Swiss Am Financial Consultants, Inc.

Direct Response in the New Millenium

What Swiss Am Financial Consultants Can Do For You
Kiran Desai, F.S.A.

Environment
Section One
The direct response segment of the Insurance Industry was poised to grow during the high expense years of the late eighties due to its inherent cost effectiveness. Instead, during these years with recession and lack of consumer confidence, the Direct Response business experienced persistency and response rate problems and the companies curtailed their marketing and product development efforts. With the return of the economy and consumer confidence, the Clinton era has a potential to see greater industry desire for the cost efficient alternative distribution systems like direct response. It is believed that the climate during the Clinton administration will foster experimentations for achieving efficiency and effectiveness at the expense of tradition. This will directly or indirectly impact on the market share and bottom line results of every major insurance company.

Our firm can provide an information base and an accelerated learning curve to assist in your analysis of and reaction to the opportunities and changes implicit in this shift in basic product, marketing and distribution techniques.

Chase Econometrics forecast for the insurance industry entitled, "Crisis and Competition" points out that, "In the Life Insurance industry, the traditional agency system is giving way in the face of a massive expansion of direct writing and mass distribution." A Delphi Study co-sponsored by LOMA and Arthur Anderson entitled "Changing Horizons for Insurance: Charting a Course for Success" points out that nontraditional (agent/broker) distribution system will generate about 30% of sales in five years.

Section Two
Why Swiss Am?
Swiss Am continuously conducts formal and informal surveys of major life and health insurance entities engaged in direct response business. This reveals major trends and subtle nuances that would influence the direct response industry in the next few years.

Swiss Am incorporates this information and synthesizes an approach which includes the best of many alternatives. Swiss Am has worked with clients of Swiss Re in Europe with extremely successful results. For the last decade, one of the leading European insurer, with Swiss Am's help, experienced marketing profits of over one-third of their total marketing budget. This is the amount in excess of the profits inherent in marketing allowance, which in itself provides about 15% return on investments. During the same period some of the European giants and subsidiaries of U.S. giants engaged in Direct Response in France were struggling to stay within their allowable acquisition costs.

Mr. Kiran Desai, President of Swiss Am, has hands on experience in Europe, the Far East, as well as the USA. Mr. Desai, as a Senior Vice President and Chief Actuary was responsible for various phases of direct marketing at Colonial Penn for over a decade. (See attached "bio" for details)

Swiss Am is a full service insurance consulting group specializing in planning, product development, pricing, as well as helping with marketing, advertising, and testing direct response insurance operations. We have in depth expertise in virtually all areas of the direct response business.

Who Should Consider Swiss Am?
Section Three
Any company interested in improving its ROI by improving or broadening its product line and distribution alternatives can benefit by using our input. Swiss Am provides a proper review of competition and consumers including expected strategies of other direct response players.

We work with insurance companies that are considering or should be considering expansion into the direct response end of the business; companies that have initial direct response projects underway; companies in the direct response business that may be experiencing marketing, financial or administrative problems; and companies who want plan a substantial growth in direct response.

We are positioned to assist in exploring and developing direct response product, marketing, and processing alternatives. We can provide strategic planning and marketing strategy processes. We can also assist in product development process by providing our actuarial know-how and the knowledge of industry trends. We help you arrive at proper trade-offs of product features and marketing appeal by a thorough review of the competition and consumer preferences.

In short, we are an experienced resource for the client who wishes to evaluate, initiate or refine direct response ventures. The product is an efficient process, an informed decision and a fast track capacity to move ahead in the direct response business.

What Can Swiss Am Do For You?
Section Four
Swiss Am has expertise in a broad range of areas including actuarial, competitive market analysis, planning and PC based administrative systems. We are outlining some of the specific areas where we can help you.

A. Planning and Product Identification

1. Identification of products for direct response, using the company's strengths, goals and competitive position as guidelines.

2. Strategic business plan for direct response.

3. Review of actuarial assumptions and product pricing in light of industry and company experience.

4. Review of market analysis.

5. Review of lapse and profitability analysis.

B. Marketing

1. Develop product positioning.

2. Develop promotion strategies and review marketing immunity concept in light of competitive activities.

3. Propose copy concepts and consult with ad agency.

4. Review competitive marketing strategy including its impact on other competitors and ultimate consumers.

C. Administration and Monitoring

1. Review and analyze test results.

2. Provide format for monitoring results.

3. Provide actuarial analysis of mortality (morbidity) and lapse rates.

4. Provide format for management reports that transform data into meaningful information for various tiers of management; policy impacting information for corporate executives; major marketing and actuarial trends for product development/marketing executives; and detailed reports relevant for making decisions on media, lists, etc., for middle management.

5. Provide PC based marketing and administrative system.