It’s no secret that in order for insurance carriers to sustain interest among varied consumers, they must focus on innovative product offerings, take the products to market in real time and connect with consumers at a personal level. The key to achieving these goals lays in effectively relating to producers as individual members of a greater distribution channel.

There are many options for producers to choose from when deciding which products to offer and recommend. Therefore, to increase a carrier’s chances of maintaining mind share (and wallet share) with producers, it behooves the carrier to ensure that producers are satisfied with their association and actively selling products that are high-priority for the carrier. To achieve this, carriers need to employ the right strategy in distribution management to attract, empower and retain good producers.

Today, carriers are realizing the benefits of automating internal processes even and especially in the face of budget constraints. Effective distribution management technology makes it easy for a producer to do business with the carrier by providing accurate, timely payments and tools to increase sales effectiveness and access self-service information.

Thus, insurance companies who invest in new processes and technology for automating the sales process can see cost savings in many forms – including increases in producer retention. For career or captive models this is especially important, as the cost to recruit and train an agent entails a large investment.

Investing wisely on distribution management capabilities brings a guaranteed ROI by securing producer loyalty and mind share, as well as increasing career-agent retention and decreasing the amount of investments wasted on agent attrition.

Managing General Agents (MGAs), large insurance agencies that manage over 250 career agents and smaller agencies, are plagued by unique administrative challenges. Because they sell different types of products from multiple carriers across multiple states, and pay commission to an oversized force of writing agents and general agencies, MGAs are prone to difficulties in administration that are best handled by a specialized business technology solution.

However, it is difficult for MGAs to find solutions that entirely meet their business needs since they fall in between the scope of the most common solutions available. For instance, they do not require the extensive policy management or billing and enrollment systems in place at the carrier level, yet they are too complicated to rely on typical agency management systems in place at the general agency and small agency level. However, there are solutions available that can help MGAs manage three main areas of their administration and ensure the sustainability of their business.

1. Policy management and revenue forecasting: The typical MGA learns of a sold policy when they receive their commission check from the carrier. But from that point forward, the MGA has no way of tracking changes to the policy, such as a cancellation, that may impact their commission revenue. MGAs need an automated way to receive updates from the carrier on the status of sold policies.
2. Advancing and charge-backs: It is common for MGAs to issue their agents advances upon submission or issuance of a policy, sometimes up to 8 months or a year in advance. If the carrier changes the commission plan or cancels a policy, the MGA needs to charge the agent back for the outstanding amount advanced to the agent. This is a difficult task to accomplish without an automated system to track and calculate advances and charge-backs.
3. Payment reconciliation: With carrier compensation plans becoming increasingly sophisticated MGAs have no reliable measure in place to assure that payments received from the carrier are accurate. They need an automated way to model the carrier’s compensation plans, calculate expected commissions, and compare expected to actual amounts received.

Any stakeholder in the healthcare industry is sure to be closely monitoring the discussions related to Healthcare Reform. The controversial issues at hand include co-ops versus a public plan, the millionaires' tax and business penalties, and every congress person and journalist seems to have a different opinion on what has a chance of being included in the bill.  Yes, there will be active speculation until the bill is finally passed; but whichever way the wind blows, employer-sponsored plans will undoubtedly be affected.

Although the latest word from Obama that employers will be able to keep their existing coverage is reassuring, it’s highly likely that some disruption will occur. There may be regulatory changes in store for insurance companies, as well as regulations requiring employers to provide health benefits as part of their benefit programs. If employer groups are faced with this imposed expense, it could mean closer evaluations of plans for both benefits and cost. Employers will choose the insurer that provides products that both appeal to employees and fit within their budgetary constraints – which will be tighter than ever.

Healthcare insurers need to be as innovative as they can to meet the requirements of individual customers and still keep products affordable. Moreover, they need to be able to keep pace with the market and quickly turnaround benefit package proposals that are easy to read and speak to the employer. Innovation in offerings becomes moot unless the value of a product is clearly and quickly communicated to the market. Communication between carriers and agents will become more important than ever – as will marketing, communication and customer service.

President Obama’s Health Care Address to Congress last night was a dense and succinct explanation of his proposed plan for health care reform, bookended by invocations of history, sentimental anecdotes, and a posit on the definition of American character. The president’s speech was received positively by the American public, with sixty-seven percent of speech watchers agreeing with his proposed plans (CNN).

I would be curious, however, to see what percentage of people who work at insurance companies would approve his plans. The president proposes many restrictions on health insurers that would fundamentally change the way private insurers do business, posing a unique challenge to the tens of thousands of American men and women who work for private insurance companies, some of whom we at VUE Software have the privilege to work with on a daily basis.

Mr. Obama stated that his plan would make it “against the law for insurance companies to deny coverage for preexisting conditions” or to “drop coverage when you get sick or water it down when you need it the most.” He also said that insurers would “no longer be able to place a cap on the amount of coverage you can receive.” Mr. Obama ingratiated himself by stating that people who work at insurance companies do not do these things because they are bad people, but because these actions can increase profits. Since the president maintains that his plan would also lower the cost of health care in general, it may become easier for insurers to offer more affordable premiums and stay profitable.

In addition to these changes, a more drastic proposition of Mr. Obama’s is a new “insurance exchange” that would allow Americans to shop amongst insurers’ options for competitive prices.  Insurers would elect to participate in the insurance exchange, which would allow them to compete for the business of the millions of Americans who are currently uninsured. In order to participate, each of the private insurers would be required to provide a base package of benefits, as regulated by the government. Mr. Obama states that “As one big group, these customers will have greater leverage to bargain with the insurance companies for better prices and quality coverage.” He points to large employer groups as the basis for this claim.

This plan has all sorts of implications that Mr. Obama did not expand upon.  We encourage you to share your thoughts on the issue of health care reform, and tell us how you think the president’s plans may affect your business.

A recent article “A Robin Hood for Inconvenienced Fliers in Europe” in the Wall Street Journal caught my attention for the company’s innovative use of software technology to address a social issue. The article profiles a company founded  by Dutch software executive Hendrik Noorderhaven for the benefit of inconvenienced air passengers in Europe. His company EUClaim takes up cases from aggrieved passengers who are entitled to compensation due to flight delays, cancellations, etc, caused by a fault of the flight carriers.

 “His staff has tapped dozens of sources of information on air traffic, airport operations and weather conditions to build and constantly update a database of every flight in Europe's skies.” EUClaim compares the claims from their clients with the information stored in their database. They make a careful determination of the reason for the hassle, whether within the control of the carriers or due to external factors like weather conditions. The company uses their evaluation to compel the airlines to pay up, and will even fight the matter in court, if the airline is found at fault and refuses to pay.

The driving factor behind the company’s ability to restore the fliers’ rights is a method for data collection and an educated analysis of that data. The company is an example of the versatility of technology to assist in various applications, including providing a valuable service to otherwise disenfranchised consumers.

Insurance carriers, whose business depend heavily on large amounts of data, may note how technology can engender business results through a productive storage and analysis of data. An example of an insurance application of this concept would be a Customer Relationship Management (CRM) solution integrated with a Compensation Management solution. Such a system allows information of agents as well as the sales cycle to be stored and shared in real time between producers and managers. This technology allows carriers to save time and money on simplifying administration and reducing errors. In effect, the carriers become their own “Robin Hood’s” – reducing wasted resources to allow the carrier to better serve their customers.