The Advantages of Automation

In the insurance industry, new information systems designed to automate processes such as underwriting, rating and enrollment can significantly reduce costs and streamline operations. Faster, more accurate quotes, better customer service and a more effective sales force all are possible with today’s selling and information management applications.

While these benefits are important, there is another, often-overlooked advantage that flows from process automation: improved decision-making. By collecting and aggregating previously inaccessible data on premiums and payouts, advanced automation systems can deliver a much more accurate view of a carrier’s book of business. This, in turn, can help managers make better, more informed decisions about rating and underwriting strategies going forward.

Indeed, analyzing an aggregate book of business essentially involves the same processes that are followed when determining whether to renew an individual or group policy. Similar cost-benefit variables are considered:

• The projection of expected premiums.;

• The projection of anticipated payouts on claims.;

Hence, rolling up actual renewal information from individual policies into an aggregate financial view allows carriers to make more timely and far more accurate financial projections than previously had been possible.

Leaving Information on the Table

Even so, companies that have capitalized on automation systems and this kind of decision-support capability are few and far between. For many carriers, the risks of implementing new information systems appear to outweigh the benefits.

Most insurers, in fact, continue to base their financial projections on sample groups of active policies that are up for renewal. That is, carriers are betting that the behavior of the sample group matches the behavior of a much larger number of policyholders. As many firms can attest, this can be a dangerous assumption.

That’s why developing a more accurate picture of the entire book of business is vital in measuring risk and making decisions about premium levels. Of course, information automation provides other, important benefits for insurance carriers. Chief among them:

• Lowered administrative costs associated with renewals.;

• Faster renewal decisions that can be communicated to field agents almost instantaneously.;

These operational benefits generate a rapid return on investment and in so doing mitigate the risks associated with a new software quoting system. Advanced software applications also ensure the data entered by field brokers at the time of renewal is complete, accurate, timely and relevant.

Automation Done Right

Successfully automating the renewal process to help generate precise financial projections requires an online sales and enrollment system that provides agents and brokers with access to rating and quoting information quickly and accurately.

The system should be able to serve field representatives through any Internet-capable device. It also should be linked to back-end policy setup and renewal systems to ensure rapid enrollment and access to accurate price and product information.

Automation also should include a sophisticated analysis package that can capture and assess renewal information in near real time, as well as provide updated aggregate financial information on all renewals received to date.

Automation done right also requires systems that:

• Can be easily updated to reflect new calculation procedures or adjustments made in the underwriting and pricing processes.;

• Allow financial managers to test the impact of different underwriting scenarios to form the most effective overall rating philosophy for renewals.;

• Provide renewal knowledge to brokers and agents quickly and efficiently, and identify or suggest alternative or additional coverage options for renewing customers.Other specific features that carriers should seek when considering automation systems include:;

• The capability of eliminating redundant data and repeat entries.;

• An advanced data architecture that allows for storage of vital information needed for decision support and financial planning.;

• Automated audits to ensure the accuracy of data stored in the system.;

• Simplified maintenance that allows insurers to quickly enter actuarial adjustments and other changes without damaging existing data.;

• Integration with existing systems and data repositories.;

• Secure, online access for agents, brokers, customers and executives.;

Benefits Outweigh the Costs

Without question, automating the insurance policy renewal process with an advanced Internet-based selling application is neither an inexpensive nor simple proposition for any insurance provider. Yet the benefits of lowered administrative costs, faster, more accurate quotes, better customer service and the ability to develop more accurate financial projections make automation extremely attractive.

The bottom line: A well-implemented automation system can deliver a significant return on investment in a relatively short period of time, particularly when compared with the costs of continuing to do manual renewals and sample-based financial projections.

For more information please visit us at Selectica