The Protector Press

Winter 2008

What’s on My Mind: How to Reduce Wastage

by Woody Richen,
Vice President, Individual Disability Insurance

I’m still thinking about getting more of your applications placed. When I wrote about wastage in the last edition of The Protector Press, I was concerned. Nobody wins when you work with customers to write disability coverage and the sales are not made. The customers don’t receive the coverage they need, you are not paid for your efforts, and we spend time and effort for no return.

In that column, I discussed The Standard’s Make an Offer, Place an Offer campaign. Our commitment is to do everything in our power to make an offer. I asked for your commitment to work hard to place the offer. That involves a complete and accurate application, preparing the customer for a modified offer, holding the belief that the offer you receive is valuable and working hard to place it.

Your efforts and our efforts seem to be working.

Don’t get me wrong. It is too soon to declare victory. However, after two quarters of deteriorating placement rates, we had a strong improvement in the second and third quarters of 2008.

No doubt many factors are involved. We have started giving you more specific information supporting your modified offers sales and I am sure that is helping. Marketing resources like Yes, You Can Land More Sales1 from the Fall 2007 issue of The Protector Press and the presentation How you can increase your success in placing modified offers2 may be helping. Second Chance UnderwritingSM may be helping. But I believe the most important factor is the attention all of us are giving to ensuring that the sales and new business processes are as effective as possible.

The opportunity

To gain a deeper understanding of placement and how to improve it, we looked at our history. The application flow from you has increased dramatically since 2000, actually doubling in the last five years. Our placement rates have improved by about five points (see the graph at right). Almost all that improvement is in our declination rate: we are making more offers that are being placed!

But wastage for other reasons — applications withdrawn, applications that remain incomplete, and policies that are offered but not taken — these have not changed. That has remained a rather steady 20% of the applications you write.

How do we reduce the 20%?

The effects of the information supporting a modified offer that I mentioned earlier do not show on the graph and I believe they will continue to help.

The keys are:

  1. Preparing the applicant.
  2. Giving the underwriter a complete and accurate picture of the risk on the application.
  3. Taking the time to understand the value of a modified offer.
  4. Working hard to place a modified offer.

The extra effort in tending to these four keys to success will have a tremendous payoff for your customers and for you.

1 View Yes, You Can Land More Sales (form 10015REPRINT).

2 View How you can increase your success in placing modified offers (form 13929PPT).

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