors Life Book
• Total Life policies 450
• Total face amount $990,000,000
• Total cash value $71,000,000
• Policies > $5M 51
• Policies > $10M 24
The Advisor
CAP Advisors Life Book
• Total Life policies 450
• Total face amount $990,000,000
• Total cash value $71,000,000
• Policies > $5M 51
• Policies > $10M 24
• Largest policy $75M
The Advisor
CAP Advisors Life Book
• Total Life policies 450
• Total face amount $990,000,000
• Total cash value $71,000,000
• Policies > $5M 51
• Policies > $10M 24
• Largest policy $75M
• Highest coverage $125M (2)
The Advisor
The Large Case Life Cycle…
• What’s the big deal anyway? • Special attention and support • Speed vs creativity • Competing and/or Collaborating • Negotiation • Privacy and confidentiality, important for everyone • Setting expectations • 3rd party requirements and relationships • It generally isn’t one and done… • Cases under attack…keeping them close
The Direct Writer
…A Life of Its Own
What’s key?
• Who owns the file?
• Face Amount
• Total Line
• Reinsurance Treaties, Capacity and Jumbo Limitations, Retention management
• Relationships, Communication/Organization, Expertise – Advisor, Underwriters, Pricing, Marketing
• Knowledge, Products, Sales Concepts • Time • Changes, Rates, Quotes
The
Reinsurer
What About the Future?
1. Large Cases Past, Present and Future? • What would a new “innovative” product or platform look like?
2. How do the MTAR changes impact the: • sales and marketing approaches? • product?
3. What’s the immediate MTAR impact on sales, staff, MGA, Underwriting and change areas?
The Advisor
The Reinsurer
The Direct Writer
What About the Future?
4. How does an advisor choose a carrier? Technology, price, capacity, historical relationship?
5. In the ultra-high case market, how much shopping is there?
6. Market capacity – could there be an argument for streamlining the process of ‘reserving facilities’ such that insurers could book capacity, for example, with the use of a “calculator”?
The Advisor
The Reinsurer
The Direct Writer
Any Questions?