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In the 19th century, the invention of metal bearings was a giant leap forward for the Industrial Revolution because it enabled manufacturers to take friction out of countless processes and products, thereby making it possible for everything from band saws to buggies to operate more efficiently.

In the 21st century, ambitious insurance companies are leading an “Insurance Revolution” by finding ways to take the friction out of procedures that consume time and add cost to even the simplest tasks. In fact, while its imperative to have solid underwriting and offer relevant products at competitive prices, these companies know it is absolutely critical to implement business processes that make it easier for their distribution partners to do business with them, rather than their competitors.

Today, cheap computing, fast connectivity and easy-to-use Web interfaces have made it possible to pitch piles of paper and accomplish in seconds what used to take hours. The benefits include better customer service and more productive business relationships, coupled with higher revenues and better margins for all involved.

Yet, surprisingly, not all companies recognize the importance of developing frictionless business processes. A recent report by Forrester Research Inc., Cambridge, Mass., reveals that even as Web-based business tools have proliferated, many insurers continue to pass administrative tasks on to writing agents. Apparently, companies engage in this practice in a shortsighted effort to reduce home office costs. What these companies fail to appreciate is the extraordinary value of doing everything possible to enable writing agents to focus on the all-important tasks of generating new business and maintaining customer relationships–activities with enormous benefits for everyone involved.

The key to fully realizing such benefits requires:

1) The vision to recognize the long-term value of frictionless processes; and,

2) People who can harness technology to make those processes as productive as possible.

To enable these innovations to flourish, leading carriers have created cross-functional, home office teams of specialists from IT, sales, marketing and service. Full implementation also requires a close relationship with distributors who provide priceless insights into what works best in the field because they are, in effect, the forward observers on the business battlefield.

One example of a frictionless process that has proven invaluable to some companies today is a Web-based system that allows producers to go online and, with just a few mouse clicks, submit a term life pre-application electronically. Teams of trained phone support specialists then take over the time-consuming task of gathering financial and medical information from applicants, setting up paramed appointments, and staying in touch with the customer to ensure that all requirements are met. In the meantime, the producer has been freed to generate new business, ultimately benefiting everyone in the distribution chain.

The ultimate goal of this type of frictionless interaction is to improve profitability for everyone in the distribution chain, but involved carriers are discovering important indirect benefits as well. One of the most important impacts is in the arena of successful broker recruiting–a matter of considerable urgency to all carriers today. Companies that are successful in bringing new producers on board must wean themselves away from depending solely on paper-and-postage processes that are tedious and a disincentive to new candidates who know there are faster, better ways to handle administrative chores.

Upgrading to processes that are frictionless is not without challenges, of course. Costs can be high. And, as many companies have discovered, putting up a Web page is easy, but tying new software into mainframes coded in outdated programming languages is hard. With older machines, business processes often have to be stripped out and reworked to accommodate the new flexibility demanded by e-business initiatives.

Another challenge is doing everything required to extend frictionless processing throughout the distribution chain. This involves providing technology services in the field, dispatching specialists to work on-site with distributors to help them fully integrate new processes and conducting regular training sessions for brokers who need to know how to use the new processes.

This kind of outreach offers an invaluable opportunity for the carrier to strengthen business relationships and deliver important information about new products and services. Interaction with the field also provides carriers with the opportunity to obtain priceless feedback from producers about products, customer satisfaction, market trends and other critical issues that can be difficult to assess from the home office.

It is vital to remember that even as technology makes it possible to conduct business over great distances and at warp speed, it remains critically important to maintain face-to-face communication with business partners. Indeed, the best companies reinforce the importance of these relationships by positioning dedicated personnel as business consultants to the field. Working in the field enables carrier personnel to identify which products fit well within each distributors market. It also provides companies with valuable insight into how best to market new products to the brokers who ultimately have the power to recommend one product over another to their customers.

While frictionless processes offer many benefits, it is important to not go too far. Not all customers or even all producers are fully comfortable with mouse-and-modem methods of transacting business. Some companies have developed a mix of processes that allow producers who are more comfortable with traditional methods to continue to work that way, while offering new, leading-edge ways of doing business to those distribution partners who want that.

After all, even after ball bearings made their entry into the 19th century, the buggy whip business continued to thrive–for quite a while.

, CLU is life product manager for Zurich Life, Schaumburg, Ill. He can be reached at mark.smith@zurichlifeus.com.



Reproduced from National Underwriter Edition, April 14, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.