Technology Drives Change in Policy Delivery

Embracing today’s powerful technology can provide solutions to some of the major challenges facing the insurance industry today, including the task of reducing policy handling and delivery expenses, increasing retention rates, cross-selling additional services to clients, supporting distribution channels and building brand awareness.

Policy production and delivery costs $4 to $9 per policy — a significant outlay, when you include copies for agents, brokers, lienholders, mortgagees, archival and reprints. Depending on the total number, this can easily translate into millions of dollars.

Dramatic savings on distribution and internal handling costs can be realized by using e-policies — policies that are delivered to customers electronically. Incorporating this change of delivery options into your strategic business plan will help you achieve your overall objectives while bringing convenience and value to your customers.

Traditionally, the policy document has been considered a legal requirement, contract or form. Because insurance is a service, the document itself becomes the product. Your policy is a customer touch point and can be an opportunity to brand. It reinforces the consumer’s decision to buy and can eliminate the human tendency for buyer remorse — people buy emotionally but later need to justify their purchase rationally.

Historically, policies have evolved from impact printed multiple-part forms 10 to 15 years ago, to multi-page laser printed documents. And now with the Internet, policies are being revolutionized. The Internet offers tremendous opportunity for businesses to provide better service for their customers.

Canadians are becoming more comfortable transacting business over the Internet. Looking at other industries, we see significant changes that will impact how your insureds will want to communicate. Most of Canada’s big banks have signed up with CertaPay Inc. to offer person-to-person (P2P) payment services, where individual banking customers and businesses send and receive payments by e-mail using an existing banking clearing system. Forrester Research Inc. predicts P2P payments will skyrocket in Canada because we are world leaders in Internet use — your insureds are likely now receiving and sending e-payments to other companies they deal with.

Bank research indicates customers are willing to give up returns for accessibility and this has inspired some financial institutions to alter their delivery strategies, including life insurers. The entire sales process at Clarica is on-line. Likewise, TD offers on-line applications and acceptance for its Survivor’s Financial Plan insurance. Mutual fund companies electronically deliver confirmations and statements with pre-authorized consent. As well, many companies make their client statement information available for clients to view on-line.

This is the age of consumer choice — your insureds can now choose to receive communications electronically from other realms of the financial services industry and will expect the same scope of delivery options from their insurance providers.

Enhancing your delivery options should be an integral part of your overall business objectives:

Reducing expense ratios. E-policies eliminate postage, paper and inserting. You can e-mail proof of insurance copies to lienholders and mortgagees. Broker or agent copies can be provided on CD with an easy-to-use index search system. Copies can be viewed on-line by your call center representatives, agents, brokers or insureds. Microfilming and filing costs are eliminated, and there is no need for stocking pre-printed forms.

Increasing retention. Customer loyalty will be reinforced and retention rates enhanced by providing your insureds with a choice of communication. Being in touch electronically also opens new opportunities for interaction through existing or new loyalty programs.

Cross-selling. You can incorporate a cross-selling message into your policy. If you are concerned about your brokers writing business with other carriers, you could include a letter from them cross-selling a new product or service they already offer.

Supporting distribution channels. Easily accessible and searchable electronic policy copies, whether on CD or viewable on-line, means your brokers or agents will spend less time filing, finding and replacing. This makes it easier for your distribution channels — brokers, agents, on-line or direct — to sell more of your products and services.

Building brand awareness. Valuable additional information about the company can be included — what to do in the event of a claim or helpful risk management tips such as taking a personal inventory. It is an opportunity to start a two-way dialogue.

Will your distribution channels resist this change? Perhaps not, as research from Royal SunAlliance Insurance shows some 90% of brokers are comfortable with the idea of the company dealing directly with customers, provided they remain part of the process (see CU, October 2001). And an Informco Inc. survey, taken at last fall’s Insurance Brokers Association of Ontario convention, shows 68.5% of broker respondents ranked electronic delivery of policies as a high priority.

The business world outside the insurance industry has taken the technology leap that is driving changes in document delivery. Now is the time to incorporate these changes into your policy delivery strategy and transform your method of doing business.

The Wired World welcomes your feedback. Contact us, via E-mail at <vspencer@corporate.southam.ca”>b>vspencer@corporate.southam.ca