What if you try to reach out to your long-term care insurance (LTCI) customer by mail – either with a standard document or with a more personal letter printed in a beautiful, typewriter-style font on the kind of carefully chosen watermarked paper that Don Draper might have picked – and you get the letter back?
With the volume of physical mail continuing to shrink substantially, it's logical to think there has also been a corresponding reduction in the amount of return mail. But the fact is, the amount of "return to sender" mail handled by the U.S. Postal Service has actually held steady, at around 1.6 billion pieces each year and actually increased from 2009 to 2010.
In the LTCI industry, physical mail is still an important aspect of customer communications. LTCI carriers, producers, brokers and agents connect with clients frequently with mail notifications on billings, benefits and claims.
My company, Pitney Bowes Management Services conducted a study that determined insurance and health care companies of all kinds account for 20% of all return mail, or over 300 million pieces per year. Why have the pieces returned, and why so many returns? Insurers often call for the return of a mail piece that cannot be delivered because it contains sensitive information that must be securely disposed of. One leading driver impacting the amount of return mail is the lack of control over the address data when, for example, the data comes from employers or government agencies.
While exact costs vary by application and product line, on average, each piece of return mail costs the sender $3.
And that's just operational costs–postage and printing, handling, research, re-mailing and related processes. The total cost can be much higher, exceeding $10, $20, $30, or even $50 per mail piece, when you count the value lost with returned communications–delayed and missed payments, extra staff time spent on the phone and overall customer service expenses.
Producers usually own the relationship with the LTCI policyholder, and the producers are the ones who must ultimately deal with the return mail information—often a costly, time-consuming, inconsistent and inefficient process.
The most effective solution is to have a centralized, automated, monitored and maintained return mail operation.
By having all return mail come back to a single, central operation, the company can initiate cost effective investigative procedures for its producers. For example, a portion of returned mail is sent back in error and should have been delivered as addressed. A centralized operation can identify and re-process these pieces, all quickly and without involving agents or contacting the policyholder. For the remaining, true undeliverable mail that requires research, there is a far more efficient process with a centralized operation.
When the producer is the one who sent the mail, or the producer has to contact the policyholder on behalf of the LTCI carrier, that contact with the policyholder is, of course, a retention effort, but it can also be a sales opportunity.
Especially when return mail issues come to light when LTCI bills go astray, a centralized operation can gather data for the producers and prioritize outreach efforts based on the value of the customer and expected efforts required.
In some cases, such as when state regulations set notice requirements, centralized return mail management can reduce the risk that an LTCI carrier or producer will violate state notice requirements or USPS Change-of-Address requirements for discounted postage rates.
The LTCI industry has its own unique challenges, given the privacy and regulatory issues that may be involved and can conflict with postal regulations. Because of the complexity of these issues, LTCI carriers, and LTCI producers who send out large amounts of mail, should consider working with a consultant with insurance expertise to design and implement return mail solution that best meets their needs and requirements.
Adam Collinson, CMDSM, MQC, is an engagement manager and solution design consultant at Pitney Bowes Management Services. www.pb.com/Management-Services
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