CXO Accent

An IT edge for insurance cos

Ashwin B

IT is rapidly gaining importance in the day to day operations of insurance companies. MetLife has tasted success with its Common Operating Platform.

Insurance companies cannot rely solely upon their advisors and agents to keep customers happy. In a competitive market where policy pricing and agent compensation are fairly standardised, there is no clear reason why a customer should choose one insurance company over another.

It is a fact that financial advisors are the primary brand ambassadors of an organisation. According to a recent McKinsey report, agents value two things above all and it holds good for customers as well—ease of doing business and personalised service. The challenge for insurers is to offer both while boosting efficiency and making its operations cost-effective.

To achieve the level of excellence, insurers must create a new operating model that uses technology to streamline processes and speed up decision-making, rethinks the front and back office functions to minimise costs and directs resources where they have the biggest impact.

Although no insurance company has fully implemented a new model yet, some are setting themselves apart with the quality of their operations and technology— either by being easy to work with or by providing exceptional service.

A McKinsey survey found that companies deemed to be the easiest to work with have distinctive Web sites that allow agents and customers to get quotes, submit applications make inquiries and change policies, online.

The main factor here is that insurers should continue to improve the speed and efficiency of their Web sites by capturing critical customer information so that they can match their products with the needs of the customers.

• For instance, straight– through processing that links steps for new applications, renewals, service inquiries and claims, so that all processing is quick and streamlined.
• Automated decision-making can also speedup the application process. Emerging technologies allow insurers to translate the expert judgment of underwriters into algorithms that can be modified without re-writing core systems.

A study was conducted by LIMRA International in association with McKinsey which covered 40 leading US Life Insurers in 2004. The study focussed on technology priorities and the effectiveness in which they were implemented.

Although administrative and sales force systems were listed as priorities—the results showed that two important technologies have had the impact in helping Life Insurers manage their costs and increase their efficiencies.

The first technology is the distribution and compensation management automation systems. These provide insurers with a better understanding of the distribution cycle: product planning, channel selection, sales and agent compensation.

The second is straight-through processing. It links tasks previously unconnected—such as new applications, renewals, service requests and claims.

Some of straight-through’s benefits include continuity. It helps companies match products with customers’ needs and generate leads even if agents leave. Further, it allows sales data analysis and process improvement activities. Techniques used by manufacturers can be applied to insurance. Another benefit is that by dividing new customer applications into simple or complex cases the insurer can divert complex ones to skilled underwriters. This segmentation allows improving the risk selection of the company. The processing time is cut down by 25 to 50 percent.

MetLife India’s experience

MetLife India is geared towards providing its front line staff benefits in terms of ease of business. For this purpose the company has effectively utilised its international learning in creating an advanced Common Operating Platform which is a holistic IT support and management system for its business operations.

Termed as Common Platform (CP), the technology-insurance model comprises a number of independent operating platforms suitably integrated to address the impending challenges for an insurance company i.e. to address the need of every individual around the country.

The main components of the CP are thus;

• Policy administration system: A Web-based application, it handles all the aspects of policy servicing. Significant enhancements were made to the system as part of CP, in the areas of data capture, policy issue, initial premium handling, and requested changes to policy and remittance processing, which made the system robust to handle all operations.
• Underwriting system: An automated underwriting system was integrated with the policy administration system. It is the first in the country. It helps us to substantially reduce the turn-around time for processing new applications and allows us to have greater flexibility in the locations where we issue a policy document. A Web-based system, it gives us a definite edge in respect of the technology and capability.
• Portals: A bouquet of Web portals have been introduced as part of the CP. These include portals for the use of customers, financial advisors, customer service representatives and brokers. Also included are portals which provide an effective tool for the internal audience of the company, that help in the functioning of these individuals.
• Other applications: There are offline components to the CP, which are seamlessly integrated with the Web-based systems to handle the diversity of the MetLife India operations. In effect these applications support well all the various channels of sales, whether direct agency, corporate agency or bancassurance.

Among the three portals PIP is the only one that can be accessed by the customer along with the agents, sales manager and customer executives of MetLife.

With CP, MetLife is able to cater to the specific needs of every customer: the main benefits of this technology are the reduction in the policy processing time and hassle-free operation. A policy can be processed within 24 hours due to this innovative technology, and the customer and the agent can check the status of the policy at any given point of time. The customers are provided with a unique ID and password to ensure security.

International application of CP

The purpose of CP is to integrate all key systems under a single umbrella, with clearly defined workflows which could be common to all countries of its operation. It brings the following advantages to MetLife as an organisation:

• With all operations following common workflows and processes, management oversight at all levels becomes easier.
• While starting up a new operation in another country, it is possible for the local operation to use the CP components and ramp up according to the business growth, quickly and with much lesser cost (which is quite significant for a start up).
• With investment in a CP, the overall cost of operation in individual countries will come down and the efficiency will increase.
• There is better sharing of resources since development made for operation in one country can benefit another in future.

The cornerstone of this model is the control over the systems and adherence to the workflows, which is managed through a virtual team, including members across the globe.

All in all, the CP is one model which can support all operations, whether it is a start up or a matured operation. As a part of its strategy, the model is going to be implemented in all MetLife International operations in the coming months. Globally, this is going to transform the face of the MetLife operations and while adding value to the customers will contribute substantially to the revenues and earnings.

The author is CAO, Metlife. He can be reached at bashwin@metlife.com