Building the Perfect Carrier

Agent Portal

In recent years, agent portals have gone from a novelty to necessity. For P&C insurers especially, they often are the primary channel of communication between agents and carriers. Celent has repeatedly documented the impact that an effective agent portal has on agent retention, attracting business, and improving the efficiency of agent-carrier communication.

In agent portals, key elements include electronic quoting and application submission, straight-through processing to underwriting and policy issue, new business "process transparency," commissions information, integration with agency management systems, comprehensive policyholder information, secure messaging environment, the ability to download materials (forms, customized proposals and letters, etc.), and leads distribution.

Billing

Billing is moving out of the back office. Insurers are realizing the strong role that billing, and especially the quality of service provided during the billing process, can play in financial operations and in building relationships with customers and distributors. For most policyholders, the impression they have of their insurers is created through the billing process. Accuracy, timeliness, flexibility, and prompt resolution of discrepancies are the most important issues.

In billing, key elements include accepting alternate payment methods, electronic bill presentment and payment, consolidated billing, and dynamic statement messaging.

Claims

New claims technology gives insurance companies the opportunity to revisit and improve their organizational structures and their staffing. As information becomes digital and paper claim files are eliminated, all stakeholders benefit: workflow is easier to manage and moves more quickly; the experience of claimants and of their agents improves; reserving accuracy increases; compliance improves as required forms and correspondence are automatically created and sent by the claims system. Several insurers are beginning to use claims analytics to provide systematic loss information to their front-end product development, pricing, and underwriting activities.

In claims, key elements include: an electronic case file, rules-based workflow and skills-based routing, automated fraud and subrogation referrals, and automated medical bill review, and, for P&C insurers, wireless adjusters.

Document Automation

Document automation projects are hotter than ever. The renewed focus comes from companies wanting to further modernize their workflows, update their imaging and workflow solutions, and retire or modernize their legacy systems.

In document automation, key elements include: web services and services-oriented architectures, current architectures, and open standards for images.

Illustrations

Agent portals and the systems that enable them to deliver on their promise are the most prominent elements of most insurers' distribution technology strategies, but illustrations are important as well for life-health-annuities insurers. Illustrations are especially critical in the life-health-annuities IT world because they are one of the areas in which technology supplied by the carrier faces both producers and customers. While illustrations have been electronic for a long time, moving away from CDs and toward having illustration software downloaded or online is becoming the norm.

In illustrations, key elements include online distribution of illustration software (including frequent updates), integration with electronic applications, use of modern technologies, and faster new product introduction and implementation times.

Infrastructure and Architecture

Infrastructure investments are notoriously hard to fund for most insurance IT groups, especially in environments where every expenditure has to be billed back to a business unit. However, investments in certain infrastructure areas are yielding major efficiencies for insurers, in both reduced maintenance costs and increased flexibility.

In infrastructure and architecture, key elements include: enterprise data strategy and enterprise data models, platform modernization, grid computing, and web services and services-oriented architectures.

IT Governance

After a few years of tight budgets and tight oversight, a new partnership is emerging between the business and IT arenas. The business side is starting to understand that it is utterly reliant on IT to operate and compete effectively, and IT realizes that its only meaningful metric is whether it enabled the business to do so.

In IT governance, key elements include: a need to evolve as a shift away from proprietary standards and monolithic architectures occurs, more iterative development than ever due to more configurable packages ("rules and tools"), more vendor management and less code management due to greater use of vendor packages and less custom development, joint ownership/management of projects by all stakeholders, and professionalized project management, centralized asset management, and centers of excellence.

Policy Administration

Policy administration systems are at the core of an effective technology strategy for insurers. No matter how impressive an insurer's distribution and claim systems may be, in most cases the overall effectiveness of the company's IT environment comes down to the capabilities of the policy administration system in three key areas:

Launching and modifying products quickly and inexpensively

Supporting electronic distribution and improved workflow

Providing access to detailed information for business intelligence

In policy administration, key elements include: straight-through processing, accessible data, flexible, tools-based configuration, intuitive user interfaces, and scalability.

Product Design and Development

The insurance product market is highly competitive, and competitive advantage is fleeting. Previous Celent research on the impact of product freshness has shown the positive financial impact of getting new products to market faster, and it is a high priority with companies.

Effective new product development depends on access to comprehensive risk and modeling data, effective modeling tools, and the ability to bring new products into production rapidly into key productivity and record-keeping systems: rating engines, policy administration systems, document creation systems, claims systems, billing systems, and others.

In product design and development, key technology elements include: transparent, accessible data on current book for regression testing, extensible rating models, common calculation engines and reusable product development components, and a controlled collaboration environment for development of policy language.

Underwriting

Driven by the availability of electronic applications and the increased sophistication of rules engines, automated underwriting is now common in P&C for personal lines and even in some commercial lines, and in life-health for low-face amount and other "fluidless underwriting" policies. Automation has an equally important role in facilitating and improving the work of human underwriters. In underwriting, key elements include: electronic case files, rules-based underwriting workflow, rules-based automated underwriting, wireless, and tele-underwriting (life-health only).

Celent's study bolsters the adage that no one is right all the time. However, almost everyone is doing something right. The company plans to continue refining this summary of best practices and to identify new model carrier components annually.