Alan Edgin interviews Scott Goldberg, President of Consumer Division at CNO
Join Alan Edgin and Scott Goldberg, President of the Consumer Division at CNO Financial Group discussing innovation and distribution - and brand-specific approaches for CNO brands like ColonialPenn and Bankers Life.
Based on his extensive insurance background with roles in strategy, marketing, and sales, Scott shares insights on innovation in the industry. Scott emphasizes the importance of collaboration, flexibility, and data analytics - and in particular how he uses distribution partner collaboration in the innovation process. He digs into the challenges involved in rolling out new products, as well as the importance of using data to improve customer service and manage risk. If you're looking for ways to stay ahead of the competition, this podcast is a must-listen.
The Insurance Innovation podcast is hosted by e123’s own Alan Edgin. Alan’s experience from carriers to IMOs guides the conversation in a way that anyone interested in marketing and selling more products will appreciate.
Insurance Innovation, brought to you by e123 - the premiere life and health distribution management system.
At e123, we think a lot about innovation and love to learn how others in the industry experiment with new products, new distribution business models, what have you. So let's shift there for a second. What do you do, Scott, to innovate at CNO?
I think our innovation comes from collaborating with our distribution. One of the the benefits of having a large career agency is you have a group that's close to the customer and close to the carrier. And a lot of what we do when we think about new products, features or tools to bring to the consumer come from our own producers, but it also comes from working with our independent distributors. They have lots of ideas and lots of needs. And when we can, we want to collaborate with them on bringing those concepts to market. So to me, innovation is about collaboration. It's about discussion.
A lot of times with my team, when we connect, we like to have some unstructured time together, because I find that you can't put innovation on the agenda and expect that, you know, ten, 15, for the next 25 Min you're going to talk about innovation. You might get some ideas, but a lot of things come organically in discussion, exploring ideas, talking things through. And the conversations don't always have a a conclusion. We might be talking about something over the course of a period of time, tweaking it, watching what happens, lining things up in our own environment. And through that process of iteratively having discussions, watching what's going on, being flexible or able to dial into a product set or tool set that really fits the need of the market.
So does you know, you have three main companies? Do they kind of run on their own or is there just a, a bigger at CNO where it tries to do a blanket philosophy for all three of your major carriers?
Yeah. So that's a, a really great question. And you know, my, my answer really gets back to some of our history. So the original Conseco was formed through acquisitions. And, you know, this has evolved over a long period of time. But when I entered the company, more or less, let's after a couple years in we did some changes. We were organized around three operating companies, Bankers Life, ColonialPenn and Washington National. In 2020, when I became President of the consumer division, that was the result of a transformation that we made to reorganize essentially around a B2C and a B2B idea. So I run all that consumer division. And then I have a peer who runs the B2B part, which is the worksite division. And we for the most part, use our brands and our statutory entities wherever they make the most sense. I'm a little bit reluctant to expose the Bankers Life products to channels outside our career agency for obvious reasons, but certainly our Washington National brand and stat (statuatory) entity, ColonialPenn brand and stat entity, and some lesser known statutory entities that we operate our fair game for us to use across our distribution. And so we can take a product, we can build it, and then we can push it through a variety of distribution channels, choosing how we brand it, choosing which stat entity we use, et cetera. And that gives us a little bit of of efficiencies and some leverage and how we go to market.
And, and that's really, you know, kind of the impetus behind some of the changes we've made. Can I take a product, for instance, like our ColonialPenn, we've had a lot of success over the last few years, not only selling it direct through our own tele agents, but also making it available for select partners to sell in the right way to some of their consumers. So we're able to build the brand, able to go to market with the brand and the product set with our own distribution, and then able to take some of that investment and leverage it for independent distribution. And that flexibility, those types of efficiencies, I think, are really powerful for us. And they allow us to be a little bit faster on the product development side, and then get a bigger bang on the distribution side.
Good, good. So when you roll out a new product, what are the things that you're most concerned about?
Well, before we get to the rollout of a product, we've done our research, we've looked at what the market need is. We've looked at what competitors are doing. We've, of course, ran a lot of analysis around pricing features, etc. And we've talked with our distribution on what their plans are. So for us, when we roll out a product, a lot of it is, did we get our assumptions right? Are we able to efficiently support the rollout of the product in terms of new business, in terms of customer service, claims, cetera? Are we able to support the experience that we want to be able to bring to the market?
And with a lot of products, in my experience, if they're not successful from the get go, they're probably not going to be successful. Because frankly, that's when your distribution is most primed for that product and ready to go. And everyone likes, you know, the shiny new object. And so getting out to market with a strong start is often the best predictor of long term success.
So do you do with some of these product rollouts? Do you do any kind of innovation with commissions or advances, you know, to kind of do a fast start program, if you will, with these.
We've made investments with our distribution to help get things going. And, you know, in terms of compensation, etc. I mean, you know, I learned early on that for a lot of folks in this industry, comp is like oxygen. And, you know, if the comps not flowing, people are dying. And, you know, that's the reality. We attract entrepreneurs into this business. They come in and they're looking to, to start a business. They're looking to grow a business, and they need quick financial success.
So we're often willing to invest in the right partnerships. And I think, generally speaking, we have a, a generous advancing program. We do give our distribution a lot of support. We don't work with everyone, and that allows us to, to kind of integrate, if you will, with our distribution and form enduring relationships and long lasting partnerships and, and, and our, and our and our track record certainly shows that, you know, as we have formed deep relationships. We've integrated processes. We've supported them through tough times, and they've supported us.
And that type of relationship, if you want to call it, that loyalty, but it's ultimately built on business fundamentals. It makes more sense for us to work together with what we're doing than to try and switch and, you know, get remarried to someone else, you'll find ourself back in the same spot. So if we can work with folks of of high integrity who are interested in growth as we are, we can, we can make things work. And we've been able to do that. I'm really proud of of our team. And we're fortunate that our distribution partners are some of the best in the industry, real entrepreneurs, great business people who are close to the markets and are looking to win. And I think we've, we've, we've made a great pair with a number of growing distributors.
And that's exciting. I mean, that's the kind of growth that every carrier wants, and we've been able to capture.
So let's switch gears, Scott. Let's talk about data in a way. Insurance products are made out of data. It's kind of the lifeblood of the industry, but everyone uses it differently. What challenges have you faced, quote, taming the beast and in your business?
Well, it's, it's an important question, right? Because I agree with you, data is the name of the game. And certainly for us, and a lot of legacy companies, it's, it's a challenge at times, because we're, we have policies on the books that we sold 50 years ago, and we have to manage those. And as I said earlier, you know, our company was formed out of acquisitions. So policies predate Conseco, and those have to be managed, and they have to be managed properly. So like any company that's been around for 100 plus years, data, legacy systems, etc, can create a challenge. Sometimes it's more costly to try and move to a new system than to just let it run off.
Right? I think for us, where we are in our, our journey, we've done a pretty good job on the, on the big parts of our business, meaning our career channel and our direct-to-consumer channel. But as we've grown our independent distribution, there's some work to be done. I mean, we'd like to get to a place where we cannot only manage that channel as a whole, but be able to break it down, not only by distribution partner, but down to the agent level. What does persistency look like? What's sort of, you know, what's the stick rate in the 1st 90 days, by partner, by agent, buy tenure, and be able to use that data to help our partners better manage their business and for us to work better with our partners. Naturally, distribution partners that have higher persistency deserve, you know, higher rewards.
And, you know, aligning those economics comes from understanding the data. So we have some work to do there as well, we, we want folks to be able to follow their business and be able to track it through all the different stages. Be able to follow claims and track them through the different approval processes. You know, I think everyone in the industry is a little bit jealous of what Domino’s did with the pizza tracker. You can see kind of every stage of your pizza and what's happening until it's delivered to your home. That's the kind of experience that we'd like to bring to our distribution.
Is great. That's great. So, you know, you said that CNO is, is a culmination of a lot of acquisitions. So usually that, that comes with systems, their own systems that they bring there. And I know you've touched on it for a second, but have you tried to consolidate those, those, those different legacy systems, if you will, into one major legacy system? Or do you let them kind of run independently?
Yeah. So I'll give you a response from, from someone who doesn't run the IT department, which 15 years ago, that's all we talked about was consolidation. And, you know, I remember slides that showed we have 150 different major IT systems and applications running through the organization. And how can we get that down to a more manageable number? And we've done some great work there. But nonetheless, it's still dozens and dozens of various systems and applications. I think we've gotten to a place where we've been able to achieve efficiencies.
And at a place where kind of the next thing we do, the business case gets a little bit sketchy. So like a lot of these businesses now, it becomes, okay, how do you contain that and be able to pull out the data that you need efficiently, without trying to do a complete transition to a new platform? I mean, we could all spend the rest of our careers trying to move to the next new platform. And when we're done, guess what, there's better. So, you know, being nimble is a little bit about trying to clean up the past, but it's also about, you know, what do we do with the next product? And how do we put that on a platform that is modern and efficient for us to use, and not try to necessarily have to tackle everything that is in our past? And I think companies by and large have an approach like ours, you know, kind of this hybrid grid approach to tackling legacy systems.
Otherwise, you know, forget about it. You'll spend the next 15 years just trying to clean up what, you know, what has been decades and decades in the making. Yeah, yeah.
Any new, exciting products that you could talk about that's coming out?
We have new products coming in the life space, in the health space and in the annuity space. I can tell you that much. I think there's, yeah, a little bit in this industry. There's nothing new when you think about new products. But we've had success with a combination products that, you know, between life and health that a lot of the industry is seen. So that'll give you a little bit of an idea of where we're headed. We've certainly had a a very robust annuity business that has just about doubled up over the last six years.
And the products that we're bringing in that space are, I'd say I'd call them on trend, new types of crediting approaches, the ability to put subsequent premium contributions into a single deferred annuity contract over time, the ability to work a little bit more closely with our securities platform that we built out so that individuals, as they age can move from, let's call it managed equity accounts into more secure products like our index annuities, and be able to make that, you know, bridging between those systems so those are the types of things that, that we're working on and thinking about.
Yeah. One of the big data metrics that I always look for is persistency and, and, and that's, you know, very vital to the distribution, obviously very vital to the carrier. What, what do you guys do in regards to trying to increase the persistency of your products?
Well, I think there's a couple of things to that. You know, one, of course, is the sales process itself. You know, products sold properly should persist but there's always a little bit of attention there, working with your distribution to make sure that's done right and we want it done right. So some of that is on the sales side itself. It has to be, if it's not set right, that that product's going to move quickly. I think the onboarding process that's on the carrier side, we have a, a new policy holder. Are we getting that 1st premium that's coming, you know, auto draft.
Are we getting that right? And I say, right? I mean, is the timing right? Is it, you know, is it the day after they get paid, not the day before they get paid? Regardless of when the application was signed, you're getting them on the right cycle and the right frequency and the right draft, you know, all of that contributes to higher persistency, customer service, etc. So I think that it's a partnership between us and distribution to get persistency, right. And, and of course, a little bit, it's on the client themselves.
I mean, they have to, you know, when, when folks have to understand that these products only work, why you still have them active? So working, working across the the value chain, if you will, is really important for us and getting that experience, right. And with, you know, many times when we're talking about persistency, you're talking about year one persistency, right? That's where the drop off is. And if you can get them past that 1st year, you can get people to, you know, kind of bring this product into their budget, into their lifestyle to understand how it can value them over time, quite frankly, if you can have some type of claims experience with them early on, those are the things that will lead to long term persistency.
What are you guys doing to prepare for the Open Enrollment for ‘23? Both, I guess, for you in the under 65 market with the products that you have and, and the over 65 products with the Med Supp and the other products that you have?
Yeah. So traditionally we've been heavier on the over 65 market. We're one of the original Medicare players. We sell our own Medicare Supp products, and we sell just about every Medicare Advantage plan that exists in the country. And we do it through our own platform where consumers and our agents can log in and compare plans and enroll. And that's my health policy.com. We're really proud of that platform, and we'd stack it up against anyone's. On the over 65 market, we recently, just just six months ago, came out with a new portfolio of Medicare Supplement products.
Obviously these products are standardized, but the short story is we got more competitive with our rates. We also added some ancillary benefits. SilverSneakers will come out and help with the drug plan would do lifeline screening and a variety of other ancillary benefits and services to make our products more competitive. So we've definitely leaned into the Medicare supplement market to reignite some of the growth that we had over the last, you know, decade, but it's been eroded by the popularity of Medicare Advantage plans. On the Medicare Advantage side, we're expanding the platform. My health policy not only has Medicare Advantage plans, but we're adding our hospital indemnity plan. We've added dental envision to grow the platform.
We've added more carriers and plan options, and we've increased our training. We also have experimented and grown what we do direct-to-consumer. Now, if you look at what's happened in the marketplace, I'm not so sure we want to follow everyone into that. That has been a a cash draining and challenging marketplace. And you can see that just by the valuation of some of the players in it, which has been really rocky. So we were a little bit more cautious when it comes to how we want to pursue a direct-to-consumer strategy. On the Medicare Advantage side, let's see how this, how this shakes out.
But we think we have a natural advantage in that we not only have a strong direct business, but we have local agents. So our plan is less around trying to build out a big room of tele agents who can handle the whole nation, but rather to use a hybrid approach, where we're attracting people digitally, and then pushing them to local agents who have local knowledge about their plans, who understand the hospital systems, who can meet in person, who can develop a relationship that leads to persistent business who can, over time, cross sell other products, etc, etc. So that's our approach on the over 65 side, and we've had terrific growth. I mean, our growth during the pandemic, we came down a little bit, but over the last three years, that business has grown, and I expect a really strong year. This year, we're off to a great start. Terms of the under 65 market. It's more about working with independent distribution folks who are selling ACA plans or MEC plans, or, you know, some type of major med product, and then adding our supplemental health products to help combat these high deductibles.
I mean, today you need insurance for your insurance, and our supp health products can fill in those gaps, but we don't want to build that ourselves. There's players who have figured out how to approach consumers, how to, how to, how to generate leads in that ACA market. But the ACA market, in of itself, doesn't have quite the compensation and enough juice to really be able to have the agencies afford all of their operating expenses. And that's where our supp health products come. In many cases, we're really driving the economics for those agencies. Even though it's the ACA plan, that might be the the 1st thing that's capturing a consumer's attention. So we want more growth there.
We're looking to expand partners. We're leaning into the partners that we work with, and I think we're, you know, we're, we're poised to have terrific growth there because the market's growing there.
Okay, great. On the over 65, or any thoughts of you guys becoming an a carrier?
I don't think so. You know, way back when, when private fee for service, this was the name of the game. We, we talked about it a little bit, but, you know, I and and others rightfully predicted that, you know, this was going to quickly move towards network plans in order to drive the premium down. And these zero premium plans, you know, these are HMO plans, typically, maybe, you know, kind of PPO plans. And that's really the realm of the commercial health carriers. We saw some carriers over the years get into this market a little bit, and then get out of the market. It's a scale game.
I'm not quite sure you can pull it off without the commercial business behind you. And frankly, we'd rather be a distributor of choice than to be pushing our own proprietary product on the a side, on the med sub side, because they're standardized. It's a little bit different because that's kind of our hybrid approach, open architecture on the MA side, proprietary product on the Med Supp side.
Okay, great. Touching back on what was the most important data project you guys undertook last year?
Well, you know, we're, we're doing a few different things, first of all, and it's, it's related to your question, we have generally moved to adopt an agile approach to our I projects. That's allowed us to move a lot faster and be a lot more nimble with how we get IT projects done. That's probably been the biggest thing that we've done that's had an impact. You know, we have a system that I would call a data warehouse. And today people are moving more towards what they'll call a data lake, with the idea that, you know, instead of taking your data and trying to structure it so you can analyze it, can you leave it unstructured, but have, you know, smart queries, ai, etc, to be able to get the data you need. So we're, we're moving along that transition. I think in terms of projects we've had there, they're probably things that are more important to me than they will be for the audience, you know, solving, solving some of our challenges, getting more visibility down to the channel level.
We put in a new compensation system five years ago. These are massive projects for career agencies, and we're still embellishing that system. So getting some of the work done in that system has been a big achievement for us. You know, it's hard to you. You talk about data today, it's like, it's, it's, it's a little bit like talking about computers. There's no longer a computer department, right? We're all in that business.
We're all in the IT business. We're all in the marketing business. We're all in the sales business. We're in the data business. So, you know, we're using data at every level. We did form, like a lot of companies, a a data and analytics team to help us with, with some insights. And, you know, that's, that's, that's been, that's had its rewards for us.
But also it's, it's, it's, it's, it's, it's, you know, sometimes it reveals things that we already know, but now we know it a little bit more precise. We got decide if that's worth it. And sometimes we've had some insights by, by using data. So I generally have a little bit of a cautious approach, when, when 3rd parties in particular will come and tell us, you know, you unlock your data, you're going to be able to do X, y, and Z, not, not every insight is actionable. Sometimes you're selling a line of products because you want to take a needs-based approach. And yes, we know that they're not, every product is not equal, doesn't have the same profitability signature. If we sell this product first, we're better off, etc.
But guess what, the real world gets into the way, in the way, and even, even having certain insights, if it's not actionable at this stage, what do you do about that? So I think that, like a lot of things in it, there's a or, you know, and I put data there, there's a little bit of a paradox, you know, every company is spent more and more and more on it. And there hasn't always been efficiencies, right? It's been just keeping up, just getting to parody. And so I think we sometimes have to be careful about overinvesting in, you know, where we think there's going to be this, this big pot of gold, when the reality is we're still out there every day. Got to acquire the customer, got to take that needs based approach, got to create that relationship, regardless of what the data says.
Still mine in a way, aren't you? Yes, mine a way. Changing the subject. Given what you've what you could see happening over the next few years, what advice would you give to a new college grad who's looking to enter our industry?
You know, for me, what was very formative in my career is my started Arthur Anderson. Those years in public accounting taught me not only a lot about the profession of of accounting and, and providing attestation services and auditing, etc, but it showed me how to interact with clients. It showed me how to be a professional. I learned the skills that I still rely on today, how to organize my work, how to manage a team, you know, plan the work work, the plan, the things that you learn as a, a young professional that you'll take with you all your life. I think in this industry, sales skills are super important. And so if someone came to me asking for advice and they were looking to be a producer, I'd say, go join the company that's going to give you the best training that, that you can find. And to be perfectly honest, I think you'd find that at CNO, in particular Banker's Life.
Yeah, I agree. So, Scott, I want to thank you so much for spending a few minutes with us and sharing your thoughts and your insights in the business. Very interesting. And look forward to seeing you down the road.
Alan, thank you for having me on the show. We're big fans of what's going on at e123, and we're expecting big things, and we really value the partnership.