Fewer errors and less human involvement may reduce costs

Distributors and carriers want the same things: error-free new business applications, faster new business processing, quicker policy issuance and–as a result–quicker commission payment. With the utilization of e-application software by insurers, we’re closer to this standard than ever before.

For some, the installation of software programs and downloading/uploading requirements may seem intimidating. But e-application tools aren’t new to the industry; many carriers have been utilizing some form of electronic application for several years with great success. And agents are learning that most e-application tools are “easy to use” and are delivering benefits for agents representing both life and health and property-casualty products.

In large part, e-applications succeed by eliminating the principle cause of “pended” new business–incomplete applications. In my experience, up to 30% of submitted business can be delayed during processing due to missing information or incomplete data.

An important feature of e-application software is that it prevents submission of incomplete applications. As the agent enters information during the sale, the system halts the process if a required field is skipped or the required information entered is incomplete. An error message alerts the agent to enter the required information before allowing the application process to proceed. Once the application is completed, the agent can leave the client feeling confident that all necessary information has been gathered to proceed with processing.

Another important feature of e-application is that the software automatically calculates premium rates. When a traditional paper application is received at the home office with an incorrect premium rate, the new business processor notes the error and contacts the agent. The agent must then reconnect with the client to communicate the cost difference and to obtain the additional premium. Essentially, the agent must re-open the sale that was previously closed and submitted, affording the client a new opportunity to reconsider the buying decision. All of these communications take time and increase the possibility of a lost or dissatisfied customer.

With e-application, the agent enters product choices, usually prompted by drop-down menus and follow-up questions. Once the selections are made, the system calculates the premium rate and automatically enters it into the application–no more manual searching on rate schedules and risking error by following the wrong line across the chart. What’s more, the software will only allow the agent to select benefits that are available to the client; with e-application, it’s no longer possible to apply accidentally for coverage that isn’t available to the client.

What about the customer’s signature? Obviously, you can’t have a traditional or “wet” signature when business is submitted electronically. E-application software addresses the signature requirement in different ways. Some insurers utilize signature pads that attach to the agent’s laptop, enabling clients to sign the application before it is submitted. Other carriers’ e-application tools allow clients to use a numeric PIN and/or answer two or three personal questions to serve as a signature. Either way, an electronic signature paves the way for paperless submission of new business.

Once the e-application is submitted by the agent, it really can speed through an insurer’s new business process. Since the data is submitted and received electronically, the home office does not need to enter the information manually into the system. “Straight-through processing,” as it is known, saves time and eliminates another opportunity for human error.

Another advantage comes from legibility. Let’s face it–few of us still practice the penmanship that we learned in grade school. It can be very difficult for new business processors to decipher name and address information, which–if entered incorrectly–will result in a follow-up call from the agent or the policyholder, requesting a correction from Policyholder Services. With e-application, data is typed by the agent and received by the carrier with no handwritten elements at all.

For some products, application submission triggers numerous follow-up actions. Sometimes additional information is required to complete underwriting–personal health interviews, physician’s statements, financial documents, etc. Without e-application, home office staff is responsible for reviewing paper applications, determining the required information and placing orders with internal staff or external vendors who perform these services. Like any manual process, this step takes time and opens the door for human error. With e-application, however, an insurer’s requirements are built into the system, and–based on submitted information–the software will automatically order any requirements for underwriting.

E-application can produce substantial cost savings for the carrier. Straight-through processing leads to more cost-efficient staffing and reduced auditing of new business processes. These reduced costs can translate to increased commissions for the agent and reduced rates for the client. For agents, e-application can reduce significantly the time spent chasing down application information and correcting application errors, which greatly can increase agents’ productive selling time.

With all of these benefits, all insurers should look to launch an e-application tool for their distribution partners. In turn, agents should look to their carriers to provide this important sales tool. And if you’re an agent who hasn’t adopted your carrier’s e-application product, now is the time. It’s easier than you think and you’ll see the benefits almost immediately.

Mike Bottoms is senior vice president of agent care for Indianapolis-based Conseco Insurance. He can be reached at ezapp@conseco.com.

An important feature of e-application software is that it prevents submission of incomplete applications