Editor's note: Click here for McDonnell's first entry, which outlines a perceived efficiency problem in life insurance distribution
Needs and leads: Growing the number of new sales opportunities
Needs and leads are the way producers and brokers know they are selling the right product to the right person. Selling the wrong product can lead to early attrition, minimal top-line growth, and lost opportunities for future sales.
A "single product sale and selection" bias often happens with paper applications, which are designed to accommodate a single product selection rather than accommodate the needs of a customer, household or account. In this one-application-per-product environment, selling a portfolio of products to a household is more of an administrative burden. To further perpetuate this, commissions are tied to the perceived value of a particular product, rather than the lifetime value of a customer, household or account.
Automating the customer-to-product selection process allows the agent or broker to think about the customer first, not the product. This isn't necessarily new thinking; it simply takes life insurers' online calculators to the next level.
For example, a mobile electronic survey for the sales agent (captive or independent, retail or institutional) can take in new customer information – financial health and goals, risk appetite, etc. Merging this with information already in other systems creates a full customer "record." Mapping rules (including suitability rules) will identify categories of products to meet the customer's needs and investment profile.
The customer can then review the survey results either online or on a mobile device, showing their needs mapped to product categories. Customers may be more likely to buy additional products when they can see their own data and the products that may best suit their needs.
e-Applications: Expediting the sale
Underwriting some life insurance products can take up to 90 days – often because of problems in the completion of paper insurance applications. Correcting manual errors means having internal resources chase down missed, omitted or incorrect data on the paper application. The delay can frustrate clients, driving them to organizations that already have e-applications.
In a paper-based environment, compliance evaluations generally occur after underwriting is complete, adding additional time to the processing. Paper applications are not updated as frequently as rules and regulations change. Including all the different compliance questions on a paper application would make it too large and off-putting.
Automating the sales process ensures quicker turn-around and better quote-to-close ratios. E-applications can piggyback off of the e-survey, replacing the paper application. The e-application can be auto-populated, with required data associated to a prospective customer's current situation. Content can be changed easily as suitability rules, compliance requirements and procedures change.
Providing an easy way for customers to select and apply for insurance products reduces turn-around time and increases the likelihood of multi-product sales.
Retain, renew, and convert: Harvesting existing revenue opportunities
Retention rates in some product lines can be as low as 82%, and renewal rates even lower. Imagine what it would mean to a company's growth if those rates could be improved by even 5%
Unfortunately, the person in the best position to affect retention, renewal and conversation rates – the sales agent, producer, or broker – typically lacks visibility into customer actions that might signal either risk of attrition or the opportunity to renew or convert. The sales agent also generally lacks a true CRM system to provide insight into customers' important "life events," which makes it harder to sell the right product at the right time.
To improve retention and add-on revenue, leverage business process automation and on demand data to bridge the information gap between agents and the siloed systems. Push out alerts to agents when their customer calls headquarters to find out the cash surrender value of a life product. Or, push out an alert to an agent when their customer misses a premium payment.
Provide your agents a view into their portfolio as it is represented by the policy administration and claims systems. Send out "renewal" activities to an agent far enough forward of the event that the agent can schedule time with the customer to learn about life changes that could trigger a new need in their product portfolio. That way, your agents can write more business for you whether at their desk or their mobile device.
In conclusion, the benefits of automation in sales and distribution extend beyond premium growth. Automation reduces cost and makes it easier for all concerned to do business with the company, whether an employee or partner. Providing what one needs when one needs it, coupled with an ease of doing business, are characteristics of modern day companies in growth mode.