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Lincoln seeks mass youth market with iPipeline automated insurance

TermAccel goes beyond "paper-driven" insurance

Lincoln National Corp., the $220 billion insurance and investments company based in Radnor, says it has completed work with iPipeline, an Exton-based insurance software company, to build an online, largely automated life-insurance application and underwriting system, TermAccel Level Term Insurance, to more efficiently target customers in their 20s and 30s.

"The traditional way of purchasing life insurance has been very paper-driven," Heather Milligan, senior vice president for underwriting and new business, told me. "You sit with your agent. You fill out papers. You send them to the insurance company. Underwriters review it. Maybe 45 days later the insured receives a package of papers.

"We did a ton of research on how Millenials and GenX people want to do business," Milligan added. "They are very mobile, very adept at technology. So we built them this pipeline, which is completely digital, end to end. It's aimed at reducing the turnaround time to a couple of days or a couple of weeks, in a digitally enabled, comfortable buying process."

That makes it faster and cheaper for Lincoln to market to more people, says Milligan: Up until now, "Lincoln has been focused for life insurance in the upper affluent market. This allows us to go into the mass market for milennials and Gen X." The process includes a relatively brief phone interview.

"We also built an automated underwriting system. In many cases, with young people, the decision (on whether to insure) is black and white. They are healthy. So we can do evaluation digitally without having to go to a person. This gives us the bandwidth to scale up," Milligan added.

The system has been adopted at Lincoln's Greensboro (corrected), North Carolina, offices, formerly home to its predecessor company there, Jefferson Pilot. Lincoln has worked with iPipeline on a series of projects dating back to the early 2010s, including iGo e-delivery, Milligan concluded.    

-- Lincoln's recent analyst meeting left Raymond James analyst Steven D. Schwartz telling his clients "that the low-interest-rate environment and the new Department of Labor conflict-of-interest rules" (which force annuity salesmen, for example, to disclose the payments they may get for shilling insurance-company products) "should not be serious impediments to earnings growth."

Sandler O'Neill + Partners' John Barnidge noted Lincoln shares tumbled 20% in 18 months. The company still plans "annual EPS growth target of 8% to 10%" from expense cuts, an expected stock market rebound, higher insurance sales and, especially, share buybacks, which will burn more than half the company's profits.

Also, Lincoln "does not seem overly interested in a large acquisition or even a bolt-on because it believes it is generating returns in its new business in excess of what could be had through an acquisition." At the same time, Lincoln "does not seem to be a seller... given its depressed price-to-book value multiple... also given regulatory uncertainty" that could force Lincoln to register as a Systemically Important Financial Institution.

Who's buying insurers anyway? Japan-based firms are looking to spend under $10 billion, which rules Lincolns out. Also, "the company believes that Chinese buyers will be a force to be reckoned with but will take at least a half a decade to truly develop."