The second part of our exploration of policy administration systems, following an introduction outlining why they make all the difference to successful insurance carriers.
A conversation with Dan Watt, FINEOS Senior Vice President of Product Management
Why is having a robust policy administration system critical for insurance carriers?
With today’s technology, filing a claim should be easy and fast. Payment should be quick. People expect speed and accuracy. With claims, carriers must think about the entire downstream system supporting filing and adjudicating a claim, as it significantly impacts the customer experience.
If you’re a carrier operating multiple systems to manage enrollment, eligibility, and billing – speed and accuracy are difficult to deliver within the customer experience. A robust policy administration system, on the other hand, can feed seamlessly into the claims process – providing all the aforementioned claimant information at one time — and the automated claims experience is easier for everyone involved, especially the claimant.
A modern policy administration platform can significantly benefit an insurance carrier. Leveraging the ability to manage multiple layers of plan and policy data to provide digital solutions for the customer is paramount to a carrier’s success. Technology has moved from being just a data repository or collection of older systems into truly active solutions focused on digital engagement, raising the bar as consumer expectations increase. The old way of managing your business across Excel spreadsheets and a multitude of databases or platforms is over. In short, companies that embrace modern insurance policy administration systems can both meet the consumer where they are and drive efficient operations from new business through claims adjudication.
So, a modern policy administration system puts everything together in one place. How does that move a carrier closer to achieving its business goals?
Traditionally there has been a chasm between underwriting, claims, billing, and commissions platforms in the insurance world. Today, there is much greater awareness of how much those separate legacy systems hold a carrier back from speed to market and improving the customer experience.
Modern platforms are built to holistically address the business of employee benefits. Companies can increase speed, accuracy, and customer experience, which all play into business goal achievement and create space for further innovation and enriching the employee experience.
For instance, look at term life insurance. The process of medical underwriting during enrollment should be simple. But if you do not have a policy administration system and your member data is not easily accessible, the process will be cumbersome with multiple steps and systems. For the employer, this can mean being in the dark about coverage and claims status, and not being able to serve the employee well or in a timely fashion.
From an enrollment perspective, a policy administration platform helps the employer by making medical underwriting enrollment and billing seamless and much quicker.
Another consideration is that accident, hospital indemnity, and critical illness claims are high-volume segments. Improving the enrollment process for the employee and employer and leveraging automation in this high-volume environment, including claim adjudication, can provide significant ROI, including better employee satisfaction.
Specific to claims intake, the carrier’s goal is always to make the experience as simple and pain-free as possible during what typically is a very difficult time for the claimant. An employer’s ability to support their employees through a challenging time with a pleasant and easy claim experience can have a significant impact on loyalty and long-term business success.
From an ROI standpoint, modern policy administration systems can positively affect revenue, profitability, growth, and the ability to reduce premium and claims leakage.
What is the most important part of a policy administration system?
Policy administration is one of the areas where an organization cannot fake it. It must be purpose-built for the market. It needs to be able to handle the complexities of the industry, the marketplace, and the segments it serves. Carriers who want to succeed must ensure their system is designed for the specific complexities of employee benefits policy administration.
Policy administration is one of the areas
where an organization cannot fake it.
What does purpose-built mean when applied to policy administration?
Purpose-built in policy administration is multilayered and best demonstrated in the carrier’s ability to support the multitude of employer plan designs, classes, groupings of locations or divisions present in employee benefits. Next, they must support the complexities of renewals, effective dates, and policy amendments. Finally, the carrier must be able to support those dynamics in a manner that ensures underwriting, enrollment, billing, and all the associated actions are managed to the requirements of the employer’s plan design. Designing the policy administration platform to serve these specific business activities is what being purpose-built is all about. Relevancy, capability, flexibility, and nimbleness are all inherent in a purpose-built platform.
While many carriers balk at the cost of a modern policy administration system, how do you measure the costs associated with doing nothing?
Mistakes can be expensive, and those costs can compound. An error during the enrollment process may result in the carrier billing for less premium than they should. If you are not collecting the proper amount, multiplied by thousands of cases, you potentially could be very upside-down by the end of the year.
Claims leakage is similar. If a carrier is paying out improper claims amounts due to errors in enrollment or a mismanaged process, the losses add up quickly. A carrier could end up paying millions for not having a modern policy administration platform in the center, integrated into billing, enrollment, and claims. In fact, most probably are either paying too much in claims or not collecting enough premium but don’t know it. Our research suggests that roughly 5-15% of all new business premium is at risk to leakage. There is also the risk to client retention: when a claims issue comes up due to an issue tied to eligibility management, the key stakeholders will look to the carrier for accountability.
On the flip side, a modern system that works seamlessly prevents group billing errors. It can flag situations where claims leakage is occurring. This safeguards the insurer while letting them focus on delivering new, differentiated products, and supporting their sales team with enhanced offerings and services.
Besides preventing mistakes, replacing legacy platforms saves money in the long run. The platforms built 20 years ago are expensive to maintain and the people who created them are leaving the workforce. New employees are not looking to retrain on old legacy systems, they are ready to work on future-ready cloud-based systems – the same modern policy administration systems carriers need to succeed today and tomorrow.
Contact us to learn more about the FINEOS Platform.