Electronic Applications

Transcription

1 February 2015

2 Contents Executive Summary 3 Current Life Insurance Application Processes 5 Automating Application Processes 7 State of Canadian eapp Adoption 8 Optimizing eapps 9 Optimal Architecture and Process 10 Electronic Signatures 12 Essential Guidance 14 pg 2

3 Executive Summary Electronic application (eapp) solutions can greatly speed up insurance policy processing by substantially reducing the not in good order (NIGO) rate of submissions from as high as 65% to under 10%, resulting in faster policy issuance while significantly reducing administration costs and risk. However, Canadian life insurance companies still receive most of their new business via paper-based applications. According to one executive interviewed, Canadian firms are 10 years behind the U.S. with respect to insurance automation. In summer 2014, IDC conducted 11 in-depth interviews with senior executives at both large and smaller Canadian insurance carriers and managing general agents (MGAs) to discuss their experiences with and views on the use of electronic applications for life insurance policies. The study found that: The majority of Canadian policies are still paper based, even for those organizations with an eapp solution. The benefits of eapps are well understood by the industry. While eapps are on most carriers radar, only three carriers had implemented some form of eapp solution. None of the companies interviewed have implemented a true end-to-end eapp process. Partial eapp solutions only reduced the time to policy issuance by two to three days. Electronic application (eapp) solutions can greatly speed up insurance policy processing by substantially reducing the not in good order (NIGO) rate of submissions... FROM AS HIGH AS 65% TO UNDER 10% pg 3

4 (Executive Summary Continued) To realize substantial efficiencies, the industry needs to move towards a fully electronic application process. This requires the integration of illustration and eapp solutions, the use of electronic signatures (e-sigs), automated underwriting, and links between carrier and MGA back-office systems. A comprehensive eapp solution could reduce the time to issue a policy from the current average of 30+ days to 10 days, while also providing a foundation for customer-driven application submissions in the future. To speed up policy issuance, while reducing cost and risks, the Canadian insurance industry should accelerate the implementation of fully electronic application processes for applicable policies. It is essential that eapp solutions include features that make policy application processing easy for advisors and clients, transparent to MGAs, and drive significant efficiencies for all parties. comprehensive eapp solution could reduce the time to issue a policy from the current average of 30+ DAYS TO 10 DAYS Key eapp features include: Ease of use Substantial reduction in time from application submission to policy issuance Multiple electronic signatures Synchronized online and offline input Part of an end-to-end electronic process Support for PCs and mobile devices Integration with illustration systems Auto underwriting Electronic policy delivery Links to MGAs and ParaMed service providers 24 x 7 availability Social networking Real-time policy issuance pg 4

5 Current Life Insurance Application Processes Most of the 500,000 insurance applications processed annually by the study respondents were in paper format. This also applies to the few carriers that have introduced electronic applications (eapps). Today, a paper application is filled out by an advisor who then sends it to the MGA they are associated with. The MGA reviews the application and then works with the advisor to make corrections. The MGA then sends the application to the carrier. If there is anything out of order the MGA is contacted to assist in making the corrections. If necessary the MGA will involve the advisor. If a medical is required the MGA or agent contacts a ParaMed organization to schedule an appointment with the client. When the examination is completed the ParaMed sends the results to the carrier. Today, a paper application is filled out by an advisor who then sends it to the MGA they are associated with. The MGA then sends the application to the carrier pg 5

6 (Current Life Insurance Application Processes Continued) Once the carrier is satisfied with the application it will be entered into the carrier system. All the information is then forwarded to the carrier s underwriting group which might require additional information, requiring that the MGA and advisor be brought back into the cycle. The issuance of a policy can take more than 30 days. Paper-Based Life Insurance Application Process ParaMed Client Advisor MGA Carrier System Entry Carrier Underwriting 1. Client provides advisor with requested information and signs paper app 2. Advisor sends paper app to MGA who reviews app and deals with NIGO 3. MGA sends paper app or pdf to carrier who enters info system and contacts MGA if any information is missing 4. Underwriting retrieves info from system or via PDF or paper documents 5. ParaMed responds to underwriting requests. ParaMed process may also be initiated by Advisor or MGA based on predefined criteria ParaMed conducts telephone interview or visits client if tests are required 6. If underwriter requires additional info MGA is contacted and MGA contacts advisor 7. When all info is received and underwriting complete policy issuance is authorized 8. Paper policy is sent to MGA 9. MGA sends policy to Advisor 6 Carrier Policy Issuance Green lines show clean input submission flows Orange lines show medical information flows Red lines show NIGO information flows Blue lines show policy delivery Dotted black lines are ParaMed requests Advisor delivers policy to client and a receipt signature may be requested pg 6

7 Automating Application Processes For many simpler applications, processing can be greatly sped up through the implementation of eapps. However, for many simpler applications, processing can be greatly sped up through the implementation of eapps. These solutions can substantially reduce the not in good order (NIGO) rate of submissions from current rates of up to 65% to under 10% while significantly reducing administration costs and risk. Electronic signatures can be added to eliminate the need for parallel paper-based signature gathering. ParaMed scheduling can also be automated to further reduce the time to issue an application and speed up payment to advisors. Finally, automated underwriting solutions can be introduced to further increase the velocity of the application process. The time from application submission to policy issuance today is on average 30+ days. A comprehensive eapp solution could reduce the time to issue a policy to 10 days, while also providing a foundation for customer-driven application submissions in the future. A COMPREHENSIVE eapp SOLUTION COULD REDUCE THE TIME TO ISSUE A POLICY TO 10 DAYS. pg 7

8 State of Canadian eapp Adoption Canadian organizations have been slow to adopt eapps and, according to one interviewee, are 10 years behind the U.S. with respect to insurance automation. While eapp implementation was on the radar for most of the carriers interviewed in the study, only two large and one smaller carrier had implemented some form of eapp solution. Primary implementation objectives were to reduce policy issuance time and NIGO rates. One of the carriers has implemented back-office links to MGAs while the other recently added an e-signature process. However, none of the companies interviewed have implemented a true end-to-end eapp process. Some rekey PDF submissions, others require telephone interview follow-up, some use ParaMeds to obtain signatures, while the majority require paper signatures or call centre confirmation. These partial solutions are only reducing the time to policy issuance by two to three days. Carriers and MGAs are currently focusing on links between their respective systems and as a result eapps have not been a priority. These links will allow MGAs to monitor the status of applications being processed by a carrier and facilitate data transfers and communications between carriers and MGAs. They are also a precursor to eapps as they allow the MGAs to monitor the applications that their advisors have entered in to the carrier systems via eapps. Many of these links should be completed by the end of this year, putting in place a critical element for an optimized eapp solution. The U.S. is 10 years ahead of Canada in insurance automation. One respondent that has an eapp solution still receives 65% of its applications in paper format. pg 8

9 Optimizing eapps The full benefits of an eapp solution will only be achieved when it includes e-signatures, illustration integration, carrier-mga back-office links, and automated underwriting. With this type of integration the issuance of policies in 10 days is feasible. The critical elements are eliminating errors as the application is being created and eliminating the need for a paper-based signature process. An eapp solution should: Be easy to use and come with appropriate levels of training and ongoing support. Some MGAs want to provide a full range of eapp training and support for their advisors while others will rely on carriers. Have rigorous data entry edits, although there must also be some degree of controlled override capability to accommodate anticipated exceptions. Offer the ability to store and retrieve partially completed applications. This was mentioned by interviewees as being very important. Be browser based to allow applications to be processed from any Internetconnected PC or mobile device. pg 9

10 Optimal Architecture and Process A true eapp architecture is needed to generate significant benefits such as: 4 Electronic entry of illustration (needs analysis) information into the eapp 4 Browser-based solution with the ability to operate offline 4 Incorporation of electronic signatures (multiple) 4 Mobile device support 4 Storage and retrieval for partially completed eapps 4 eapp system entry directly into carrier system 4 Auto underwriting for simple products and cases e.g., $500,000 term 4 Near-time data transfer between carrier and MGA back-office systems 4 Close coordination with MGA admin application vendors 4 ParaMed scheduling and tracking interfaces 4 Electronic policy issuance 4 Use of Accord and CLIEDIS standards for back-office file transfers and for eapps when these standards become available Carriers are attracted by the ability of eapps to improve ease of doing business by reducing NIGO submissions. Some 50% 75% of applications submitted by agents are incorrect or incomplete. pg 10

11 Optimal Electronic Life Insurance Application Process 1. Client provides advisor with requested information 2. Advisor enters information into carrier eapp system with esignature 3. Carrier backoffice systems sends information to underwriting system MGA 6 ParaMed 5 4. Underwriting requests ParaMed information if required 5. ParaMed responds to underwriting requests. ParaMed conducts telephone interview or visits client if tests are required. May also collect client signatures and confirm identity 6. MGA systems is provided with status information via data feeds from carrier system 7. MGAs and advisors may use a carrier website portal to obtain status information. In some instances carrier sends s to advisors 8. Underwriting authorizes policy issuance 9. PDF copy of policy sent directly to client or to advisor or MGA Client 1 9 Advisor Carrier Policy Insurance Carrier System Carrier Policy Issuance 4 Green lines show clean input submission flows Orange lines show medical information flows Red lines show NIGO information flows Purple lines show carrier feedback to MGA or advisor Dotted black lines are ParaMed requests pg 11

12 Electronic Signatures e-signatures are a critical component of an optimized electronic issuance process and benefit carriers, agents, and clients. An e-sig solution is built on digital signature technology and provides a lasting record of someone s intent. Digital signature processes ensure the authenticity of the signer and the validity of the document, and any changes made to the document after it has been signed invalidate the signature. The study determined that only a few Canadian carriers have implemented e-sigs and none have implemented multiple e-sigs. However, all carriers do plan to include e-sigs when they implement new eapp solutions. Canada s Personal Information Protection and Electronic Documents Act (PIPEDA) came into effect in May 2000 with the intent to put electronic and paper media on an equal basis. e-signature Benefits Reduces processing time. Simplifies procedures and eliminates manual processes. Eliminates processing errors. Improves compliance by providing evidence of client acceptance. Gives agents more time to sell by eliminating the need to chase signatures. Eliminates the need to print applications to obtain signatures. Allows advisors to use their preferred electronic device. Digital signature processes ensure the authenticity of the signer and the VALIDITY OF THE DOCUMENT pg 12

13 (Electronic Signatures Continued) It also describes the characteristics of secure electronic signatures. The 2005 Secure Electronic Signature Regulations under the Canada Evidence Act set out technological processes (such as cryptography) that will result in a valid secure electronic signature as required under PIPEDA. Key e-signature requirements include ease of use for advisors, client opt-out, multiple signatures, and mobile deployment options. e-signature security is a key requirement and solutions should have: Multiple levels of security User authentication to reduce fraud and ID theft Document authentication Process evidence Canadian Government e-signature Criteria e-sigs must be unique to the person using them. The person whose e-sig is on the document must have control of the use of the technology to attach the signature. The technology must identify the person using the electronic signature. The e-sig must be linked to an electronic document to determine if the document has been changed after the e-sig was attached to it. The study determined that only a few Canadian carriers have implemented e-sigs and NONE HAVE IMPLEMENTED MULTIPLE E-SIGS pg 13

14 Essential Guidance Before proceeding with an eapp implementation carriers should establish a straight through processing (STP) vision and a plan to implement the vision in a progressive manner. IDC does not recommend implementing all components in a big bang process achieving full STP will likely be a multiyear process. Deployment roadmaps will vary based on carrier objectives and MGA and advisor needs. To speed up policy issuance, while reducing cost and risks, the Canadian insurance industry should accelerate the implementation of fully electronic application processes for applicable policies. It is essential that eapp solutions include features that make policy application processing easy for advisors, transparent to MGAs, and drive significant efficiencies for all parties. IDC recommends that you consider the following when selecting an eapp solution: 4 Ease of use 4 Substantial reduction in time from application submission to policy issuance 4 Multiple electronic signatures 4 Synchronized online and offline input 4 Part of an end-to-end electronic process 4 Support for PCs and mobile devices 4 Integration with illustration systems 4 Auto underwriting 4 Electronic policy delivery 4 Links to MGAs and ParaMed service providers 4 24 x 7 availability 4 Social networking 4 Real-time policy issuance pg 14