Next Generation Technology

Brokers provide insurance companies with a flexible, localized and entrepreneurial sales force. Yet they also represent a big challenge in lack of uniformity and multiple methods of transacting business.

Can insurers meet the needs of multiple brokers, while still maintaining underwriting consistency? Which companies will build real broker loyalty in this post-CSIO Portal era?

Canada has about 3,500 insurance brokerages. Each firm has its own strategy and preferred method of doing business. Brokers will select the management system that best suits their sales and service processes.

Add up these facts and you get a distribution “bottom line” for insurance companies: insurers need the ability to support the broker’s method of doing business and they need to do it quickly, cost effectively and efficiently. Simply put, ease of doing business will have a profound effect on the broker’s choice of carrier and volume of business submitted.

BROKERS’ CHOICE

But what matters to brokers? Several reports have been published in recent years identifying key company attributes brokers value most. Celent Communications has conducted independent broker surveys in the U.S., for example, that identify technology, underwriting relationships and speed of service as the critical drivers of carrier choice. A similar study of Canadian life insurance agents also pinpointed speed, new business and underwriting support, and ease of application completion as crucial factors in choice of company.

“Underwriting speed really stands out as a driver,” Celent senior analyst Craig Weber says. “Agents and brokers are results-oriented when it comes to new business processes. They want to submit information easily, have thorough follow-up and get quick decisions that they can communicate to their clients.”

Similarly, a survey Gartner Inc. released last year showed that U.S. brokers prefer to do business with insurers that provide real-time transaction capability to better serve customers. The ability of insurers to support straight-through processing of applications ranked much higher than incentive and compensation factors.

“Having real-time transaction capability means policyholder inquiries can be addressed immediately, as opposed to waiting several days or even a week for an answer,” Gartner research vice-president Kimberly Harris-Ferrante says. “It will be impossible to drive agent loyalty without adequate investment in technology to support real-time information availability and transaction capability.”

STRAIGHT-THROUGH PROCESSING

This all sounds impressive. But how do companies create this capability? What is the best path to cultivate broker loyalty? To achieve this ease of doing business, insurers need a connected, automated process that provides fully rated, underwritten and completed transactions in an uninterrupted session. Straight-through processing means that the transaction is right the first time – from point of sale through to policy fulfillment. It does not mean how quickly a company can take information from its Web site and re-enter and complete it through disconnected manual back office processes.

The latter point is important because insurance company Web portals and other initiatives have opened the door to straight-through processing, but many question whether they will truly achieve their potential. Brokers have not picked up these portals as quickly as predicted. And many companies and brokers are actively investigating the potential of linking with “open market solutions.”

Clearly, there are challenges in achieving ease of business for multiple transactions. One critical factor is the need to maintain underwriting consistency for all broker transactions, no matter what the point of origin. That has left many insurers with the tough task of “bridging” data or processes from different broker management systems and initiatives.

Is it possible to build within insurance companies a centralized way of handling all business transactions, including those from broker systems, while at the same time ensuring speed, consistency and accuracy in underwriting and business processes? The answer is a qualified “yes.”

Already insurance companies have found solutions that have been proven to work, allowing them to support multiple forms of broker access while at the same time maintaining crucial consistency in underwriting processes and service standards. Instead of competing with broker technology vendors, these kinds of applications allow insurance companies to rapidly integrate data and processes from any method of transaction – no matter where or how it started.

Brokers benefit from this as well. They are rewarded with savings in customer service representative training, reduced costs of re-keying information from one system to another and single sign-on. Significant improvements can also be made to customer service and quality.

The “yes” is qualified because insurance companies must use the right technology to achieve these goals. They must seek proven solutions that connect people, process and technology. And, perhaps most importantly, these solutions require a provider that has in-depth knowledge of the insurance industry.

SEAMLESS EXCHANGE

Whatever the start point of the transaction, insurers should look for solutions that enable a seamless exchange of electronic business-to-business information between companies and brokers. These should be reliable, simple and low-cost applications – preferably pre-built, and definitely focused on insurance – that can be brought to market in weeks, not months.

Through Service Oriented Architecture (SOA) and a Business Process Management (BPM) Platform, new technology gives insurance companies the capability to provide brokers the choice of how they want to do business. The criteria for any application should be whether it allows insurers to leverage their current investment in technology and accept and process any method of business transaction. The application should be low- cost, and offer quick delivery and fixed maintenance expenses.

Brokers have carved out a dominant share of the insurance distribution system in Canada. This will continue in the years ahead. There will also continue to be new ways for brokers and companies to transact business, whether through industry initiatives or broker management system upgrades. Successfully accommodating broker choice is an issue all insurance companies face. After several failed attempts at a common industry platform, insurers are now turning aggressively to open market solutions.

They should go in with their eyes wide open.