A better grip: technology can help insurers turn undeveloped distribution processes into tools to help producers boost sales.Distributing profitable insurance products and services depends upon attracting and retaining high-value producers. Value begins with recruiting good producers and ends with delivering services to support them and their customers. To reach and surpass these goals insurers need a flexible technology platform to run and manage the business. Insurers try to position their products and services competitively. One way to do this is to control rates and commissions, but in today's market insurers cannot rely solely on this strategy to drive marketplace demand. Product offerings must be augmented with a distribution support structure that uses a combination of tools to increase producers' productivity and deepen deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. deepen Verb to make or become deeper or more intense Verb 1. their loyalty to the insurer. Insurers that help their distribution partners make more money can differentiate themselves from the competition and find value in their distribution and services. Distribution costs distribution costs distribute npl → Vertriebskosten pl continue to escalate es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. in such areas as sales, marketing and customer service. Managing distribution services cost effectively continues to plague insurers and many report it as one of their biggest challenges to mitigate capital strain. The other big challenge is choosing the right distribution strategy. Insurers manage a complex array of products and Y services for a multichannel Using two or more paths for transmission or processing. It can refer to a variety of architectures including (1) multiple I/O channels between the CPU and peripheral devices, (2) multiple wires in a cable, (3) multiple "logical" channels within a single wire or fiber or (4) multiple distribution system. Network support includes products designed for specific markets, rates for certain distribution systems and various incentive programs, which makes designing a distribution strategy complex. Insurers must streamline support to their distributors, regardless of channel or product, and must align sales and marketing to present their services holistically to the marketplace. In an attempt to manage the complexity, insurers often segregate seg·re·gate v. seg·re·gat·ed, seg·re·gat·ing, seg·re·gates v.tr. 1. To separate or isolate from others or from a main body or group. See Synonyms at isolate. 2. their services by product line. This method can be costly, however, because it can require duplicate systems and services to accommodate each independent outlet. So how can insurers mitigate the cost of distribution services in such a complicated environment? Successful insurers create sustainable value Sustainable Value Sustainable Value is an approach to measure and manage sustainability performance. The concept was developed by researchers who are working today for Queen's University Belfast in distribution by strategically deploying technology to transform their business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Such distribution technology solutions as browser-based platforms, portals and real-time processing Noun 1. real-time processing - data processing fast enough to keep up with an outside process real-time operation data processing - (computer science) a series of operations on data by a computer in order to retrieve or transform or classify information are being built by top-tier insurers. Insurers investing in these solutions make every effort to expand revenue-generating opportunities and enhance distribution relationships. TowerGroup believes insurers can further distribution value with services in less mature areas such as recruiting, partner relationship management, marketing and sales. Recruiting Top Producers New producers recruited in 2003 declined 20% from 2001's 10-year high, and four-year retention rates are down to approximately 11%, the lowest level in more than 30 years. Consequently, recruiting activity is costly. Hiring experienced producers is expensive, since it is costly to finance a transfer, but hiring inexperienced in·ex·pe·ri·ence n. 1. Lack of experience. 2. Lack of the knowledge gained from experience. in producers involves investing in training and oversight. Savings are possible with improved retention rates because fewer new recruits equal lower recruiting expenses. Insurers can improve their recruiting results by using software applications designed to standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. the process with stringent controls, metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. and analytical capabilities. These tools help insurers understand what it takes to boost retention rates and identify the qualities of high-value producers. Automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. recruiting can help insurers quickly identify what sets top producers apart from other candidates and facilitate the hiring process in advance of the competition. Recruiting applications can capture prospect demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. , schedule interviews and gather data from recruiters. Once a producer is employed, tracking the new recruit's information continues for post-hire analytics of performance capability. Analytics and activity reports illustrate where the best producers are coming from, regardless of industry or experience, so insurers can improve their recruiting and retention performance at a reduced cost. Relationship Management Insurers can work more efficiently with distribution partners by using tools to facilitate communication, disseminate dis·sem·i·nate v. dis·sem·i·nat·ed, dis·sem·i·nat·ing, dis·sem·i·nates v.tr. 1. To scatter widely, as in sowing seed. 2. information and supply shared analytics. Partner-relationship management tools improve the flow of information between the insurer and its distributors by advancing the effectiveness of strategic distribution outlets. The goal is to provide the insurer and the distributor with information to increase sales production. Partner relationship-management applications arrange processes from a pre- and post-sales standpoint and provide tools such as standard reports and ad hoc For this purpose. Meaning "to this" in Latin, it refers to dealing with special situations as they occur rather than functions that are repeated on a regular basis. See ad hoc query and ad hoc mode. analytics on performance management in sales, service and marketing activities. Such process-focused applications as core systems, billing, incentive management, commissions, sales, marketing and finance are integrated into many business areas. By highlighting shared services shared services, n.pl the administrative, clinical, or other service functions that are common to two or more hospitals or their health care facilities and used jointly or cooperatively by them. between the insurer and distributors, these applications help sales executives make decisions about resource allocations resource allocation Managed care The constellation of activities and decisions which form the basis for prioritizing health care needs , services and performance. Connecting partner management to field activity links strategic goals with tactical activity and has a direct correlation Noun 1. direct correlation - a correlation in which large values of one variable are associated with large values of the other and small with small; the correlation coefficient is between 0 and +1 positive correlation with partner investment and results. The Advice-Oriented Portal Since insurers support a one-to-many distribution relationship, they must use technology to deliver repeat sales and marketing services in an adaptable a·dapt·a·ble adj. Capable of adapting or of being adapted. a·dapt  a·bil and easy-to-use format. The best way for insurers to do
this is to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. their experience creating portals. Most insurers have successfully launched a service-oriented portal that delivers self-service support to distributors in new business, claims and client inquiry operations. Currently, few insurers are developing these portals for sales and marketing support, which are services that can increase producers' productivity. Insurers can capitalize on their existing investments in portal capabilities and develop such enhancements as planning and reference tools, illustrations and calculators, sales presentations and marketing campaigns. For example, an insurer can deliver a suite of marketing campaign functions ranging from targeted, demographic prospecting to campaign development, collateral preparation and execution. At the same time, the insurer maintains control over content and compliance. A complete campaign package may include presentations, prospecting letters, producer guides, seminar invitations, educational material, sales scripts and ideas. Once the campaign is executed, the technology can link prospect data to customer-relationship management systems or agency management systems to report results. Insurers must develop cost-effective alternatives for pushing sales and marketing to the field while retaining control over the results to measure and track productivity. On-Demand Wholesaling Today's Web-based learning tools support virtual wholesaling with an advanced level of control. Virtual wholesaling is a technology platform featuring the ability to hold live online meetings and download marketing materials. Financial-services institutions are using this technology to augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: sales-force activities because it's an economic way to reach a range of distributors. These applications are changing the way financial-services institutions communicate with distribution partners, enabling them to deliver rich media content to the producer's desktop via e-mail and track when the producer views it for follow-up activities. For example, insurers can send an audiovisual presentation about company news, product enhancements, or sales ideas to a few producers or broadcast to all licensed producers. A broadcast message could include rate and performance information and be tailored to a few top producers with a targeted message about how to use the new information to increase sales. Follow-up activity by advanced sales professionals could be limited to only those producers who express interest, as opposed to cold calling unresponsive unresponsive Neurology adjective Referring to a total lack of response to neurologic stimuli prospects and wasting the time of valuable human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. . Web-based learning tools help insurers to push to a qualified producer actionable Giving sufficient legal grounds for a lawsuit; giving rise to a Cause of Action. An act, event, or occurrence is said to be actionable when there are legal grounds for basing a lawsuit on it. information that is timely and consistent from one channel to another and, further, to measure sales activity to revenue. Reasons to Take Action Advanced sales support to boost producer productivity is a key area where insurers can make a difference in their distributors' day-to-day operations. Insurance companies' traditional high-touch delivery model of advanced sales support is considered a high-value benefit. Insurers offer support for advanced sales markets by means of regional field directors and call centers that offer consultations, seminars and point-of-sale assistance. This is a costly approach because of overhead expenses that increase acquisition costs and decrease the distribution margin. Insurers can save money by cutting sales and marketing resources or by limiting production of collateral material. Neither method, however, addresses the costs associated with the execution and delivery of field support. It is important for insurers to understand how technology can improve delivery of services to producers to increase its value at a reduced cost. Insurers can also gain greater control over their brand, marketing collateral Marketing collateral, in marketing and sales, is the collection of media used to support the sales of a product or service. These sales aids are intended to make the sales effort easier and more effective. and sales activity. With limited resources in advanced sales and marketing, insurers can augment their reach with technology and reinforce the effectiveness of their efforts to improve their distribution profit and loss. Good producers struggle to find time to grow their businesses through prospecting and new business development while increasing personal income from profitable clients. Traditional marketing methods, such as public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most with the local press or prospecting from generic mail lists, usually prove ineffective because their messages lack the personal touch. Uncertainty about the limitations imposed by the "Do Not Call" regulations makes prospecting difficult. Producers must find ways to meet their growth objectives by focusing on targeted marketing, referrals and educational seminars. Another approach is to use advanced sales strategies in estate planning Estate Planning The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death. Notes: Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the and wealth management for affluent investors as a way to boost compensation from higher premiums. It's apparent that producers lack the resources to do this effectively and need the support of their preferred insurance partners to advance their sales goals. Insurers work hard to attract and retain good producers and improve their productivity in such areas as prospecting, marketing, training and education. These objectives require creative solutions to advance the quality and type of resources insurers provide to their distributors. While insurers have done a good job of helping producers become more productive through enhancements in customer service, they lack the resources to help them drive sales and expand their practice with advice-oriented services. Supporting both service- and advice-oriented models will cost insurers additional resources. Nevertheless, for Insurers to compete with other insurance companies facing similar pressures, they must invest more in the distribution of their products and services and address profitability issues in the underlying operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. . Technology can minimize much of the expense embedded Inserted into. See embedded system. in the traditional high-touch sales delivery model. Automating components of the distribution process will help direct sales and marketing activities to high-value producers and client segments. Industry evidence shows insurance companies that understand and act on distributors' needs grow faster, are more profitable and are better rewarded by the marketplace for their performance. The future success of an insurer will be measured by the company's ability to build loyal distribution relationships and manage service operations profitably. Key Points * Successful insurers can create sustainable value in distribution by using technology to transform their business operations. * Insurers can further distribution value by using technology in recruiting, partner relationship management, marketing and sales. * Industry evidence shows insurance companies that understand and act on distributors' needs grow faster, are more profitable and are better rewarded by the marketplace for their performance. Cynthia Saccocia is a senior analyst in the insurance practice at TowerGroup. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion