CEO Mehran Assadi was featured in the publication Life Annuity Specialist today discussing how National Life has reacted to the COVID-19 pandemic. The article is reprinted below.
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Q&A: CEO Describes Running a Life Insurer in a Time of Pandemic
By Cyril Tuohy
Vermont, where National Life Group has its headquarters, reported its first case of coronavirus on March 8, and the next week the insurer issued a work-from-home order. “We just flipped the switch,” said CEO Mehran Assadi. He discussed lessons learned from a pandemic and products the company is working on during a 45-minute interview. His comments were edited for length and clarity.
Q: Have you ever encountered anything like this before?
A: No. I have heard of pandemics which were much more regional. A global type is something that all of us are experiencing for the first time in our lives.
Q: But over the course of history?
A: We’ve been around for 172 years and this company is not unfamiliar with pandemics and crises. It went, in 1918, through the Spanish flu. I ran into [the company’s historian], and we sort of exchanged greetings and I said, “Crazy times, man.” He said, “Remember this is a resilient company which has gone through the flu pandemic and crashes in the market and a depression, and we have always made good on promises.” I’m concerned about everybody’s health, but when it comes to our balance sheet, we are rock solid.
Q: When did you give the order to work from home?
A: On Monday, March 16, we communicated that and on the 17th we went work-from-home. We went from a physical company to a virtual company overnight. We just flipped the switch. In Vermont we had somewhere in the neighborhood of 900 people and in Texas about 500. Now we have between 45 and 60 people going into Montpelier, Vt., and between 6 and 12 people going into Dallas on any given day.
Q: Since March 17, what have you learned about your technology?
A: What has amazed me is the resiliency of my teammates. Their nimbleness. Their scrappiness. The organization goes in 24 hours from being physically in the same building and then going virtual and all the planning pays off. Technology works, people know what is expected of them. Our customer service center is up and running and actually improved in responsiveness.
We had over 5,000 virtual private networks at our disposal. In advance of this event we ordered over 500 pieces of hardware. We were not chasing hardware when everybody was also competing for it – laptops, servers, routers.
Q: This is a watershed event in terms of technology for the entire industry.
A: Yes. We added people to our technology call center in order to support people in terms of getting set up at home to answer the questions. [There was] a surge in terms of the number of calls going to the technology support desk, the help desk, and then it leveled off and went down.
Q: On the claims side, a lot of insurers are going to need to hire nurses and psychologists and people who can help grieving families. Have you done that?
A: No, I have not heard that. Our claims associates put themselves in the shoes of the person who’s calling during their most desperate times. We have 28 people in our claims department. If you believe in what you do as an organization serving middle America, you have the ability to put yourself in their shoes.
Q: What have you noticed about what middle America wants?
A: Middle America is looking for good advice. Middle America is not just looking for a policy that is about the death benefit. We have products with living benefits, which makes the policy not about just dying, but also about living. People sometimes have chronic illness. People have terminal illness and they’re going to need help in order to live their lives versus the death benefit alone. We are also in the teachers market. We serve that market through 403(b) with lifetime income benefit riders.
Q: Do you plan to launch any new products this year?
A: Yes. We are ranked No. 2 in indexed universal life and we launched the new 2017 [Commissioners’ Standard Ordinary] products earlier this year in January. We’ve completed our product refresh. We have a couple of products we are working on. Our plans are to continue with the development of those initiatives: indexed universal life, fixed UL and also survivorship universal life – products for estate planning.
Q: What are people in the field saying about the appetite for products right now?
A: A great level of interest on the part of clients to talk about life insurance in light of the pandemic. And they are adapting to the new normal.
We introduced electronic and digital capabilities in terms of leveraging Skype and Zoom to interview clients, take applications. Over 85% of our applications are coming in electronically, in life insurance. About 70% of our annuity applications are coming as electronic applications. The electronic application feeds into the underwriting engine without anybody really touching it. You have a pass-fail rate. What fails is routed to underwriters for further review.
Q: Is that what the middle market wants?
A: Absolutely. We live in an era of instant gratification. We are also going to start doing electronic delivery of policies. People don’t want somebody walking in their house to deliver the policy. We are not going to let this crisis go to waste. We want to make sure we come out of this crisis better than the way we entered. It’s an opportunity for improvement.
Q: Zoom appears to be a place that can be hacked. Are you concerned?
A: I’m very much concerned about cybersecurity, and that’s one of the reasons for our corporate discussions and meetings. We’re on Skype, we use both. To be fair to Zoom, when that came out, they came up with a quick patch and solved the problem.
Q: Prudential is suspending 30-year term applications due to low interest rates. Do you plan to suspend term life or any other products?
A: We don’t have any immediate plans to suspend products. For permanent life products we just raised our no-fluid [maximum] face amount to $3 million [for people 18-50] because of confidence in our underwriting engine. We will carefully monitor the Covid-19 situation to determine if future changes and updates to our limits are warranted. This enhancement impacts our FlexLife, PeakLife, Living Life by Design and TotalSecure products.
Q: What innovation or technology might fall to the wayside?
A: Paper applications is a clear loser. I think that the winners are the digitalization of our business. As an industry, we have been a slow follower of digitalization. My hopes are that one of the good [things] that’s going to come out of this crisis is insurance companies and regulators embrace digitalization.
Speed of innovation and creative thinking is the winner. Because of this crisis, I can tell you at National Life we are more connected virtually versus when we were in the same building. Our effectiveness on efficiency and decision making has improved 25 percent.
Q: The labor market is taking a huge hit. How do you see the labor market for life insurers?
A: I don’t think the life and annuity business is immune from what’s going on. However, you cannot step away from strategic investments. You don’t want to overreact. When we come out of this crisis, you just want to make sure you are coming out of it in good shape.
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