Why I would never build my own ePolicy Delivery solution again

BVB_HEADER

By Eric Lester

Most of you know me as the former technology change and innovation leader for one of the world’s largest life insurance carriers.  Over the past twenty plus years I’ve had the great opportunity and privilege of helping bring some awesome new technology to our industry, one being ePolicy Delivery.

In early 2010 we made the choice to build an ePolicy delivery platform with the underlying chaise being that of a popular eSignature vendor.  We, as the carrier, decided to build our own offering because at the time solution providers were in their infancy with their own products and their costs for implementations, annual licenses, and transactions were, let’s just say high at the least.

Over the years our offering became one other carriers would point to as a successful model and used to self-justify building a similar solutions of their own. Because of this I still regularly get asked “should I build and/or keep maintaining my own ePolicy delivery solution or license one from a service provider?” 

Well, this may come as a shocker for those of you who know me well, but I’m here to say on the record that I would be hard pressed and need a very compelling reason to build another one given the current landscape.  I’ll share with you a few quick points of why.

·       SOLUTION PROVIDERS NOW HAVE GREAT SOLTUIONS: In the early days when we were pioneering ePolicy Delivery, solution providers had products that weren’t really much better than what we could build.  Fast forward nine years and these providers have invested millions into their products offering better functionality, scalability, and means of garnering adoption.  There’s little carriers can do to improve on what’s already being offered.

·       MAINTENANCE IS A NIGHTMARE: Any carrier who has built their own software solutions knows that the build part is only half the battle.  The war is won by keeping it current with new functionality and continually innovating while you have limited IT resources and 10 other large projects that need to get done each hear.  For me, there were multiple year spans with 50+ enhancement sitting on the roadmap and we couldn’t even address one of them.  Solution providers on the other hand have to keep up the innovation in order to stay competitive.

·       EXPENSE IS OVERBEARING: Don’t fool yourself, building and maintaining software is expensive.  Don’t forget, that unless you build everything, you’ll have to account for expenses like eSignature which adds up quickly.  It’s important to also think about your internal resource abilities; to keep your new offering up-to-date and do it well you should expect to spend around 1,000 hours for BA and Development work annually. Let’s be honest, most carrier home grown software is not built with configurability and rules that can be defined and updated by the business areas.  Whereas leading edge technology companies are in production now with platforms that can be configured for workflow, forms and ability for customers to dynamically change the policy on the fly – Think Up Sell!!  Now that there are multiple providers offering ePolicy delivery today, prices have dramatically dropped making very little sense not to implement one of them regardless the size of your company.

·       MORE DISTRIBUTION REQUIREMENTS: This one folks is the big deal and you shouldn’t take it lightly.  Unless you’re solely a career carrier you need to think about your distribution and how they sell – direct to the consumer, via the independent channel, through banks or broker dealers, etc.  These dynamics weren’t much of a concern in 2010 as they are today.  Distributors are now demanding different workflows, communications, and ways to support their partner’s compliance when it comes to technology.  In addition, if you’re listening to the market, and I hope you are, they want a couple of multi-carrier solutions to pick from.  If you’re not on that multi-carrier eDelivery bandwagon now I guarantee that in the very near future you’ll be pushed in that direction.

I’m sure a few of you are sitting on the floor right now saying to yourself “this isn’t the Eric I know” because he had a tendency to build everything in-house.  

We’ll times are a changing folks, and our industry is finally kicking itself into high speed on the InsureTech express.  If you can’t keep up and stay innovative you’ll be pushed out of the way by the carriers you compete with.  Eventually you’ll end up like so many other carriers over the past decade that either get shut down or bought out. 

That’s the harsh reality of today, and frankly you’ve got a lot of other fish to fry than worrying about building or maintaining an ePolicy delivery solution yourself. Especially when you can easily license one that can be implemented in half the time and provide 10 times the functionality than you could ever build. 

 

About Eric Lester.
Eric has recently formed his own technology consulting company, Nexus Insurance Services, located in Charlotte, North Carolina.  He is actively engaged in working with technology companies, carriers and brokerage agencies to identify best-in-class solutions and create partnerships with the companies that are best aligned. Eric may be reached by phone at 204.328.9617 or via email 
eric.lester@outlook.com

eDelivery So Sweet!

eDeliverySweet

A while back I attended the annual event of a large independent broker dealer. It was a spectacle that rivaled any industry event I’ve been to in years. There were easily thousands of people in attendance and venue was filled with the outstanding entertainment, speakers and training.

 

While I was there I had the rare opportunity to have dinner with some senior level executives at the broker dealer and their carrier partners along with a half dozen or so of their top advisors. Amidst some jovial conversation and the occasional joke, one of the advisors blurted out, “I’ve got a real problem with you guys”. The table went silent, for what seemed to be an eternity, until a polite young lady from one of the carriers replied, “well let’s see if we can fix that”. He went on to say that he felt like the carrier and broker dealer have shifted the costs of delivering annuity contracts and life polices to his office. Almost immediately another advisor chimed in with more comments, then asked if the advisor still wanted to be kept in the loop to ensure his client received the documents and completed the process?

 

The debate surrounding this topic continued for about half an hour where issues like cost, time, compliance and lack of follow-up were all discussed. The waiter must have thought the table needed a little “time out” as he made the rounds twice filling up wine glasses. The young lady with the carrier sat quietly through the discussion, just listening. As the dessert arrived, she asked the group “what if you could have your cake and eat it, too”? She went on to talk about sending annuity contracts and life polices electronically to all the parties in the distribution channel and ultimately the client. “Other industries have adopted eSignature and eDelivery and some have equally as many, if not more, regulatory issues as ours”, she said. “The cost savings can be immense and the time savings dramatic, all while keeping everyone in the loop…in real time”. This thought seemed to resonate with everyone at the table as the group pondered how this type of process would help their unique situations.

 

I can assure you; many similar conversations are taking place daily around the water coolers, dinner meetings and conference rooms today. Electronic document delivery is a hot topic as more companies are looking to streamline processes, reduce expenses and improve the overall customer experience. So, lets take a minute to review some of the benefits and metrics around the next evolutionary step in the delivery process for the insurance sector.

 

More Than Just Polices and Contracts. When looking at eDelivery it’s important to note that there are a lot of documents besides the life policy and annuity contract that carrier could be sending electronically to save time, money and resources. Examples would be: both the pre and post sale prospectus, supplemental life questionnaires that were missed during the application process, client statements, annual disclosures and more. Although required, these documents in a paper process can be burdensome and costly.

 

Staying in The Loop. Everyone, no matter where you sit within the distribution channel wants to know where the document(s) stands once its issued for delivery. Has it been sent out, has it been received, has the client completed any necessary outstanding paperwork and has it been sent back to the carrier? Why? Because in most cases no one gets paid, in the distribution channel, until it’s complete. While in other instances, there may be big risks with areas like free look periods when possession cannot be proven. Electronic delivery satisfies this need by providing each stakeholder notifications at key points in the cycle while everything is logged for future review.

 

Cost Savings. There have been many studies conducted over the years on how much it costs to deliver insurance policies and annuity contracts. Estimates vary, but let’s take the averages around a life insurance policy for example. The cost is about $35 for the carrier, $30 for the distributor (if it goes to the distributor first or it has internal compliance added) and anywhere from $25 for the advisor if the policy is mailed and up to $200 if it’s hand delivered. That’s a lot of coin adding up to be tens of millions annually for the industry! Electronic delivery dramatically reduces expenses, in most cases by nearly 75%. How much could that save your company?

 

Time. We’re all pressed for it these days; with so many things that need to be done, there never seems to be enough of it to go around. Time is precious and when it comes to the delivery process, it’s critical. Each day that goes by brings additional risk. In the paper world, it takes about 27 days for a life insurance policy to get returned to the carrier. Electronic delivery is showing a completed cycle time of under 5 days on average with just over 10% being completed within 24 hours. This time saving is equating to a 5-6% placement lift for new business!

 

Compliance. In some circles “compliance” can be a dirty word, but lets face it, they play a very important part in ensuring we stay out of trouble. Additional paperwork means there is more likelihood of missing a step which can linked to big fines. Because an electronic delivery system can be rules driven, it can force specific forms and require eEignatures throughout the process. This type of platform guarantees compliance requirements are met and provides a detailed history of what took place.

 

Better Customer Experience. Companies all over the world are searching for ways to make the customer experience a better one. They’re looking at how to streamline processes and make these easier, quicker and more user friendly. Our world of selling financial products to consumers is often laden with many steps, start and stops, delays and paperwork that takes an attorney to understand. With eDelivery we can simplify the process, make it easy to understand and quick to complete thus raising the satisfaction levels and our placement ratios.

 

Green Thumb. Consumers are more than ever are expecting companies to provide options other than paper. In fact, its been shown that more than 80% of consumers opt for eDelivery when asked.

Consumers not only see the benefit of eliminating big binders to hold important documents but see it as a way to reduce the damage associated with printing these documents on our environment. It’s estimated that the insurance and financial sector uses more than 53 billion (that’s right folks, that’s billions) pieces of paper each year for documents like life insurance policies, annuity contracts, prospectus and more. Electronic delivery can dramatically reduce this number helping reduce carbon footprints and maintain a healthy environment for future generations.

 

It’s time for our industry to finally “have its cake and eat it, too”. Electronic delivery can solve a number of issues we currently experience using paper processes. Each party can reap the benefits of time and cost savings while providing a positive customer experience. It’s up to us to get more organized and implement platforms to make it a reality.

For information on how you can be more involved in steering the direction of electronic delivery, join one of the many working committees in the industry such as the ones offered by ACORD, LIDMA or the LBTC.

 

#imabeliever

By Roy Goodart, roy@insurtechexpress.com