It's no surprise that the workers' compensation market has been challenged by a host of issues that have driven costs skyward for carriers and agents. According to the Council of Insurance Agents and Brokers (CIAB), Washington, D.C., commercial property/casualty insurance premiums continued to decline significantly during third quarter 2004.
Citing workers' compensation as an isolated "trouble spot," CIAB notes agents' biggest concern: price competition and insurer solvency. Other issues, such as the medical care portion of lost-time claims, weak return-to-work incentives and excessive litigation further contribute to this vertical market's troubles-and to carriers' ability to remain competitive.
Experts say that the secret to retaining a competitive advantage, however, lies not just in monitoring expense ratios: It's in using technology to streamline customer service and build business.
Forrester Research, a Cambridge, Mass.-based technology research firm, calls it "Continuous Customer Management"-a service-oriented approach for validating, distributing, and acting on customer data at every touchpoint.
"Leaders in financial services, such as workers' compensation carriers, are shifting to systems that use customer information to make service proactive," says Erin Kinikin, a Forrester vice president. "Those systems will help companies use accurate, up-to-date information to deepen relationships, detect critical changes and drive frontline decision-making."
A clear mandate
Tim Thackaberry, director of information technology at New Mexico Mutual Group (NMMG), understands the importance of delivering accurate, up-to-date information and the highest level of operational efficiency to service the company's internal and external customers.
When the company's board of directors retained a new senior management staff less than two years ago, the mandate was clear: Find a way to make it easier and more economical for NMMG's more than 300 independent agents to do business with the carrier.
Thackaberry was charged with helping implement a larger scheme: In tandem with the company's goal to divest its personal lines, he would work with internal sources and agents to simplify workflows and create efficiencies.
By doing so, NMMG would be able to focus fully on building on its 30% market share in New Mexico's workers' compensation market.
Established in 1991, NMMG, Albuquerque, N.M., provides insurance to more than 6,000 commercial customers throughout the state. Posting $65 million in 2004 annual revenue, the newly refashioned single-line company wrote roughly 2,600 new policies and 10,000 renewals for the same period.
"These policies were written on 13-year-old internally developed systems," recalls Thackaberry. "Our legacy systems were Oracle forms-based. They were antiquated, including the processes behind them.
In addition to revamping the processes, we needed to replace the mainframe system, cleanse the data and upgrade everything. It was obvious that we needed to start with underwriting."
Working within the framework of the reorganization, Thackaberry's challenge was to analyze existing methodologies, incorporate new processes and create a system that would improve productivity and responsiveness in policy quoting, rating, binding and issuance.
"Even before the reorganization, we knew we had to get rid of the manual processes and associated paper logjam," he says.
Selecting a system
After studying NMMG's existing workflow and gathering agents' feedback, the carrier selected an Internet-based policy administration system called Comp-Quick (Version 4.0) from Ravello Solutions, an Atlanta-based company.
The Web-based software uses table-driven technology to help agents and carriers quote, issue, bind, endorse and audit a policy throughout its lifecycle.
Using CompQuick, agents log on to the carrier's secure Web site and complete information that populates the ACORD form.
"They are basically filling out the form electronically rather than by hand, which enables the agent to submit it in a matter of minutes, depending upon how complicated the application is," says Rick Pagan, NMMG's workers' compensation underwriting manager.
The submission is delivered via Internet to the underwriting work queue, where underwriters can approve, decline or ask the agent for additional information.
The hallmark of Ravello's software, notes Thackaberry, is its ability to present the user with all of the policy's pertinent messaging and associated data. For example, an agent might receive a rejection notice during the quoting process due to restricted risk, loss history or other issues.
However, if a new quote received by an NMMG underwriter is linked to that customer's name, address, or other identifying information, CompQuick seeks any and all associated data and advises underwriters via an attached warning.
Because the software creates different workflows for agents and underwriters, underwriters can make further exceptions to the file that are not available to the agency force. "That same risk may be presented at some point in the future to another underwriter, who will now be able to see and act on the previous history and experience," Pagan says.
Once the quote is approved it's sent electronically to an agent and appears in the agent's work queue. The agent can print, fax, or e-mail the policy to the insured.
Another benefit is that CompQuick's policy history page provides an instant view of a policy over a period of time, including endorsements in effective-date order.
"Previous history and experience was captured via a large internal scanning project," Thackaberry says. "Once we were up and running, we were happy to call the storage company to remove all the paper files, and happier still to have our archives held electronically for use going forward."
Although the new system has only been in place since October 2004, Pagan reports a dramatic drop in call center activity. In 2004, NMMG processed more than 72,000 customer calls.
"We know there has been a huge drop," Pagan says. Customer service questions-such as whether a specific class code is appropriate for the risk, or if maximum credits are allowed because of good loss history-are now answered via e-mail. "All comments are attached to the policy, a click away," he adds.
The level of customer service agents are providing has improved, says Thackaberry, who reports that 95% of NMMG's business is coming in through the new system. "Our agents are Internet-savvy and are already using the Web to transact their personal lines business with other carriers," he says.
"This really closes the loop because our underwriters now have the ability to communicate with our agents in real time, and promptly service our agents so agents can service their customers. This reduction in processing time creates efficiencies and saves money for all involved. Our agents couldn't be more pleased."
Pagan sees other benefits to the new system. "Our previous system was not transaction-based," he notes, "so approximately 70% of our quotes, policies or endorsements would be processed and not touched again. The data was out there, but not available to us for analysis or reports. "With the new system, each and every transaction's data is captured. We can slice it and dice it for management, agency or even regulatory reports," he adds.
The bigger picture
Andrew Serowitz, Ravello's executive vice president and chief operating officer, credits NMMG's commitment to a larger vision-to decrease costs and increase customer service-with the success of the system's seven-month implementation.
"The technology and underwriting departments at NMMG thoroughly planned their marketing and customer service strategy around technology," he says. "It wasn't without challenges, because the company had a large constituency that was used to doing business a certain way, and we understand that workflows can be sacrosanct.
"Our mission was to help NMMG replicate some of these workflows so there would not be a big change to users, but at the same time to enable users to enjoy substantial gains in efficiencies and increase responsiveness to their agents."
The company is measuring the system's effectiveness via service standards, notes Pagan. "We are tracking our underwriters to see how much they can process in a certain period of time. We hope to be able to measure how much this tool enables us to speed up our whole underwriting process."
Thackaberry maintains that proof of long-term success will not just appear in the expense column.
"A good portion of NMMG business is small-premium accounts, so the efficiencies provided by CompQuick are important," he says. "Another long-term goal is to increase business."
Pat Speer is a business writer based in the Chicago area.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access