Transamerica asks for input from advisors

(April 4, 2005) Transamerica Life is looking at speeding up the underwriting process and using principal-protected notes in its universal life products. Advisors were asked to weigh in on the proposed changes during a webcast held last week.

Insurance advisors participating in the 90-minute session were given the chance to influence insurance policy features and options during the webcast, hosted by Joe Kordovi, assistant vice-president and pricing actuary at Transamerica Life Canada.

Kordovi reviewed features under consideration aimed at streamlining the underwriting process including instant issue underwriting, in which insurance policies would be underwritten through an automated processing system. Advantages include faster approval while disadvantages include greater risk to the insurer since there is less time to scrutinize individual details.

That could lead to potentially higher premiums to cover the risk as well as a higher proportion of declined applications, where the insurer opts to “play it safe.” Other features under consideration include electronic applications, which would reduce the cost of obtaining information. Internet self-access, a third feature, would offer reduced paperwork and round-the-clock availability but would require the continued need for personal contact with an underwriter. Kordovi also outlined possible changes to death benefits provisions and surrender charges.

On the product side, Kordovi reviewed changes under consideration by Transamerica such as a simplified universal life policy. Potential design enhancements include the use of principal-protected notes as the investment component in universal life insurance. “As you are probably aware, principal-protected notes are very popular,” said Kordovi.

The 100% principal protection would apply at maturity with market returns based on a guaranteed formula and terms at five and 10 years. Advisors were asked to vote on whether they agreed with the proposed change, agreed with the change but wanted other parameters, preferred another investment option or did not want any new investment options.

Kordovi also polled participants on changes to Transamerica’s living benefits products including a form of product bundling designed to heighten sales of the company’s CriticalADVANTAGE insurance, which provides access to Best Doctors, $1 million in coverage for medical expenses and $10,000 for travel expenses for cases in which the client receives care outside Canada.

Each of the webcast polls showed at least 200 votes but Transamerica plans to restrict circulation of the results, Kordovi explained. “We’re not going to post the polling results to everybody because our competitors would end up seeing them.” Transamerica does plan to share some results with some of its key advisors.

During the coming months, the company plans to introduce product changes and new products supported by poll results and now plans a second webcast focusing on advisor and client service issues later this year.

Art Melo is a freelance writer based in Toronto.