Funeral Directors Life Cuts Pricing Cycle Time by 95%
Dwayne McGrawEVP & Chief Actuary, Funeral Directors Life
Hours saved every pricing cycle
Hours of onboarding
Funeral Directors Life is an insurance company selling pre-need insurance policies across the country since 1981. It is licensed in 45 states, and has current assets over $1.4 billion.
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Lost Institutional Knowledge
Historically, all pricing, valuation, and forecasting functions were completed by a single individual, the Chief Actuary. The former Chief Actuary had significant knowledge of the business, the actuarial software, and the ancillary processes developed to overcome the limitations therein.
After the change in personnel, Funeral Directors Life encountered limits with the legacy actuarial system. The system was inflexible and unable to adapt to a dynamic business model and product portfolio. Specific customizations of the pre-need product were not available in the historical software. These limitations required writing and editing code in a separate program to calculate factors that could be applied in a table back inside the model.
Reactive Instead of Proactive
While this enabled the necessary calculations, it also added a significant amount of workaround to the process. A pricing cycle could take upwards of two weeks to complete, forcing Funeral Directors to only work on pricing when it was absolutely necessary. As a result, pricing was performed infrequently and inefficiently, limiting the opportunity to influence the market and be leaders in their industry.
“We can set the market, rather than trying to follow it.”Dwayne McGraw, EVP & Chief Actuary
Legacy Vendor Challenges
Their legacy system had an upgrade option that would require hundreds of thousands of dollars in fees. But even this proved to be unworkable. The interface did not appear to have any advanced features. And the newer version did not appear to offer any greater functionality or take advantage of modern technology. A quote was requested, but months went by without an update so Dwayne began to look elsewhere.
A Modern Solution
After seeing an example of SLOPE in action, McGraw was confident that the system could provide the solution they wanted and needed, in a much more user-friendly, cost-effective way.
Because of SLOPE’s flexible, user-defined formulas and relationships, models of the preneed products could easily align commissions with the face amount. As well, that face amount could be defined in a flexible way to handle various increases for inflation, and even account
for additional conditions as necessary.
And because SLOPE licenses come with support from dedicated account representatives, McGraw was able to get advice on how to best build the models to reflect the business and risk management functions. He no longer has to find work-arounds and manage external add-ons.
Short Learning Curve
SLOPE was built to allow actuaries to move quickly as they want and Dwayne was up and running on the platform within a matter of hours.
By the time Dwayne finally got a quote back from his legacy provider, he had already seen SLOPE, purchased a license, onboarded the platform, and solved the problem he was encountering on his previous platform.
Drastic Cycle Time Reduction
Now, instead of taking 2 weeks to conduct a pricing run, Funeral Directors Life can complete the same kind of work in only a few hours (4 hours on the most recent run). The time for pricing cycles has been reduced by about 95%.
Now, McGraw can run pricing much more frequently and with strategic intent. He said, of the opportunity to be a leader in their industry, “We can set the market, rather than trying to follow it.”
Regularly Ahead of Schedule
As Funeral Directors Life continues to use SLOPE, they are finding benefits that far beyond just that of pricing runs. Dwayne has now conducted multiple year-end reporting cycles with SLOPE. He typically finishes his Cash Flow Testing in the days of January and wraps up his report weeks ahead of the March 1st deadline.
Since this original case study, Funeral Directors Life has gone on to cut their runtimes down even more with SLOPE High Performance Mode. Read the case study here.
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