Case Study: Outsourcing Port & Conversion Process Efficiency

No one likes losing customers! Whether you are a restaurant, a retail store, or an insurance carrier, losing customers is a pain point that you want to avoid. Luckily, the port and conversion business presents an opportunity for insurance carriers to retain customers and premiums that might otherwise be lost. If you want to capitalize on this opportunity, you need to have a streamlined process that makes it easy for the insured to apply for and enroll in a new plan.   We have recently posted a blog about the basics of portability and conversion, but this time we wanted to highlight a specific example of how outsourcing this business process to an experienced TPA like SelmanCo can genuinely add value to the service you provide your customers.

Business Case Background Information

SelmanCo is contracted with ABC Insurance Company to assume administration of their Portability and Conversion business. After initiating the contracted services, SelmanCo noticed that two issues were arising in the application and initial payment processes that were driving down the ratio of received applications to approved/issued coverages, as well as decreasing premiums collected for ABC Insurance Company. SelmanCo researched and presented options for how these problems could be managed more efficiently for the administrator and the carrier, while making decisions that would be in the best interest for the insured end-user and increase customer satisfaction.

Issues and Problems - Current Approved/Issued vs. Received Application ratio is 59%

1. Individual applicant sends in a quarterly premium due with application and based on the timing for processing the application as well as the effective date of coverage, another billing period has already been entered into.  Additional premium must now be requested from the insured to issue coverage and set up the new applicant in the administrative system.  Decreased response from this request for premium results in:
   1. Decrease in percentage of issued vs. received applications. 
   2. Decrease in premium to underwriting carrier
2. Individual applicant sends in a payment with application that does not cover a full mode of premium (quarterly, semi-annual or annual).  Additional premium must then be requested from the insured to issue coverage and set up the new applicant in the administrative system.  Decreased response from request for premium results in:
   1. Decrease in percentage of issued vs. received applications. 
   2. Decrease in premium to underwriting carrier

In the two examples above, if the correct premium to issue coverage wasn't received, we would close the application and return all funds received to the applicant. This can create a negative experience for the applicant as well as an increase in appeals to the carrier.

3. Service Process:  Current procedures do not allow for a phone call to Employers or Employees in an effort to obtain missing information or premium.  Standard practice is email notifications to Employer Groups and a written notification to the Employee which includes returning all documents and funds.  Decreased response from request for information results in: 
   1. Decrease in percentage of issued vs. received applications. 
   2. Decrease in premium to underwriting carrier

Goal

Increase Approved/Issued vs Received application ratio to 69% which would result in a 3.5% increase in premium to the underwriting carrier.

Solutions and Recommendations

1. Obtain approval from carrier to accept less than a modal premium amount at time of application, then bill for the balance upon issuance of coverage. 
2. Obtain approval from carrier to contact Employers and Employees via phone, instead of written requests sent by email or post, for missing information and premium.

SelmanCo Results

• Approval obtained from carrier to accept less than modal premium and then bill for the balance upon issuance of coverage.
• More timely processing of applications (increased efficiency for processors and client satisfaction)
• Coverage allotted for period of time that payment provided would cover (security for applicant)
• Increase in retained premium
• Increase in Approved/Issued vs Received application ratio (reduction in number of declined/closed applications)
• Reduction in number of appeals that needed to be processed by administrator and carrier

• Approval obtained from carrier to contact Employees and Employers by phone for specific missing information and premium (some information is still required in writing)
• More timely processing of applications (increased efficiency for processors and client satisfaction)
• Increase in Approved/issued vs Received application ratio (reduction in number of declined/closed applications)
• Reduction in number of calls to administrator for application status requests (increased efficiency)
• Reduction in number of appeals that needed to be processed by administrator and carrier (reduced operational costs and increased efficiency)
• Reduction in postage/mailing costs

Results 

Within 6 months of implementing these newly approved processes, SelmanCo was able to increase the Approved/Issued vs Received application ratio to 80.56%. That means that the carrier was able to retain more customers than before, because SelmanCo sought out ways to make the process more intuitive and easier to accomplish for all parties involved. A flexible and entrepreneurial insurance administrator like SelmanCo can help identify process improvements, create innovative solutions, and partner in the implementation process, which can ultimately lead to a better customer experience.

Take a look at our white paper on the basics of portability and conversion for more information on this subject.