Together, carriers and producers can improve the process
While independent distribution of life insurance products is clearly a success story, this channel does present unique challenges. From insurers’ point of view, independent distribution provides virtually limitless opportunities for increased revenue. But the costs of processing new business submissions and providing service can eat into profit margins. It is harder for insurers to deploy and enforce usage of efficient new business technology to these sellers.
From independent distributors’ perspective, insurer-provided technology and processes are often at odds with their customary way of doing business. This causes frustration, in addition to the tangible problems of prolonged sales cycles and fragmented information flow.
Is it possible to address the concerns of both insurers and independent distributors, and improve service to producers and customers? By combining business process improvements with available technology, the answer is yes.
Where We’ve Been
As insurers increasingly turned to independent distribution channels, they first looked to modify and expand the new business technology used by their career agents. While initially serving as a less expensive option, this path became unmanageable. The steep costs to customize and maintain legacy systems for the specialized needs of independent channels largely were unsustainable. Insurers had to develop multiple subsystems to ease the pain of legacy system limitations. And experienced legacy system resources are an ever-shrinking commodity.
To provide better service and ease independent distributor distress, insurers then developed specialized new business solutions using newer technology. Some were channel specific; others were product specific. To fill the gap, several front-end software packages emerged to cater to the needs of the independent distributor. This approach, while solving some problems, created others. Among the issues was the fact that redundant system solutions began to consume large percentages of IT dollars, and system integration costs increased.
Where We Are Today
Today, both insurers and independent distributors are experiencing the pain of success. As the volume of new business submissions increases, so do the inefficiencies and expense of supporting multiple systems and processes. Currently, insurers are evolving toward componentized hybrid systems, where manufacturing processes and distribution methods are truly separate. This sets the stage for insurers to meet independent distributors and producers halfway–and to make huge strides in distribution effectiveness and customer service.
But even with these new systems that incorporate rules engines beneath flexible and configurable data capture processes, challenges abound. The first is data quality. Not-in-good-order (NIGO) submissions slow sales cycle times and increase costs for the distributor and insurer alike. The second stumbling block is gaining wider adoption of electronic new business submissions. Producers need to experience new business submission as a flexible, accessible and simplified process.
One way to achieve high adoption of efficient electronic submissions is for the insurer to integrate with the independent broker’s order entry solution. However, in this scenario, distributors and insurers aren’t addressing NIGO concerns and administrative follow-up costs, because data quality controls are not carrier-specific enough. Carriers can build integration functions to perform data validations either by exposing the edits to the point of sale or automating follow-up. But when these point solutions exist alongside other new business systems, the carrier finds it expensive and unmanageable to maintain the customized solution and handle redundancy with other similar applications.
Aggregators are another alternative for independent producers. But NIGO still doesn’t go away: Ticket orders from aggregator submissions require data cleansing outside of the very basic validations they support. In fact, when carrier and aggregator systems don’t exchange data validations, NIGO actually can rise. Insurers need to push the right level of validation edits outward–in a quantity that both the aggregator and producer can live with.
Improving Electronic Application Usage and Data Quality
Across new business submission methods, insurers and independent distributors can work together to address electronic application adoption and data quality and issues.
Carriers need not choose between receiving in-good-order applications via their agent portal and working through aggregators. Carriers and aggregators can work together to improve overall service to independent producers and address the data quality and cycle time challenges. By improving their integration and knowing when to pass the baton, together carriers and aggregators can strike the right balance between multi-carrier quoting processes, ticket ordering and shifting the sale to the insurer’s platform for immediate processing.
When an aggregator handles the complete order and submits the application, the open ticket and level of edits it supports solely control validation quality. In some instances, when aggregators and carriers don’t integrate these two processes, data quality drops to new lows.
In this situation, more seamless integration is the wisest path. Rather than separate the aggregator’s data capture from the insurer’s validation engine, data can be re-routed immediately and securely to the insurer’s portal once the ticket is opened. From there, the insurer’s new business data capture processes can take over. To provide a seamless experience, the aggregator’s branding can remain when the producer is routed to the carrier’s portal.
Contrary to what many in the industry believe, it turns out that tales of independent producers trying to navigate scores of new business systems offered by different insurers are just that–tales. Typically, independent producers select one or two carriers for most of their business and use carrier Web sites on a daily basis.
With this knowledge, insurers can extend confidently electronic applications to independent producers through portals. By including flexible data collection paths to meet the variances in producer needs, insurers can control data quality, provide immediate integration with manufacturing processes and supply real-time status updates.
This approach allows insurers to have control over the new business submission and showcase their brand through the quality of their new business service. It also removes problems stemming from the inadequacies of the open ticket validations provided by aggregators.
When EDI submission alternatives from the aggregator or producer don’t enable management of the order completion session, integration strategies can improve efficiency and facilitate automated follow-up.
Improved integration could expose more robust data validations and present them back to the source for point-of-sale revisions. Even though the carrier is not controlling data entry, through this method the carrier is able to present concise data quality errors to the producer to help nip in the bud any NIGO submissions. Use of industry-standard XML formats is recommended to minimize integration costs.
No matter the submission method, tightly managed case management provides the final piece of the puzzle. Case management solutions can centralize a common set of rules that evaluate the submission. For data quality issues or any follow-up need (i.e., managing receipt of subsequent forms), the solution can serve as the hub for all administrative and underwriting manufacturing processes–and as the source for producer communication.
With the technology and knowledge available today, and a willingness to work closely together, carriers and independent distributors can work together to provide superior service at lower costs–and better satisfy producers and customers.
John Roe is a principal consultant in Edison, N.J.-based NaviSys’ Consulting Services division. He can be reached at email@example.com.
With the technology and knowledge available today, and a willingness to work closely together, carriers and independent distributors can work together to provide superior service at lower costs.