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September 28, 1999
For more than 30 years, Aflac specialized in selling insurance to cover cancer. Now, the company sells a variety of supplemental insurance, including long-term care, intensive care, hospital indemnity and other supplemental insurance products. "Aflac can no longer be characterized as a cancer insurance company," Daniel Amos said at the life insurance segment of the CIBC World Markets conference, co-sponsored by A.M. Best Co. This year, the company will begin testing insurance to cover critical illness and has begun venturing into dental coverage, he said. As a result, U.S. premiums grew by 14% during the first six months of 1999, to $256 million. As for distribution, the company continues to expand its independent agency network, growing to 8,600 agencies by June 30. Those agents are equipped with laptop computers that allow them to process 300 electronic applications a day, instead of 60 paper ones. Aflac has worked to increase its brand-name recognition over the past few years by cutting operating expenses, then spending that money on advertising. Amos said brand-name recognition grew from 2% to 62% between 1990 and 1998. In Japan, Aflac enjoys a 93% brand-recognition rate, second only to Coca-Cola among foreign companies. Still, Aflac will face increased competition from Japanese and foreign insurers as the country loosens regulations on insurance. "We understand that people will be interested in getting into our business," Amos said. "We have to continue to make sure we are the low-cost producer." Aflac primarily operates through agencies run by human resources departments at private companies. Those agencies sell products to employees through payroll deductions. Aflac already has about 10 million customers through the system and hopes to target 40 million employees who work for small companies. "That represents an enormous opportunity for potential growth for us," Amos said. |
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Aflac Inc.'s recipe for growth has two basic elements--create new products and expand distribution, its chief executive officer told insurance industry analysts and investors on Tuesday.