Insurance agents and carriers both know that capturing new business centers around offering fair and competitive prices. Most understand that pulling in customers also hinges on the ability to issue coverage swiftly and accurately.Paul Bouwers, principal of Pella, Iowa-based Pella Insurance Agency, never had difficulty finding competitive quotes for auto or homeowners insurance through his many insurer affiliates. But when it came to maximizing the service behind new or existing business, Bouwers had a burning desire to get policies in the hands of Pella's customers much faster.
"It was always a process of faxing paper back and forth between our office and an insurer's. It would be a 12- to 30-day process before a customer would have a policy in hand. But customers have developed a 'drive-through' mentality about fulfillment-they want to be accommodated instantaneously," says Bouwers.
Picking up the pace
Midwest Family Mutual Insurance Co. had never lacked for attracting independent agents to its doors--its reputation has been that of an insurer that provides agents with competitive price for both personal and commercial lines coverage.
"New-business growth has never been a problem for us, but the concern had been whether we could effectively service our agents without the proper tools in place," comments Ron Boyd, president of Minnetonka, Minn.-based Midwest Family. "We always believed we had solid service levels, but there's no doubt that operating in a paper-based environment slowed down the process."
Through a Web-based policy processing solution that went live in 2002, both Midwest Family and Pella Insurance, among other agencies, are reaping big dividends
Midwest Family is now processing policies electronically while Pella Insurance, which was the first Midwest Family agency to beta-test the solution, is generating a handsome increase in new-business submissions.
These efficiencies came to fruition when Midwest Family implemented INSideOUT Policy Processing, a fully-integrated policy administration solution developed by Montreal, Quebec, Canada-based CGI Group.
INSideOUT provides policy administration, billing, reinsurance, agency processing and management/statistical reporting. All the components of INSideOUT work in unison to promote accuracy and quickness in policy processing-all carried out online in real-time, which enables changes to a policy to be done instantly.
A multiple-lines property/casualty insurer that markets personal and commercial insurance in six Midwestern states, Midwest Family has developed a solid reputation for delivering a high level of agency-related customer service over the years-agency surveys indicate a 96% level of satisfaction with the provider's abilities.
With 350 independent agencies in its network, Midwest Family generates $44 million in net premiums annually, of which 60% consists of personal lines business. All told, the provider has 43,000 policies in force.
Despite its success, Midwest Family realized a need to reach higher on the servicing end by adopting a Web-based real-time policy rating and policy administration environment for its agent network.
"At our company, the Web had been non-existent back in the mid-1990s," says Boyd. "We communicated with agents via e-mail, but there was no policy or billing on the Web, and no interactive policy issuance. We did not have an automated underwriting solution in place or online report ordering. Now we have all of it."
With improved technology in place, Midwest Family realized it could hike its service levels even higher. And with Web-based processing, it could also significantly ease call volume at its customer contact center since agents would be able to fulfill policy matters independently.
But to make the investment, there was one caveat: "It was essential that we use the Web to grow the business--but without having to increase staff," Boyd explains.
Since 1993, Midwest Family had deployed a policy processing system developed by INSpire supporting a rating engine from AQS Inc., Hartland, Wis. Operating two Oracle databases--one each for personal and commercial lines--Midwest Family's goal was to combine its personal and commercial systems and then push the core system out to the Web.
When INSpire was acquired by CGI last year, Midwest Family gained access to greater expertise and resources. Over the years, CGI regularly added functionality to INSideOUT. During this time, Midwest Family, throughout the late 1990s and into 2000, operated from its original INSpire processing system.
That's when Midwest realized that it had to invest in a systems upgrade. "INSideOut is now offering its eighth version, but we passed versions two through seven before implementing the most recent," Boyd adds. "We went from operating in a 16-bit system environment to a 32-bit environment."
As CGI's team went to work with Midwest Family, one of the first tasks was to create a bridge connecting Midwest Family's existing rating product and integrating the components with its back-end system.
"It was a soup-to-nuts conversion where we custom-designed work flows to adhere to the client's needs," says Gordon Gaar, vice president software technology, IBS (insurance business sector), U.S. division, CGI Group.
"It's a components-based design where there is no dual maintenance of more than one rating system. We developed the Web algorithms to comply with those written for the back-end system."
With the base INSideOut system launched in July 2002, Midwest Family rolled out online report ordering, automated underwriting and workflow two months later. This April, the carrier launched an interactive Web site for personal lines' new-business rating, and before the year is over the company will introduce electronic fund transfer.
"We began with a prototype system in March 2002, which involved a great deal of hard coding," says Ann Kelly, CIO for Midwest Family. "Validating algorithms was a big task to perform. We worked seven days a week for six months to meet the July 2002 program launch."
Currently, agents who log onto the Midwest Family Web site navigate to an e-MFM Web link to access a user portal that enables agents to begin interactive policy processing.
Under the old system, agents normally would place a call to a contact center to obtain necessary new-business materials. Now, they can bypass a contact center because the customer data resides on the Web. In about 15 minutes, an agent is able to have returned a qualified quote for new business.
From a security standpoint, Midwest Family Mutual controls user access within a role-based operating structure. "XML-configured files enable a high level of security and user diversity, since so many agents have different access needs," states Gaar.
Currently, agents can use the interactive components of Midwest Family's site to enter new business quotes for only personal lines. On the commercial side, agents can only conduct policy inquiries.
In the future, Midwest Family plans to enable its agents to become interactive in areas such as policy endorsements, a capability that could be part of the next-generation investment in INSideOut.
"This investment has enabled us to control our costs of acquiring new business, and we're getting about 25% more applications coming in via the Web," Boyd explains.
With the program running strong, Midwest Family doesn't plan to make it available to additional agencies.
"There's a moratorium on new agencies," says Boyd. "We could actually double our agency network if we wanted to but we're more concerned about conservation of capital and keeping the program in the hands of existing agents."
One of those participating agencies is Pella Insurance, which writes 70% personal lines coverage and has net premiums of about $1.7 million. In early 2002, Pella was selected to perform beta testing on INSideOut.
The need for an upgrade in automation was simple. "We struggled in the past," says Bouwers. Like many other insurers, "Midwest Family always had competitive pricing, but INSideOut enables us to pull up a policy online instead of having to refer to the policy jacket. On a new-business quote, we can issue a standard policy in about one hour," he says.
"In some cases, this process would take 2 to 3 days. It's definitely enhanced our ability to write more business-I'd estimate that we are bringing in 25% more new business due to the efficiencies of INSideOut. The power behind the solution is a key reason Midwest Family is at the forefront of choice of placing new business in our agency."
And it's not just speed, but accuracy that drives the process. "Once a quote is placed, it's 98% solid. That's a refreshing change because another auto insurer that we do business with, we've found that 40% of new-business submissions have to be kicked back for corrections, particularly in verifying one's motor vehicle records," Bouwers says.
One key aspect of Web-based policy processing that has reaped internal cost savings for Pella Insurance is the recovery of agency management system costs.
"Now that we use the Web for quoting new business, we've been able to phase out our existing management system," Bouwers adds. "We can launch Midwest Family's Web site, paste in a policy number and we have customer data instantly. It's a direct-to-company workflow with the most accurate information possible."
In addition to CGI Group, Midwest Family engaged two other vendors that offered proposals for the policy administration upgrade, but ultimately Midwest Family opted to keep its business "in the family," says Boyd.
"CGI was in the driver's seat. We knew how CGI thinks and works. They proved to have a great deal of empathy for our specific needs. Another distinction of CGI is that their people have all developed a great deal of business analytical skills.
"It's not always hard to find competent tech people, but it is hard to find ones with business skills. CGI encourages its people to improve their knowledge of insurance so they can understand the dynamics of the industry."
After mastering the learning curve of the new system, Midwest Family has been able to realize measurable return on investment paybacks, says Boyd.
"Through policy imaging, all policies now reside on the Web. That's fueling some real return numbers," he says. "We have increased net premium 21% since the program went live and did it without adding staff. We are actually overstaffed by two people, but we don't plan to make any layoffs.
"We've also seen productivity increase 5%," adds CIO Kelly. "Now, in the first year post-install the bugs are out of the system and the learning curve is flat. We see big gains to be made in the foreseeable future.
"Our goal in 2004 is to increase net premium another 10%. And another benefit is that more people can now work from home with this system in place, meaning that we're on the way to becoming a virtual company."
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