The list of famous college entrepreneurs is distinguished. Bill Gates. Mark Zuckerberg. Howard Dell, who started what would become computer giant Dell Inc. while a student at the University of Texas. While a student at Yale, Fred Smith came up with the concept for an overnight delivery service in the age of computer technology that would become FedEx — and got a “C” for his paper outlining the concept.
Clearly, the bold ideas of college entrepreneurs can change the world.
Now let me tell you about a couple of college entrepreneurs who are out to change the life insurance industry.
Cameron Jacox and James Hilton are a senior-to-be and a 2012 graduate of Babson College in Boston, respectively. In the past two years, they’ve built a startup technology firm, the Jacox-Hilton Corporation, with a CRM that mines life insurance producers’ in-force business and creates a flow of opportunities to lower costs for clients, scrap inefficient policies and improve commissions.
Babson is widely recognized as a leader in developing entrepreneurs — the school’s M.B.A. program has been ranked No. 1 in entrepreneurship for 19 consecutive years by U.S. News & World Report — and the Jacox-Hilton Corporation earned the prestigious Student Business of the Year award in May from the Babson College Alumni Association. But the company’s not simply a school project. It’s poised to make some serious noise with its proprietary, patent-pending product, lifeAssist. Jacox-Hilton is projecting revenues of $1 million in 2012 and $3 million in 2013.
Why life insurance?
The fact that these two highly motivated entrepreneurs decided to target the life insurance industry — not exactly known as a market conducive to or accepting of young innovators — is no small development. Turns out it was just that reputation that appealed to them.
“As hungry entrepreneurs we were attracted to the scarcity of innovation in this industry,” Jacox says. “In more sought-after industries, there are a lot of people and noise, so your intuition about what is a great opportunity can be drowned out. Great opportunities arise where people aren’t looking. James and I both started in life insurance brokerages in our teens. The folks we meet on a day-to-day basis love what they do, they’re fun people, they’re hard-working, and they do important work. We love this industry.”
The combination of being immersed in an environment at Babson that fosters entrepreneurship and Jacox and Hilton’s common experience working in life insurance brokerages sparked a business idea. They concluded that life insurance policyholders generally were not receiving a sufficient level of service from their agents. Jacox tells this story of how he was first exposed to the industry and how he came to identify an opportunity within it:
“When I was 13 years old, a mentor of mine gave me a $100 bill, on the promise that I would invest it. I took it to a local financial planning firm, Money Managers in Peterborough, Ontario. When it came time to look for a high school job, I wrote a letter to Money Managers asking if they had any spots open; I was pushed into the fledgling life insurance business, where they had just acquired a number of advisors’ blocks. From there, my role as an assistant to brokers became a sales analyst role, and I found that looking through their CRM and carrier portals made for finding a lot of problem policies, whether they were renewing or had loans against them or otherwise. I would point out loans or high premiums and then write a letter to the client, then call them. Soon this became habitual, and we increased sales quite a bit. Then they recommended me to another local advisor, Nick Devere-Bennett, CLU. I went over and did this for him for a summer, and we made about $70,000. Then I came to Babson and met James in the Entrepreneurship Tower, a living community for student-entrepreneurs, and we set out on a journey to build a company around what we recognized as a very clear need.”
Ready to launch
When they first started the company, the idea was to replicate the analyst role that was so successful with a few individual advisors, Jacox says. “We would hire analysts and teach them to study advisors’ books, working in their offices on temporary projects and generating large revenue increases over slower periods, such as summers,” Jacox says.
Gradually, a shift occurred and they began to focus on automating the data collection and quoting functions. “At first we were concerned with simple things like automating quoting. Then we started to envision a larger software solution, something that could scale and make a true impact,” Jacox says.
It has since grown into a very robust system, Hilton says. “It is now a set of algorithms that can actually mimic the decision process that an advisor can go through, in a matter of seconds, analyze the policy and provide the report to the advisor, then of course manage his opportunities in a seamless way,” Hilton says. “We’ve even reverse-engineered the actuarials, if you will, and have a renewal rate estimation system that is 95% accurate.”
In July 2011, Jacox-Hilton conducted a pilot launch with a large Canadian life insurance distributor, which allowed them to refine their software and internal operations. Now they have the U.S. market firmly in their sights.
“The incredible thing about this industry is that opportunity exists everywhere,” Hilton says. “I led recruitment and was also a producer for a Boston-based general agency prior to coming to Babson, and there’s a tremendous amount of opportunity in in-force in the U.S as well. We’ve even seen the opportunity in mature life insurance markets, like Japan. So our system is largely about servicing mature markets, rather than emerging ones. The U.S is the logical next step, and we’re excited to have developed now a solid base of software for U.S products. So we’re looking to launch here this summer, and I’m actively marketing.”
Jacox says they’ve been in talks with a CRM firm in California that is interested in supporting its base of 10,000 independent brokers with lifeAssist, and Hilton has had discussions with a number of carriers and brokerages. “We know the demand is there, and our plan is to have the U.S version of our system running on May 25.” (Find out more about the product at www.lifeassist.ca)
Recent graduate Hilton now focuses all his energy on his position as managing partner, while Jacox says he essentially does the same as the other managing partner. “School has become the part-time commitment, and I’ve changed many of my classes to evenings,” Jacox says.
Rounding out the executive management team is fellow Babson College student Karan Kanodia, a partner who leads operations and system development. “He is one of the smartest guys I know,” Jacox says of Kanodia. “He really challenges all of us to keep the complex simple, to stay focused on our core competency in analytics.”
Jacox-Hilton has a full-time three-person development and design team based in Allahabad, India, and they work with a call center in Toronto with another two people. “We have software vendor partners in Canada, such as BlueSun Inc., which is just a phenomenal company. So our core team remains small and we have a lot of great partners,” Jacox says.
Overcoming the age barrier
No matter how smart you are, it is often difficult for “experienced” professionals to take people under 25 seriously when it comes to their business. Most middle-aged people or seniors with wealth would be very skeptical about working with a twenty-somethings instead of someone closer to their own age. With the average age of an independent producer hovering around the mid-50s, will they take these twenty-somethings who want to help them maximize their book of business seriously?
“Obviously, in an industry where the average age is much higher, it was certainly difficult at first to build credibility,” Hilton says. “But we found that as we were able to generate results and as our service offering has become more complex, our age very quickly became less of a barrier and more of an advantage, because people are more intrigued by our interest in this industry and the services we offer.”
Hilton says they find “incredible” opportunities to enhance client value and to drive production, but he’s amazed at how little of it is being taken advantage of currently. Jacox-Hilton estimates that about 25% of the policies in an established advisor’s book should be changed or altered due to a variety of scenarios, such as clients taking loans against policies that may have jeopardized the policy’s viability or policies approaching sharp increases. “One of the challenges we face is having advisors take action,” Hilton says. “On average, they’ll close one-third of the opportunities presented, but once they get into a meeting, there’s a 90% closing ratio because the opportunity makes so much sense. We want to find new and innovative ways to motivate our clients.”
The road ahead
Jacox and Hilton say they share a common vision for where they think the industry needs to go, and there’s a long road ahead.
“Coverage is declining in North America as advisors pull back their activity level and, yet, don’t transfer their block on to someone younger,” Jacox says. “So the buy/sell market needs to unfreeze, and we even see a ‘business network’ for advisors, where the senior advisor can transfer select leads to a younger advisor for a commission split that they agree upon through the system. That’s one way to ensure we get more activity in servicing existing policyholders and make it easier for younger folks to enter the industry,”
Expect plenty more ideas from the team at Jacox-Hilton as they expand into the U.S. market. “Most of them come out of 2 a.m. company sessions with a whiteboard,” Jacox says.
You can take the kids out of the entrepreneurial college, but you can’t take the entrepreneurial college out of the kids.