Detailed Information on the
Veterans Life Insurance Assessment

Develop a quality assurance program for Servicemembers' Group Life Insurance Traumatic Injury Protection (TSGLI) case processing.

Conduct an independent evaluation of the conversion privilege from SGLI to VGLI

Validate the results from our customer satisfaction survey using the American Customer Satisfaction Index (ACSI)

Develop first steps in aligning budget requests to performance.

Measure: Rate of high veterans' satisfaction ratings on services delivered

Explanation:Insurance earned scores surpassing all private sector and other government agencies performing similar functions for awards processing and toll-free telephone service. ACSI validates customer satisfaction survey results. This validation is scheduled for 2009 and is part of our Performance Improvement Plan.

Measure: Ratio of premium rates charged per $1,000 by other organizations compared to the VGLI premium rates charged per $1,000 for similar coverage.

Explanation:A target ratio of 1.0 means VGLI premium rates are the same as other organizations that offer similar coverage. In 2007, the average premium rate charged by other organizations was $0.295 cents per thousand dollars of coverage; the average VGLI premium rate was $0.32 cents. This resulted in a ratio of 0.9 ($0.295/$0.32), since the average VGLI premium rate was higher than other organizations. July 1, 2008, Insurance reduced VGLI premium rates for ages 30 to 63, comprising 85 percent of those insured under the program. As a result of this reduction, the average VGLI premium rate will be reduced to $0.30 cents; increasing the ratio of this measure from 0.9 to 1.0 ($0.295/$0.30). A ratio of 1.0 as the target, with 1.0 demonstrating fulfillment of program intent and values indicating improvement, is desirable.

Measure: Ratio of premium rates charged per $1,000 by other organizations compared to the SGLI premium rates charged per $1,000 for similar coverage.

Explanation:A target ratio of 1.0 means that SGLI premium rates are the same as other organizations that offer similar coverage. In 2007, the average premium rate per thousand dollars of coverage charged by other organizations was $0.087 cents and the average SGLI premium rate was $0.07 cents; resulting in a ratio of 1.2 ($0.087/$0.07), since SGLI rates are lower than other organizations. July 1, 2008, we reduced SGLI premium rates to $0.065 cents per thousand. As a result of this reduction, the ratio for this measure will increase from 1.2 to 1.3 ($0.087/$0.065).

Measure: Percent of active duty servicemembers covered by SGLI.

Explanation:Insurance will measure the percentage of active duty servicemembers that are covered by the SGLI program. Our strategic goal is to provide life insurance coverage to at least 98% of all servicemembers. The goal of 98% is based on the optimum percent of servicemembers covered in the SGLI program. Not all servicemembers will take insurance because some may already have life insurance through personal plans or through work plans.

Measure: Number of disbursements (death claims, loans and cash surrenders) per FTE.

Explanation: Processing disbursements is the most important service Insuranve provides to its customers. Insurance calculates the direct FTE and direct supervision for processing disbursements from a variety of sources, including surveys, endproduct reports, and FTE reports.

Measure: Conversion rate of disabled SGLI members to VGLI.

Explanation:Servicemembers who leave the military with a disability are the individuals who have the greatest need for VGLI. Insurance will track the percentage of servicemembers who leave the service with a DoD disability rating of 50% or greater against servicemembers that receive the SGLI disability extension, servicemembers who die and their beneficiary is paid a death claim while on the disability extension, and those that convert to VGLI.

Measure: Ratio of multiple of salary that SGLI covers for the average enlisted servicemembers versus the multiple of salary that private sector covers for their employees.

Explanation:

Measure: Ratio of the multiple of salary that SGLI covers for the average officer versus the multiple of salary that private sector covers for their employees.

Explanation:

Measure: Average number of days to process SGLI death claims.

Explanation:The data on processing times are collected and stored in the OSGLI Life Claims Management System (LCMS). Processing time begins when OSGLI received the completed claim and ends when the OSGLI internal control staff approves the disbursement. This information is presented by OSGLI and reviewed by the Insurance Service for validation. Insurance will do a random sampling to ensure the timeliness data is accurate.

Is the program purpose clear?

Explanation: To provide universally availability life insurance benefits to veterans and servicemembers that may not be available from the commercial insurance industry due to the hazards of war and/or lost or impaired insurability resulting from military service at competitive premium rates and to encourage all members of the uniformed services to obtain life insurance.

Evidence: VA 2006 Congressional Justification; PL 89-214 Conference Report, August 16, 1965

Does the program address a specific and existing problem, interest, or need?

Explanation: VA life insurance programs provide universal life insurance coverage and services to the uniformed services who are exposed to the hazards of military service. It also provides life insurance protection to veterans who have lost their ability to purchase commercial insurance at standard (healthy) rates because of their service-connected disabilities. In addition, the program provides life insurance benefits to WWI, WWII and Korean War era veterans that were not readily available to them when they served in the military.

Evidence: 38 USC Chapter 19 Subchapter II; 2001 Program Evaluation

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: Although there are several mutual aid societies and benefit associations that provide life insurance coverage to servicemembers and offer many features of Government life insurance, there are significant differences that make VA programs unique. The primary difference between commercial policies and Servicemembers Group Life Insurance (SGLI) is that SGLI provides universal coverage to servicemembers and their families, while these organizations limit participation based on health or certain affiliations. The basic SGLI program insures 2.4 million individuals, and Family SGLI insures a total of 3.1 million spouses and children. Participation in the SGLI program is significant in that 98% of all active duty military and 93% of Ready Reservists are covered. The number of members covered by mutual aid societies and benefit associations is small compared to the members and their families covered by SGLI. Another advantage to SGLI is the automatic nature of coverage. Servicemembers must elect to reduce or decline their insurance coverage. (If SGLI was not automatic and servicemembers were provided with a menu of insurance providers, it is possible that servicemembers would go uninsured.) delete covered below

Evidence: United Services Automobile Association (USAA), Military Officers Association of America (MOAA), Armed Forces Benefit Association (AFBA), 5STAR Association, Uniformed Services Benefit Association (USBA)

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The Insurance program is designed so that servicemembers must opt out of life insurance. This encourages all members to carry life insurance and avoids the possibility of administrative oversight that would result in someone inadvertently not being insured. There is no evidence that any other approach would be more efficient and effective to achieve the program's purpose. The Insurance program is extremely efficient and has maintained high levels of customer service. Maximum SGLI coverage exceeds most employer sponsored plans. Additionally, the SGLI to Veterans' Group Life Insurance (VGLI) conversion component is superior to commercially available options.

Evidence: The 2001 Program Evaluation

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: The intended beneficiaries of the government life insurance programs are servicemembers, veterans and their families or designated beneficiaries. The insurance is offered to all service members when they enter service and over 98% of eligible servicemembers are enrolled in the plan.

Evidence: 2001 Program Evaluation; 2004 SGLI Advisory Council Minutes

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The purpose of the program is to provide universally available life insurance coverage to servicemembers and veterans that may not be available from the commercial industry due to the hazards of war and/or lost or impaired insurability resulting from military service. The program has developed two new outcome measures for the 2007 budget, which are designed to improve upon and replace existing measures. Universally available life insurance is measured by evaluating the percentage of servicemembers insured under SGLI program. A program evaluation completed in May 2001 by a private contractor stated that large scale employers offer their employees four to six times their salary. The SGLI program offers almost ten times the average servicemembers salary, which includes military pay, housing allowance and subsistence allowance. Servicemembers who leave the military with a disability are the individuals who have the greatest need for life insurance. To determine if veterans with impaired insurability as a result of their disabilities resulting from military service are obtaining life insurance, , the program measures the conversion rate of disabled veterans from SGLI to VGLI.

Evidence: VA Strategic Plan 2003-2008; VA 2006 Congressional Justification.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The program has determined long-term targets and baselines for each of its long-term measures. The program is operating at an optimal level in some areas such as having 98% of all service members covered by VA Life Insurance. Our strategic goal of 98% is based on the optimum percent of servicemembers covered in the SGLI program. According to life insurance industry standards cited in Group Insurance by W. Bluhm, "a critical risk factor for group life insurance programs is adequate participation by both employees and dependents, which is a key underlying principle of group insurance. A minimum 75% enrollment is the traditional rule for contributory plans." This concept is also supported by arguments from K. Black and H. Skipper, authors of Life Insurance that "generally at least 75% of the eligible employees should join the plan if coverage is to be effective." The SGLI program target of 98% is well above the industry standard for group life insurance providers. All servicemembers with SGLI that separate from the military have the option to convert to the VGLI program. Those veterans who have serious disabilities traditionally have a more difficult time obtaining life insurance. Therefore, the program focuses its conversion measurement on this population. The conversion rate for group life insurance is usually is very low as cited in Group Benefits: Basic Concepts and Alternatives by B. Beam, Jr. According to Beam, it is estimated that only one or two percent of employees eligible actually take advantage of the conversion privilege. The VGLI strategic goal is to have 65% of servicemembers who leave the military with a DoD disability rating of 50% or more to convert to VGLI. While ambitious, the program has implemented a robust outreach initiative to call each one of these veterans and inform them of their life insurance benefits. The program has created specific milestones to reach its long-term goal of 65%.

Evidence: VA Strategic Plan 2003-2008; VA 2006 Congressional Justification. Group Insurance" by W. Bluhm; "Life Insurance" by K. Black and H. Skipper:

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The Insurance program proposed three new annual measures for the 2007 budget. These measures compare the premium rates and coverage amount to the private sector. Competitive premium rates and coverage amounts help the program reach the long-term goal of covering the vast majority servicemembers.

Evidence: VA 2006 Congressional Justification; VA Annual Performance Report.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The program has determined long-term targets and baselines for each of its annual measures. Insurance's strategy is to set targets at levels necessary to ensure the long-term competitive position of the program and to reflect superior levels of customer service. The program is outperforming the insurance industry in virtually every category that is measured and is operating at a best in class level, relative to its annual measures. The results of two independent studies of Insurance by the American Customer Satisfaction Index (ACSI), stated that the program is performing higher than the national average and recommended that the program work to maintain their current high level of service in order to keep and strengthen the level of customer satisfaction it already enjoys. In addition, VA's SGLI program charges a significantly lower premium and provides significantly higher coverage amounts than the private sector. The goal for the VGLI program is to charge premium rates that are equal to or less than premium rates charged by other organizations that provide similar coverage. This is difficult to monitor as most other organizations do not cover unhealthy individuals while VGLI accepts all servicemembers regardless of health.

Evidence: VA 2006 Congressional Justification; 2004 Insurance Industry Turnaround Times Survey; FY 2004 Annual Performance and Accountability Report; FY 2006 Budget Submission. ACSI Survey (May 2001); ACSI Survey (November 2003)

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: Office of Servicemembers Group Life Insurance (OSGLI), the private administrator of SGLI, has targets that are outlined in their Balanced Scorecard. Its performance measures are similar to those of the rest of the Insurance program, and correspond directly to the long-term goals of the program. OSGLI is also subject to periodic operational reviews conducted by VA Insurance to identify areas of improvement in order to enhance OSGLI's ability to help the program meet its goals. VA and OSGLI report annually to a multi-agency Advisory Council that reviews the operation of the programs and advises on matters of policy.

Evidence: OSGLI Balanced Scorecard February 2005 12-Month Moving Averages; OSGLI Operational Review Report Summary of Recommendations January 2005; 2004 SGLI Advisory Council Minutes.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: A program evaluation was completed in May 2001 by the Hay Group. The evaluation was conducted to determine if the SGLI, VGLI, Service-Disabled Veterans' Insurance (S-DVI) and Veterans' Mortgage Life Insurance (VMLI) programs meet their statutory intent. The evaluation provided a comprehensive review of the above programs to determine whether they meet their statutory intent and the expectations of surviving family members. The program evaluation was rigorous in that it used both telephone survey methods and electronic files. The Insurance program is scheduled for another evaluation in the next 5 years. VA routinely, every 5-6 years, conducts a preliminary examination of major benefits programs to determine whether or not a full-fledged program evaluation is necessary. If necessary, then a full-fledged program evaluation will be conducted. The overall findings of the last program evaluation indicate that the programs are meeting their intent. While some of these recommendations have already been implemented, a number of recommendations have not been implemented. The program will continue to pursue improvements through these recommendations but many require legislation.The program also contracts with the American Customer Satisfaction Index (ACSI), which is produced annually by the University of Michigan Business School in order to validate its customer service results. The program consistently applies for various award programs, many that involve independent evaluations of various aspects of the program.

Evidence: ACSI Surveys; 2002 Robert W. Carey Organizational Excellence Award Application; Program Evaluation of Benefits for Survivors of Veterans with Service-Connected Disabilities; CFO Audits; VBA's Leo C. Wurschmidt, Jr. Customer Service Team Award.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: There is no direct correlation between VA's budget requests and the impact of targeted goals. However, the relationship is not apparent only because the Insurance program is designed so that premium rates cover the costs of the administration of the program.

Evidence: VA 2006 Congressional Justification.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: Insurance continually monitors performance and the results drive its strategic planning efforts. Insurance has developed a succession-planning model that identifies, by positions, the areas where it projects FTE shortages or overages to occur. Insurance has created SKIPPES, a computer-based training initiative to capture and retain institutional and operational knowledge. The program has developed long-term measures and annual measures.

Evidence: VA 2006 Congressional Justification; Insurance External Environmental Scan 2005; Insurance Workforce Succession Plan; Strategic Plan FY 2005-2008.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The program collects monthly performance data from all operational areas. A current comparison against the insurance industry standard benchmark study shows its performance meets or exceeds private industry performance in all cases but one. The program also collects monthly performance data from OSGLI, its program partner, and program staff members perform annual reviews in order to validate these results. It also maintains access to various DoD on line data systems in order to closely monitor the SGLI coverage and premium payment process.

Evidence: Insurance Industry Turnaround Survey; FY 2004 Annual Performance and Accountability Report.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: As part of the Insurance Service Director's Senior Executive Service (SES) performance evaluation, an Annual Performance Appraisal Plan is prepared. This plan includes the following areas of consideration: service delivery, enacted and proposed legislation, and program enhancements and accomplishments. Other senior managers are held to annual performance measures that mirror the Service Director's performance plan measures. Performance against targets influence annual evaluations and compensation. Managers who work for program partner, OSGLI, also have annual performance requirements that are linked to the service indicators found on its balanced scorecard which is reported to VA on a monthly basis. All goals and measures are linked to the VA strategic goals. Insurance employs project management software to track, schedule and test variances, results of which are reported to the Under Secretary for Benefits.

Evidence: All managers associated with the Insurance program are subject to annual performance review. FY 2004 Annual Performance and Accountability Report; OSGLI Balanced Scorecard; Annual SES Performance Evaluation; Annual Performance Plan for Senior Insurance Managers; VA's Primavera IT Project Office System.

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: Funds are obligated in a timely manner and spent for the intended purpose. New awards are obligated biweekly and monthly for recurring awards. To ensure funding is utilized for its intended purpose, the Office of Resource Management monitors obligations and expenditures on a monthly basis.

Evidence: ORM uses Form 4 (VBA Financial Report); SF 133 (Statement of Budget Execution) and a monthly status of funds report to monitor obligations and to compare monthly expenditures to agency operating plan (provided to the VA Departmental Budget Office and OMB); the FY2004 Performance and Accountability Report (PAR).

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The program has performance measures for timeliness and quality and tracks and publishes these measures monthly. The Insurance program looks at customer service and speed of entitlement processing. The program has also developed a new efficiency measure for the FY 2007 budget that tracks disbursements per FTE.

Evidence: VA 2006 Congressional Justification; 2004 Annual Performance and Accountability Report; VA Monthly Balanced Scorecard results.

Does the program collaborate and coordinate effectively with related programs?

Explanation: The program effectively works with other federal agencies and OSGLI daily to accomplish its goals. It receives weekly death match information from Social Security Administration (SSA) to identify deceased policyholders and invite a claim for death benefits. The program also uses this information to identify deceased beneficiaries that receive recurring insurance payments to avoid overpayments and deter fraud. It runs address matches against both SSA and Department of Defense's (DoD) retired pay system to locate veterans. Special access to various DoD databases verifies that the program is receiving full and proper premium payments. DoD disability rating data also assists in a Special Outreach Project aimed at severely disabled veterans.

Evidence: Title 38, chapter 3, sec.320; Computer Matching Agreement Between the Department of Veterans Affairs and the Social Security Administration.

Does the program use strong financial management practices?

Explanation: The 2004 VA Audit found Life Insurance Programs had a material weakness in its integrated financial management system. Auditors found the lack of system interface with VA's general ledger created the need for a significant amount of adjusting entries. Journal entries were not posted timely or accurately. Although adjusting entries is a well-accepted and necessary practice in the insurance industry, Insurance is working to avoid the situation in the future and expect to resolve it next year.

Evidence: FY 2004 Performance and Accountability Report

Has the program taken meaningful steps to address its management deficiencies?

Explanation: Continual analysis of customer survey results (over 400 surveys a month), review of the subject matter of each congressional inquiry and ongoing call monitoring allows us to identify and address management deficiencies. Since approximately 27% of Insurance program managers are eligible to retire in the next 10 years, Insurance has developed a Succession Planning model to determine future staffing needs.

Evidence: Insurance Succession Planning Model; VA 2006 Congressional Justification.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: The program recently developed new long-term performance goals. The program is operating at an optimal level with 98% of all servicemembers covered by SGLI.

Evidence: 2001 Insurance Performance Evaluation; VA 2006 Congressional Justification; FY 2004 Annual Performance and Accountability Report; Insurance Industry Turnaround Survey (2004).

Does the program (including program partners) achieve its annual performance goals?

Explanation: The program recently developed three new annual performance goals. The program is operating at an optimal level when compared to the private sector and has met or exceeded seven out of eight annual measures.

Evidence: FY 2004 Annual Performance and Accountability Report; Insurance Industry Turnaround Survey; Insurance and OSGLI Balanced Scorecards.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: The program annually benchmarks itself against private industry. Demonstrating very high levels of efficiency, the program has won numerous awards for best-in-class for efficiency. An annual insurance industry survey found VA to be operating at an optimal level for efficiency. The average days to process disbursements is half of what the private sector average is for processing disbursements, according to an insurance industry turnaround survey. The program has developed a new efficiency measure, the number of disbursements per FTE. Although it is a new measure, the program has tracked the data for the past three years and the number of disbursement processed per FTE has increased.

Evidence: FY 2004 Annual Performance and Accountability Report; 2004 Insurance Industry Turnaround Survey; VA 2006 Congressional Justification.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The VA Insurance Program regularly measures its performance against and compares favorably to other programs with similar purpose and goals. Because the VA Insurance program is similar to a commercial insurance company, it compares its performance with other private companies as a member of a life insurance industry trade association and a well-known organization that tracks customer satisfaction for commercial companies. Both organizations provide performance data on customer satisfaction, timeliness and other performance indicators. Results of the Insurance Industry Trade Association study indicate that the Insurance program consistently exceeds its benchmark targets and compares favorably to commercial life insurance companies. In addition, the American Customer Satisfaction Index (ACSI), another performance study that tracks trends in customer satisfaction, provides benchmarking insights for commercial companies, and government agencies. The program's score of 90 out of a possible 100 in death awards processing exceeded the private life insurance sector's score of 75 and the federal government-wide score of 68.6. In the program's toll-free telephone service study, Insurance earned an overall score of 80 out of a possible 100, the highest score of Government agencies performing similar functions.

Evidence: ACSI Survey (May 2001); ACSI Survey (November 2003) Insurance Industry Turnaround Survey; VA 2006 Congressional Justification.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: A program evaluation commissioned by Congress and designed to also satisfy the requirements of GPRA was completed in May 2001. While the evaluation stated the programs were effective in meeting their Congressional intent, there were several recommendations for improvement to the Insurance programs. While some of these recommendations have already been implemented, a number of recommendations have not been implemented. The program will continue to pursue improvements to address the recommendations of the Program Evaluation, many require legislation. Some of the implemented recommendations are: Public Law 107-14 that allows SGLI dependent's coverage; reduced VGLI premium rates, which makes them more comparable to commercial quotes; , Public Law 107-32 removed the terminating age of 70 from the VMLI program; a plan was developed to increase VMLI participation by eligible disabled veterans; and measures have been taken to better publicize the SGLI conversion feature. In addition, Insurance will continue to apply for various award programs, many involve independent evaluations of the program. The next program evaluation is scheduled in the next 5 years. VA routinely, every 5-6 years, conducts a preliminary examination of major benefits programs to determine whether or not a full-fledged program evaluation is necessary. If necessary, then a full-fledged program evaluation will be conducted.

Evidence: Program Evaluation of Benefits for Survivors of Veterans With Service-Connected Disabilities, May 2001; 2004 Annual Performance and Accountability Report.