Automation for Oldsters

After experimenting with accident and health policies for auto-racing drivers, test pilots and United Nations truce teams, the Continental Casualty Co. (assets: $419,761,432) was ready to solve one of the insurance industry's greatest longtime problems: a low-cost hospital-surgical plan for persons 65 and over. With the help of International Business Machines' wonder-working 705 computer, Continental devised a radical new policy procedure that cuts costs sharply and comes close to automating insurance for oldsters.

Last week Continental ended its most ambitious drive to recruit "65-Plus" policyholders in seven states--New York, Connecticut, New Jersey, Pennsylvania, Ohio, Maryland, Delaware--and the District of Columbia. Previously Continental had offered the plan in Iowa, Illinois, Wisconsin, Indiana and California, and it is expected to add more states soon.

Continental sells its 65-Plus policies through newspaper ads, thus cuts insurance agents' commissions. An applicant needs no physical examination, simply signs a coupon in the ad and sends it in. Monthly premiums of $6.50 provide hospitalization benefits of up to $610 for each different illness incurred within a six-month span. After the details of an application are punched on IBM cards, the computer takes over. It prints the policy, monthly-payment cards, self-addressed envelopes and claim forms, cuts policy-processing costs to about $4 v. $12 for a regular policy.

Also vital to Continental's scheme is its statewide saturation selling, which spreads the risk, gives the company the benefit of group insurance. Other companies have already followed Continental's lead. Mutual of Omaha is trying a similar policy in four Southern states and Fireman's Fund has just completed a trial campaign in California.

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