July 14, 2014 | Written by: John C Anderson
Categorized: Claims | InsurTech
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On this site I’ve written a few thoughts on US distribution and channel management. This is not so much coincidence as it is paying attention to how the industry is evolving in how it sells product. Of course, my thinking is not only propelled by the dynamic changes emerging from the digital era but also the frequency and urgency by which I am asked for solutions to problems that our clients are facing.
I have been involved in many transformative efforts (claims, policy administration, billing, etc.) but one that has recently increased in attention has to do with producer life-cycle management.
The insurance industry’s front office operation has become increasingly complex. Starting with the many distribution configurations (e.g.: direct, captive agents, independents, managing general agents, “agent groups”, program managers, etc.) and ending with the regulatory labyrinth of 53 territories.
One of a carrier’s obligations is to ensure that products and services are sold by licensed and knowledgeable staff, and that commissions are paid only to properly credentialed producers. Despite the importance of this function, many carriers have been using antiquated systems that are 30-40 years old and good old-fashioned manual labor.
I readily admit that end-to-end producer management is not the hottest topic to be talking about but I have a reason for bringing this up (or should I say a couple of reasons).
With all of the transformation work going on, this area has been overlooked. That is easy to do; after all. this has to do with licensing, appointing, certifying and all of that administrative and regulatory “stuff”. Not sexy, I get that. But here is why I am spending time on it.
1) Relying upon a “cobbled together” legacy environment requires significant manual intervention (expensive, time consuming, prone to errors), creates management risk and increasingly fails to support core management needs (regulatory, reporting, hierarchical management). As an example, the agent on-boarding process is particularly inefficient often requiring manual efforts to prepare forms, print / fax, and track status.
2) Managing sophisticated agent hierarchies requires the ability to execute in two critical areas. First, the need to accurately capture and reflect the producers’ reporting structure, which provides keys to location, authority, and access. Second, being able to account for multiple compensation schemes and tracking/communicating performance.
I believe that transforming the operating model with digitized claims, policy administration or even billing capabilities will provide significant lift to a carrier’s performance. But the reality is that those investments will remain only as capable as the weakest core function (and that can be the producer life-cycle management system).
I find that reducing the cost of the processing required has proven to be compelling. This is not simply because reducing costs is popular but because the savings can provide a rapid return on the investment (adding to its affordability) while materially reducing process times and errors. Additionally, a dedicated platform provides opportunities to enable self service by the agent or producer and creates transparency.
The digital era of Big Data and analytics are an opportunity for carriers to take advantage of the data that can be captured by a single end-to-end producer management platform. Insurers must be able to quickly access and apply the insights gleaned from a fully integrated view of the producer. The analytics that then become available deliver rapid feedback based upon data associated with performance, shifts in distribution reach, and changes to regulatory requirements.
Having a complete view of the agent provides a carrier with the opportunity to focus on targeted opportunities and optimize their performance. New technology solutions are available in the marketplace.