Insurance Forums asked top marketing executives at a number of leading life insurance and annuity carriers to share their thoughts on the current state of some of the most important trends impacting the business, their concerns and their strategies for business in the year ahead.
In the following interview, Chris Calabro, Senior Vice President and Chief Marketing Officer with Cincinnati-based Ohio National offers his vision of what it takes to be both effective and profitable in the current market, and how independent producers can work with firms such as Ohio National to capitalize on opportunities in 2020.
Calabro joined Ohio National in 2010 to head the company’s career agency distribution system and he advanced to senior vice president, career agency marketing in 2013. In 2016 he became senior vice president of life insurance strategic business. In November 2018 he became senior vice president, career agency distribution and marketing. In July 2019 he was promoted to senior vice president and chief marketing officer. He is responsible for Ohio National’s sales, distribution and marketing for life and disability income insurance products.
INSURANCE FORUMS: What do you see as the primary directions for your product suite in 2020? What are the most important trends in refining and focusing your insurance line?
Calabro: Our product and distribution strategy in 2020 focuses on four key areas: One – Continue to attract new distribution to the Company who value independence, a broad and competitive product array and who want a relationship with their company. Two – Leverage our competitive life and disability income insurance portfolios to drive sales and distribution growth. Three – Bring greater industry awareness of ONESCO, our broker-dealer, whose growth has been driven by building strong relationships and delivering exceptional service. Four – Continue to strengthen and expand our Latin American operations, which present exciting growth opportunities.
Last year was very busy for us on the life product front. Like all companies, we recently completed re-designing and re-pricing our life product portfolio on the new 2017 CSO mortality tables, while also introducing a new 20-pay whole life product. Now that the dust is settling and we’re seeing how our products compete against other carriers’ updated products, we’re excited to have one of the most competitive, well-rounded life insurance and DI portfolios in the industry.
Our term products are not only competitively priced, but have among the strongest conversion options available today. Our expanded whole life portfolio has grown more efficient, with products sharply focused on providing an exceptional long-term value for protection needs, or for maximizing cash accumulation and distribution potential.
While many accumulation-focused Indexed Universal Life (IUL) products continue to rely on charging higher expenses to be able to illustrate higher potential returns through the use of bonuses and multipliers, we feel the tide is starting to turn in favor of products that provide a low-expense design. Despite competitive pressures, we stayed focused on offering an IUL with strong accumulation potential while maintaining some of the lowest expenses of similar products on the market. That story has resonated with top IUL producers who have their clients in mind; and, in light of the dialogue taking place right now regarding illustration regulations, we’re confident other producers are going to take notice of our low-expense design.
That same design expertise carries over to our disability income (DI) insurance line, which continues to grow at an industry-leading rate. It’s a top-shelf product with exceptionally competitive features, occupation classes and definitions, while maintaining attractive flexibility and pricing. We also recently entered the employer-sponsored multi-life market, and are also adding to our business results in that space.
We believe that both products – life and DI – are critical pillars in a protection strategy for individuals, families and businesses. That’s why we’ve put tools and discount programs in place to encourage our producers and policyholders to have both types of protection. In fact, over 20 percent of our DI apps are coming in through our Life + DI combo application, which results in a permanent discount for the DI policy when a qualifying life policy is purchased. It’s good for our policyholders, it’s good for our field distribution partners and it’s good for us.
We are also leveraging our sizable annuity platform to add a Fixed Indexed Annuity product in our line-up to serve the retirement applications of our agents and the needs of their clients. This product will be available through both our registered and non-registered agents.
INSURANCE FORUMS: As the costs of insurance increase, both in relation to claims and increase in premiums for consumers, what does that mean to Ohio National’s product and sales strategies, and those of its agents?
Calabro: Price certainly is one measuring stick. Providing value to policyholders isn’t just about offering low premiums. Value can be measured through offering more robust or more flexible product features, strong cash accumulation and distribution capabilities and attractive dividend potential. Our policyholders and distribution partners are counting on us to deliver value, regardless of whether we’re facing favorable or unfavorable environmental factors.
The good news is that we have elements playing in our favor. Expense management continues to be a focus and the fact that it’s always been a part of our culture helps in economic environments like we’re experiencing today. We also have experienced very strong policy persistency, a good indicator that we’re providing value to our clients. This is in great part due to our well-designed products, and our focus on strong relationships with our field force, who in turn, have nurtured strong relationships with their clients. We’re continuing to reap the benefits of our technology investments. Additional investment in tools like robotics, cognitive automation, data analytics and self-service capabilities will help us provide an ever-better experience for our customers.
Some of the greatest pressures to pricing are tied to the rising costs of doing business: The costs of complying with a complicated and ever-evolving regulatory environment; changes in accounting and reserving requirements; accounting not only for the investments we’re making to improve the customer experience, but also to protect ourselves and our policyholders from cybersecurity threats.
A prolonged low-interest rate environment makes navigating these challenges more complicated. The impacts are felt across the board, as the low interest rate environment can affect our ability to make strategic investments and absorb the risings costs of doing business. But that doesn’t mean we can stand still and wait it out. Yes, we have to be prudent and disciplined in the investments we make – but we have to keep making important investments in our people, processes, and technology. The world doesn’t stop changing just because interest rates are low.
Here, too, is why mutuality matters – because not only are we financially strong and well capitalized, when we answer to our policyholders and not Wall Street, we’re better positioned to make decisions with the long-term interests of our policyholders in mind, and not what reflects best in a quarterly earnings report.
INSURANCE FORUMS: What steps or new technology are you employing to improve your client experience? Can the underwriting experience also benefit from new technology? How do you communicate your focus on service to your customers?
Calabro: We’ve embraced a mindset that we’re pursuing an application and underwriting experience that’s “faster and more efficient – and mortality/morbidity neutral or positive.” Our disciplined underwriting has given us a distinct competitive advantage, which helps with pricing, with our relationships with reinsurers and, ultimately, in the value we can provide to our policyholders. That’s an advantage we want to maintain.
And while protecting that advantage, we’ve improved and simplified the purchasing experience for financial professionals and their clients – from providing an agent dashboard with timely updates on their book of business that lets them engage with our teams, to offering a completely electronic end-to-end sales process with e-Illustration, e-application, and policy e-delivery, starting with our term insurance products. We’ve also rolled out a streamlined process for completing special authorizations and collecting medical records – a piece of the process that can be notoriously slow and frustrating for the applicant, the financial professional, and for us as well. All of these advancements are a win for everyone involved.
That said, there are also some things we are being very intentional about. We are in the long-term risk management business. While we continually look for ways to speed up the process, providing short-term convenience during the purchasing process can’t come at the cost of jeopardizing the Company’s ability to manage risk and deliver on the long-term promises we’re making to policyholders.
Even with the most robust of underwriting processes, there is an art form to managing mortality and morbidity risks in a disciplined manner. Today, there’s pressure for companies to make fast risk predictions on an applicant with less data – or perhaps, different types of data than we previously utilized. And while this may speed the process, it will be some time before companies will be able to measure how accurately they were able to make these critical risk assessments with less or different data.
While innovation can be worth pursuing, your claims experience has to be protected if you want to maintain long-term profitability and provide value to your customers. It’s what our policyholders expect and deserve.
INSURANCE FORUMS: In a crowded marketplace, how do you articulate and communicate an operating philosophy that differentiates both your product suite and your approach to business?
Calabro: You can learn a lot about a company through its Mission, Vision and Value statements. Study ours, and you’ll see a few key themes emerge that set us apart. First, that independence is important to us – While it is a key focus of ours to help our policyholders achieve financial security and independence, it’s something we also value for ourselves, our associates and our distribution partners. Secondly, we believe building mutually beneficial and valued relationships is critical to achieving our Mission.
We’ve seen time and time again that the relationship between a financial professional and the policyholder is built on trust – not just in giving that initial guidance at the point of purchase, but in providing advice and counsel through all of life’s changes. Someone who’s there to help them make important, difficult financial decisions, or to give comfort and support when an injury, illness or death impacts a family or business. The quality and care provided by our field partners is why our company’s culture holds them in high esteem.
In fact, our recruiting tagline reflects our philosophy. It’s “Your business. Your vision. We’ll help.” This philosophy has attracted some of the very best financial professionals and General Agencies to Ohio National. Our value proposition goes beyond our competitive product portfolio. It’s our culture, contracts and business practices that respect their independence and entrepreneurial spirit – while providing exceptional support to help them grow their business according to their vision.
We serve policyholders from coast to coast, with an increasingly diverse range of needs and expectations. And while we need to be nimble so we can adapt to a changing world, it’s our financial professionals who are closest to the customer, and who are building responsive practices aligned to the needs of their clients and prospects. One way we can continue to differentiate ourselves is to value our field partners and their independence. We don’t tell our financial professionals what the customer wants, how to provide service or how to run their business. Rather, we leverage their expertise, their nimbleness, their proximity to the voice of the customer – to help us listen, learn and make the right choices when it comes to investing in product development, service offerings, and support.