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Eric Seldon, second vice president of Client Services, talks with Vanessa Dumas, a senior new business specialist, about processing new business submitted on SmartApp. SmartApp revolutionized AFLAC's business because employees such as Ms. Dumas can process five times more electronic applications per day than paper applications. More than 78% of all new payroll business was submitted via SmartApp in 2000. AFLAC's extensive use of technology has helped improve the company's service and efficiency.
Advertising Increases AFLAC's Visibility

We introduced new commercials in 2000 featuring the AFLAC duck, and they have become very popular. In fact, we received more sales leads during the first two weeks of 2000, when the AFLAC duck first hit the airwaves, than in all of 1998 and 1999 combined. The success of the first three commercials led us to produce four more for 2001. Like the original advertisements, our new commercials use humor to help build brand awareness. However, they also send a serious message about the need for supplemental insurance.

Advertising has clearly benefited recruiting, sales and name awareness. A recent independent survey indicated that our name recognition had increased to 87% in 2000. We have been able to maintain our strong commitment to advertising by redirecting expense savings from other areas of the company. Most of the improvements in the efficiency of AFLAC U.S. have come from adapting new technologies to our business.

Expanding Technology and Services

SmartApp is one of the cornerstones of AFLAC's ongoing improvements in efficiency. Our sales associates use SmartApp to electronically transmit policy applications to our headquarters. This saves our associates time, reduces paperwork and allows us to provide our customers with better service. In 2000, we processed 78% of all of our new payroll business with SmartApp. By comparison, only 37% of our business was submitted electronically in 1997. In addition, the percentage of applications that were "jet-issued," meaning no human intervention was required to process the application, continued to rise. Of the total SmartApp submissions, jet-issues rose from 38% in 1997 to 47% in 2000. In 2001, we will make additional enhancements to SmartApp that should further improve jet-issue percentages.

We also completed the development of an Internet billing system in 2000 and began testing it in California. Internet billing was designed to improve service to our payroll account customers by presenting them with online invoices rather than paper copies. Internet billing should improve turnaround time on service requests and reduce manual transaction processing. In 2001, we expect to introduce Internet billing nationwide.

Just as we have expanded our use of technology to improve service to our customers, we have also increased the services we provide. AFLAC Administrative Services continues to be the number one provider of cafeteria plans in the United States, assisting in the administration of more than 80,000 plans. Cafeteria plans allow consumers to pay health insurance premiums with pretax dollars. Through ventures or arrangements with other companies, we also provide small businesses with additional administrative services, including help in complying with federal regulations that govern COBRA, 401(k) administration and payroll services.

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