Electronic transmission of information and communication, from one end of the supply chain to the other and back again, is something other industries probably take for granted today. In life insurance, however, that flow is more halting than seamless, with gaps at several points along the way where participants need to intervene manually to get what they need.
Initial steps to remedy the problem were first undertaken almost 10 years ago. And while each subsequent effort has built on the success and lessons of the past, progress has been slow.
“I had one distributor say their board of directors asked what percentage of business they have in insurance, versus investments. They had to say ‘We cannot answer that question – We know our investment business, but we don’t know what insurance business we actually have,’” says Tana Sabatino, CLIEDIS’ eData project manager. “It was a big surprise. It was a surprise to the carriers as well,” she adds, saying the discussion was enough to make those involved understand why the effort towards better transmission of information was important.
The slow progress can likely be attributed to the need for a constant, and ongoing effort at the diplomatic two-step – a dance to involve all invested stakeholders, including carriers, distributors, their IT departments, vendors, and end-user agents.
The effort has required a rather amazing amount of back and forth, first to develop standard data sets that everyone can agree on, and follow-up before, during and after implementation of any recommendations or subsequent fixes.
To have a clear view of a distributor’s in-force block of business, for example, Sabatino says “We have not seen the implementation we wanted to see, so we went back to figure out why. We didn’t see results because we were asking for too much information,” resulting in prohibitively large files that took a great deal of time to process.
“So I went back to the distributors and their systems vendors, to find out what they needed. It always came down to very basic information – they needed to know the policy number, and they needed to know the status. There were a few other data points, but that was basically it.” When the revised requirements were brought back to carriers, the effort found renewed support.
“The carriers have been getting pressure to produce in-force data feeds,” she says. One carrier, however, had to point out that it took almost 36 hours to produce the original feed requested.
“That was the cycle of run time. Obviously, we can’t have something running for 36 hours to create one feed, so we had to come back to them.” On the distributor side, meanwhile, the job involves taking this feedback, and using it to help stakeholders understand how their extra data requirements might stop companies from getting a feed from carriers altogether.
Sabatino estimates this ongoing dialogue has included almost 500 people over time. Concerns expressed by this group too, are almost as wildly divided as their needs. Carriers want any additional time and resources needed to implement the recommendations, to augment, rather than replace existing technology investment.
Distributors, meanwhile, employ very different support services to their agents, some acting as intermediary between agent and carrier, some not, with carriers themselves needing to decide who is authorized to handle service change requests along the way.
The group’s demands also need to follow a logical progression, even if that path isn’t clear at the outset. One larger realization arrived at along the way, for example, was that data needed to service a policy is very different from the data needed for reconciliation and data-mining. “This split of usage is paramount to understanding the true business requirements.”
Similarly, although distributors need data from carriers that will help them build alerts – for the moment when a policy lapses, for example, that functionality for notifications can’t come until there is a means of viewing policies in the system in the first place.
At the core of the industry’s business too, are deeply ingrained beliefs about what makes a competitive advantage. Where many other businesses deal in services or products that are commoditized, or at least somewhat standard, insurance companies still differentiate themselves by their basic product rules, application wording, and actuarial-driven methodologies.
“It’s the nature of the business,” she says. “Banking is commoditized. I have a chequing account. I have some features, or I don’t have those features, but it’s highly commoditized. Insurance, particularly life insurance, very much comes down to product features and underwriting calculations. The things we use to price the product are extremely complicated, and that complication lends itself to every other facet of the industry.”
“We focus on ways to commoditize the data sharing, but it’s taken a long time to get there because companies do business so differently. They have very different rules, and their underwriting processes all have their own unique flavour.”
Finally, once there is consensus on the data-sharing front, particular attention needs to be paid to the process of implementation. “The stickiest items are always found in implementation,” Sabatino says. “We’re not a policing organization. I can’t fine you if you don’t implement the changes. That’s why the work we’re doing is so critical - we’re finding out what is going to get implemented before we publish the recommendations.”
Right now, the data needed to process paramedical information is being discussed, in-force process improvements are being made, and commission data feeds are next in the queue for discussion.
Overall, Sabatino says eData is actually ahead of schedule, in year two of its established five-year plan.
“I anticipate it will be a four-year plan at the pace that we’re going,” she says. “Our focus is shifting, even now, (from analysis and recommendations) to really support implementation.”