Unlocking ‘Hidden Value For The Industry
During the past five years, life insurance companies have faced ever-increasing pressure to focus on and improve their core operations.
Most insurance organizations have already deployed traditional measures to improve earnings, including work force reductions, re-organization, focus on core product lines and the deployment of “smart management” techniques.
The September 11 events, uncertain financial markets, new market entrants, pricing pressure and expectations generated by new acquisitions have further exacerbated this need for profitability improvement. While the “safe harbor” supported by the bull market economy of the late 90s may return, new actions are required to achieve expectations for improved financial and corporate performance.
There is a convergence of situations such that it appears “we have done everything we can,” yet there is a compelling business need to do more. So what can insurers focus on to create new value? What tools are available to help? Why havent insurers more quickly adopted technology solutions to help realize cost savings? These questions have the attention of all industry stakeholders.
Skepticism has been the order of the day from the first emergence of e-commerce solutions within insurance. Doubt from the industry resulted from the very stance of the emerging players. These early entrants claimed that success was assured because of inherent weaknesses at the core of the life insurance industry. When these early models failed to produce promised results, the initial skepticism was resoundingly validated.
Suggested reasons for the failures included: the idea that early entrants lacked strong parents and lacked focus; the cultural conflict that existed between new players and their traditional insurance partners, and complaints that integration was too difficult between the new technology and legacy systems.
However, the primary cause for failure of these early models is that they did not address the multiple layers of complexity inherent in the life business. Ironically, this level of complexity is exactly the environment in which properly deployed Web-based technologies can have the most impact.
There are (at least) three levels of complexity to the life insurance businesscomplex consumer interaction; high volume, multi-point data collection and complex, non-standardized risk assessment. Early e-commerce models focused primarily on complex consumer interaction, but the real power of Internet technology lies in its ability to address the remaining two levels of complexity.
The ability of the new technology to easily accommodate high-volume data input from multiple sourcesthen aggregate and process ithas significant implications to the traditional way in which new business is processed and underwritten.
The collection of data from many different sources and the ultimate assessment of this data have historically been mutually independent processes. However, the emergence of new technology tools is, for the first time, enabling the integration of these disparate activities.
Introducing new technology in these areas can increase sales productivity by streamlining existing procedures, increasing speed-to-issue and improving case management. Lower costs and improved margins can be realized by applying technology solutions to reduce application errors, eliminate redundant and repetitive tasks and enhance underwriter productivity.
While the adoption of technology solutions by traditional sales channels is considered to be a challenge for any new initiative, the value proposition to the producer has never been stronger.
Current solutions offer the ability to initiate a case via a Web browser or paper application, select one or several carriers with whom to proceed and choose one of several methods to collect underwriting and financial information. Insurers can then utilize a reflexive question set with database links and edit checks to produce applications forms, automatically determine and order underwriting requirements and dynamically track the status of all cases and requirements in real time.
This functionality offers several benefits. It drives down expenses for the producer, eliminates the need to keep track of all the required forms, enables the submission of cases to one or more carriers through a single collection process and eliminates the need to manually track cases and requirements. Dramatically increased speed of processing improves placement rates, thereby resulting in more and faster commission checks.
Web-based technology can assist in all aspects of comprehensive gathering of the information underwriters and producers need to get cases issued. This includes drill down questioning methodologies, real time database links, automatic edit checks, etc. These tools allow for incremental, more accurate and more complete information to be initially gathered. In essence, this is the codification of the discovery process to ensure as much evidence as possible is collected on the first pass, thereby making the process much more efficient.