Insurance Operations

Predictive Modeling: 5 Benefits of an Independent Review

by Denise Farnan

The practice of predictive modeling is a powerful tool for risk assessment for today’s insurance industry. What once was considered a new technique for insurance pricing is now getting utilized in all aspects of the industry.
Your models are only as sound as the industry knowledge that goes into their development. Lack of complete regulatory support for predictive models has slowed InsurTech companies and carriers on their path for regulatory approval.
Instead of dealing with the expensive and time-consuming fallout of stalled approvals, it makes more sense to get ahead of potential pitfalls by investing in an independent review of your model from experienced insurance actuarial consulting experts.
Here are five reasons an independent review of your predictive model is worth the investment.

1. Discover your model’s strengths and weaknesses

Independent review from actuarial consulting experts will reveal areas where your model can benefit from improvement as well as verify its biggest benefits. A review that combines proven industry benchmarks with professional actuarial judgment will surface erroneous assumptions, incomplete support and lead to model improvement.

2. Comply with state regulations

Many predictive models have been rejected by state insurance departments due to lack of compliance in that jurisdiction. States have their own unique regulation and you want to be prepared. By partnering with an independent reviewer who knows the nuances of each state’s regulatory process, you’ll strengthen your chance of approval.

3. Strengthen your case with key decision-makers

Achieving buy-in from the customer is crucial when marketing an InsureTech predictive model to insurance carriers. Though your model may perform impeccably, if your company has a limited track record in the insurance industry, it may be a hard sell to the carrier’s executive team. Getting an independent review with comprehensive documentation will demonstrate to decision-makers that your product has been carefully evaluated by insurance industry professionals. This vetting of your model and accompanying written proof may be the deciding factor between your product and a competitor’s.

4. Increase your speed to market

Presenting your model to regulators without thorough pre-submission scrutiny may reveal surprise shortcomings. Discovering these deficiencies while your model is deep into the review process adds unnecessary time. It’s much smarter to pressure-test your model before submitting to state insurance departments to speed up approval for your model’s implementation.

5. Trust in your results

Your data may support strong predictors used in your model, but to be truly effective, results must be combined with subject matter expertise. Insurance experts who understand all steps in the insurance process give you insights for model improvement.
High level assessment of your model’s viability, paired with detailed scrutiny from subject matter experts who specialize in insurance, is a smart way to protect your investment. An independent reviewer will ask tough questions, and follow best practices for predictive modeling in order to assess your methodology to add credibility and strength to your work product. It’s like investing in “insurance” for your insurance product.

Get your independent predictive model review today! Perr&Knight’s experienced actuarial consulting team can help.

How to Make the Most of Your Software Evaluation Period

by Dana Pagliarulo

Determining whether a new software system will meet your company’s needs may seem like a gamble.

  • How can you tell if this new product will really streamline your workflow?
  • Will it actually increase process efficiency?
  • Can you guarantee that it will add value to your organization?

Vendors understand that you’ll need to get your hands on the product before you can make an informed decision. Luckily, some offer a time-boxed “trial” period where you and your team have a chance to apply the software to your workflow and obtain a much sharper perspective. By taking full advantage of this evaluation period, you’ll be able to determine whether or not the solution will work for you.
Here’s how to make the most of your evaluation period before investing in full.

Take time to prepare. Don’t just dive in.

After identifying software that seemingly checks all the boxes, it’s tempting to want to begin trying it immediately. However, preparation is a crucial step that lays the foundation for an accurate assessment. Here are some less obvious things to do in order to be thoroughly ready to analyze the new product:
Develop test cases: Include both standard transactions and anomalous outliers, as well as things that are on your team’s “wish list.” Identify and document an array of scenarios such as initiating records from scratch, conducting tests on reporting at the beginning/middle/end of the workflow, and interfacing/importing external records.
Use existing data: If your prospective software will replace an existing system, use your trial period to evaluate how your new solution works with your existing data. Your IT department can provide your vendor with a detailed list of the types of data objects you’ll need to manage which can be used to populate the new system with your current data set. Even if you must scrub some of your data before sharing with the vendor, the more you can provide, the more accurately they can assess your needs. If you were to license the software, using the data from the evaluation period may be used for your implementation of the product.
Gather requirements from your legacy system: Your current system was built on set of requirements and design documents. If you want your replacement system to mimic those assumptions, share these details with your vendor. This information will help them determine if the system will meet your needs as-is or if it will require customization.

Treat it seriously, like a project

Though your evaluation period might not cost anything upfront, there is a very real opportunity cost if the software ultimately doesn’t deliver or if you dismiss a quality product without sufficient review. Therefore, treat your software evaluation period like a mini-project. Dedicate the same level of attention as if your company had already invested capital.
Create a one-page “mini” charter that defines important specs such as: What is the purpose of this project? What is its perceived benefit? Who is assigned to work on it? Who ultimately “owns” it? What are the roles and responsibilities of each individual or team? What is the scope of the project? Developing an official “work order” enables you to obtain signoff for teams to dedicate their time to evaluating the software, thus increasing the chance that all parties will take the evaluation period seriously.
As part of defining the scope of this mini-project, don’t hesitate to bring in an outside subject matter expert who can springboard you into software usage to accomplish your goals straight away. Their detailed answers about your specific questions can save you plenty of time that may otherwise be wasted on back-and-forth between you and your vendor.
Finally, be sure to hit your dates. All projects have a timeline and this one should be no different. Work with your vendor to establish an achievable schedule that will keep your teams on track. During evaluation periods for our own state filings software, StateFilings.com, we create a week-by-week plan that outlines what we will accomplish, from training to full implementation. A timeline creates a necessary structure that keeps everyone on track and enables teams to identify any hiccups early on.

Ask plenty of questions

Don’t make assumptions about what the software may or may not be able to do. If it is important to your particular process and the answer is not apparent, ask! Be specific about what you need. By describing your workflow requirements in detail, the vendor can train you on how to perform your desired task, explain how the software handles the requirement in a more efficient manner, or determine that the software may need further customization to meet your needs. Don’t be afraid to ask questions that may seem obvious. It’s faster and easier to confirm that your needs will be met than to worry whether or not the software can perform the basics.
Additionally, feel free to ask the vendor to share the product road map with you, which will detail upcoming features. This might answer some of your questions about functionality and may reveal opportunities for you to improve your own workflow when new features are launched.

Determine how close you are to going live

If you present your vendor with a full set of current data, going live may be as easy as “flipping a switch” after signing the licensing agreement. If the data is only a partial set, or requires additional software customization, fully operational real-world use may take longer. Work with your internal teams and vendor to determine what functionality is mission-critical and what can be postponed until after launch. Strategic configuration during the evaluation period can minimize implementation delays. Perr&Knight’s StateFilings.com evaluation period has resulted in many near-immediate go-live implementations for customers.

Help your vendor help you

Your vendor wants to do more than just sell you a product. Ultimately, they want to solve your problem. Make sure that your teams are not impeding the process. When the vendor asks for information, keep turnaround time to a minimum. Establish a regular meeting schedule (once a week is preferable, but bi-weekly meetings can suffice) and keep communication clear and frequent. As mentioned above, if you have questions, ask them ASAP. Finally, if it becomes clear that the software solution is not what you expected and will not meet your needs, let your vendor know immediately. Instead of wasting everyone’s time, it’s better to move on.
The goal of your software evaluation period is to reduce surprises further down the line. Pressure-testing the system from all angles will provide a clear perspective on what the software can and cannot do. By taking the trial period as seriously as you would any other project, you stand the best chance of achieving your ultimate goal: implementing a smarter solution for your organization.

Want to know if your proposed insurance software will actually perform? Our insurance experts can help you better capitalize on your evaluation period.

Our Commitment to a Strong Company Culture

by Karen Barrett Daley

A corporate culture is comprised of the values that characterize the company and guide how employees behave. Every company has a culture. However, if management doesn’t actively develop and support a particular culture, one will nonetheless develop—and it might not be the culture that management wants.
On the other hand, a strong, well-defined corporate culture has many benefits. It defines the company’s identity, sets and maintains direction for employees, attracts and retains better talent, and adds to brand identity and company reputation.

Bringing our mission to life

In 2016, Perr&Knight decided to focus on our company culture to ensure it was consistent with our mission statement and reflected who we are as a company. We formed a committee with members who represented not just executives and management but also a cross-section of the employees at our actuarial and insurance operations consulting firm. Because our team of actuarial, regulatory compliance and insurance operations consultants occupy offices across the country, it was important to include people who represented a cross-section of locations, departments, and tenure with Perr&Knight. We made sure to include individuals who have been with the company for years, as well as newer employees with fresh perspectives.
The committee started by defining what we wanted our company culture to be. We had many discussions about what employees value and what our clients value. Our initial brainstorming sessions revealed that everyone’s perspective was a bit different. We worked diligently to sharpen ideas and fine-tune language to create a series of cohesive statements about the firm that apply across the board.
We ultimately landed on six values that represent the core of our culture: Employee Development, Excellent Work Product, Innovation, Integrity, Respect for Each Other, and Superior Customer Experience.
We then translated these values into behaviors. For each value, we developed a list of collective behaviors we would encourage our employees to exhibit which exemplified our values. The behaviors are expressed as “we” statements. For example, to demonstrate our value of Superior Customer Experience:

  • “We make it easy to do business with us”
  • “We recognize that communication is critical”
  • “We value long term relationships with clients”

Ultimately, we came up with a handful of behavior statements for each value, which we published on our website.

Resistance and concerns

As with any significant organizational change, there was some trepidation about how we would implement these ideas, even within our committee. Would we be forcing a foreign new culture on our staff? Would we become so diligent that we would devolve into micro-management? Our team of actuarial and insurance operations consultants brings decades of professional experience to Perr&Knight; they wanted to ensure we were not asking them to disregard their proven strategies and start from scratch.
None of this was our intention, but it was helpful to be aware of staff concerns. We were careful to emphasize that our goal is to encourage behavior that is consistent with our company values, not force new conduct on employees.

Promoting our culture

One of our main initiatives now relates to promoting the culture, both internally and externally. We’ve used several methods to promote our culture. We started a corporate culture newsletter that is published quarterly. Each issue is centered around a “featured value,” in which we print responses from our employees to questions related to our behaviors like, “How do you stay current with what’s going on in the insurance industry?” (Excellent Work Product) or, “When you’re leading a discussion, how do you ensure everyone feels comfortable expressing their views?” (Respect for Each Other). We publish a list of staff promotions in our newsletter to celebrate the successes and accomplishments of our peers. We share pictures and stories that our employees have submitted regarding what they do outside of work, to show our support for a healthy work/life balance.
We also implemented an employee recognition program where staff members are encouraged to send emails to one another, thanking or recognizing them for a valuable contribution. Not only are staff members sending emails across departments, but managers are employing recognition emails as a valuable management tool. At the end of each month, we publish these feel-good emails to demonstrate our pride in, and gratitude to, our staff.

Reflecting our culture in our operations

Our committee’s other current main initiative is to ensure that our company’s policies and procedures encourage employees to act consistently with our values and behaviors. We started by evaluating our performance review process in conjunction with our HR department which led to a pretty significant overhaul of our process. We moved to an online system, which will allow for more frequent feedback, and changed the criteria on which employees are evaluated to better align with our culture.
We’re just about ready to publish revised hiring procedures that ensure we communicate the culture to candidates and evaluate them for their fit with our culture. And, we are just now beginning to assess our manager training and onboarding procedures at our insurance operations and actuarial consulting firm.

Positive feedback so far

While it’s too early to determine whether our focus on culture is having the expected benefits of increased employee retention, increased productivity/profit, and improved brand reputation, we have already seen some benefits. We’ve received positive feedback from candidates and new employees about our commitment to a strong culture. We’ve heard that employees really enjoy the quarterly newsletter, and participation in our Employee Recognition program is high.
We believe that a well-defined culture has made it easier for our managers to lead and make decisions because a clearly articulated foundation of values and behaviors directly informs and influences decision making. A strong company culture also makes it easier for employees to do their jobs because it lets them know their managers will support actions and decisions that are consistent with our values and behaviors.

5 Ways Pricing Actuaries Can Benefit from a Best Practices Review

by Adrienne Lewis

Credentialed actuaries adhere to a high standard of practice, so their work is necessarily going to be thoughtful and thorough. However, working only with an in-house team might insulate you from what is happening elsewhere in the industry. You might be falling behind in terms of competition and growth. But how can you really know? This is where the best practices review can be your company’s secret weapon.
Usually performed by an unbiased third party, a best practices review compares your practices to other companies and generally accepted actuarial methods to ensure that you are meeting or exceeding a high standard of practice. Close scrutiny helps to determine that you’re not missing key segments in your ratemaking. In short, it makes sure your business is keeping up.
However, that is just the broad look at the benefit. There are many more detailed ways that a best practices review can give your company a boost. Here are five specific ways your pricing actuaries could benefit from a review by an outside actuarial support partner.

  1. Alleviate the time burden.

Reviewing your rate level indication processes ahead of time can relieve your actuarial teams of some of the pressure that accompanies a rate filing. Every state has specific requirements or considerations that are unique to that jurisdiction. If your company submits a filing with indications that don’t meet muster with that state’s department of insurance, you’ll have to go back and make revisions—which could delay your filing or require you to scramble to collect the appropriate information. Undertaking a best practices review before a major filing helps you stay on schedule.

  1. Rank priorities to determine what will bring the most benefit.

Indications are also a significant part of internal decision making. Understanding how your processes stack up can help you determine the appropriate priorities to focus on in order to achieve your projected growth or other business goals. By determining how your actuarial methods compare to the indications from other companies and the industry as a whole, you can prioritize process enhancements or other aspects of your pricing methodology. You might discover that your teams are not performing an industry-leading procedure in some instances, but this might not be critical for overall business strategy. Knowing what to devote time and resources to can save you from wasting both.

  1. Determine how your company measures up against competitors.

Beyond comparing your methodology and results to actuarial standards, a best practices review can also provide insight that you might not be privy to otherwise. While your reviewing partner might not be able to share specifics, they can alert you if some of the ways your pricing is out of the ordinary for the industry, or if you are overlooking things that other companies are including.

  1. Build confidence in short-term and long-term growth.

Recognizing and determining how to respond to a particular finding is helpful for your business. With limited exceptions, every company has concerns about credibility. With indications, the data may say one thing, but how will you interpret it or react to it? A heavy reliance on your own data could lead to internal overreaction. A best practices review will compare your methodologies to other companies to make sure your decisions are not based on a myopic perspective.

  1. Validating what you’re doing right.

A best practices review is not just about identifying weakness; it can also surface all the ways your company is ahead of the curve. You’ll see your own role in pioneering industry change. An objective, third-party assessment by a credentialed actuarial support team will equip you with valuable intelligence about all the ways you’re doing things right.
An actuarial best practices review is like getting a regular physical exam for your business. It’s not something you need to do often, but it’s smart to check in regularly to make sure everything is okay. When you take a closer look, you’ll find areas for improvement and create benchmarks against which to measure future gains. We recommend conducting an actuarial best practices review every five years or so. Like with everything in insurance, it’s better to know for sure than to be surprised.
Also, best practices reviews can help all aspects of your business, not just indications. Once you complete the review for your company’s rate indications, consider doing the same with your reserving methods, product development, internal operations, and other departments. When the entire cycle is complete, it will be a good time to check in on rate indications again.

Curious about how your rate level indications compare to the rest of the industry? A best practices review from Perr&Knight can help you find out. Contact us today to discuss our actuarial support offerings.

Think Before You Act: Why Expert Solution Architecture Should Always Precede Critical Data Initiatives

by Joseph Allen

Deploying a data solution that addresses a real-world business problem is not just about drafting a quick set of specs and coding to meet those requirements. Instead, it’s about architecting a solution that will satisfy your true business need.
As experts in insurance data services, we have seen many companies dive headfirst into development without taking the time to outline a process that delivers not only their desired data set, but a viable strategy to keep moving forward.
Companies can sink deeper and deeper into development quicksand, increasing budgetary spend and extending the project timeline by piling more features onto both legacy and modern systems that don’t fully address the problem. To achieve lasting solutions that deliver maximum value, slow down and think before you act.

Focus on the problem, not the tools

Before you undertake any data initiative, it’s vital that you dedicate sufficient time and attention to define the full scope of your problem. We have seen companies get distracted by the latest, greatest software tools and fail to determine whether or not these tools will deliver the information they need.
Focusing primarily on tools is like shopping for ingredients without an idea of the meal you will be preparing. Instead, clearly articulate the problem first, then determine how you will utilize the tools at your disposal to solve this problem as efficiently as possible.
At Perr&Knight, most of our engagements are preceded by an in-depth workshop, during which we aim to identify the true need. Many companies think they need help with one aspect, but it turns out that addressing a different issue will solve their challenge. We apply our insurance data services expertise to determine short-term success as well as define a long-term solution that will help our clients avoid this situation in the future.

Outline specific future actions and activities

After assessing your problem, articulate the specific activities that you will take as a result of obtaining your data set. Knowing these actions informs the scope of what should be contained in your reports. Focus on obtaining useful information that will equip your teams to perform their jobs more efficiently and effectively.

Teams must understand how their roles support your business

IT teams might be deeply focused on technical aspects of the initiative but lack sufficient context for the project as a whole. As such, their expertise is stifled. Don’t limit your IT teams to only the execution of the plan – loop them in early to make sure that the ultimate solution takes into consideration your actual business needs. Spend time bringing your IT team up to speed on how their input fits into the bigger picture of your data initiative and what your overall goals and outcomes are. Equipped with this knowledge, your technical teams become more valuable project assets.

How to avoid “analysis paralysis”

Successful deployment efforts start with the known and build incrementally from there. Look for what you can define that will provide an immediate benefit. In the effort to plan for every possible event, software developers can end up overdesigning their solution architecture. Companies that want to create a massive system to address every possible future need often get stuck developing bloated, unwieldy software that takes forever to deploy.
Perr&Knight’s process is to plant a firm stake in the ground by targeting a specific data consumer with a specific need, then focus on building out just those portions. From there, we expand incrementally, generating deliverables that are definable, measurable, and achievable.

More expert tips to keep your data initiatives on track

  • DON’T cast too wide a net. Keep your eye on the specific problem you’re trying to solve.
  • DON’T chase trends. Make sure your solution delivers the information that addresses your core
  • DO make sure that you are being specific. There’s no point in coding to vague specs.
  • DO define what constitutes success before you undertake the project, including how you will measure progress along the way and metrics that ensure you accomplish various scope items throughout development.

The fact is, data reporting is not a sexy profit center – but it is a critical part of doing business. Everyone wants a quick plug-and-play fix, but solution architecture is more about business modeling than a strictly technical solution. There is no such thing as a silver bullet. Quality solution architecture starts at the business level, i.e. understanding your business problem and applying that knowledge as your guide to implement the best solution. Data initiatives are a marathon, not a sprint. Keep this in mind and you’re sure to go far.

For more information about Perr&Knight’s expert insurance data services, contact us today.

The Benefits of a Mock Market Conduct Exam

by Terri Hitchcock

Authors: Terri Hitchcock, JD, Director of Product Design and Nancy Self, Sr. Product Design Consultant
Regulatory compliance infractions are damaging to an insurance company. Violations can result in fines, cease & desist actions, license suspensions, or, in worst case scenarios, loss of a company’s certificate of authority. In addition to these sanctions from the state DOI, compliance failures can devalue stock and generate terrible press that creates lasting reputational harm.
The best way to handle a compliance violation is to not receive one in the first place. One of the most effective ways to discover compliance weaknesses is to carry out a mock market conduct exam. These “non-official” reviews reveal the systems and processes that increase your risk of penalty when your company comes under examination.
In this article, we’ll discuss how mock market conduct exams are your company’s smartest strategy to uncover potential compliance issues and get ahead of the problem.

Market Conduct Exams in General

Market conduct examinations are the means by which regulators examine the practices, policies, and behaviors of an insurer in the marketplace. As a result, they focus on a broad range of consumer protection topics such as company operations, complaint handling, marketing and sales, producer licensing, policyholder services, claim handling, underwriting, and rating.
Exams will vary. Some are all-encompassing, while others are limited to certain topics. Some states (California, for example) have a regular schedule for market conduct exams, while others may conduct “targeted” exams. Targeted exams can be triggered by things such as complaint activity (i.e., an uptick in complaints or the recurrence of a particular type of complaint) or a significant premium volume change.  In all cases, it’s best to be prepared so when regulators come knocking, you’re not left scrambling.
A “mock” market conduct exam describes the review of your organization by someone other than a regulator (i.e. a contracted regulatory compliance services company or your organization’s internal compliance department).

How Mock Market Conduct Exams Can Help

Conducting an internal compliance audit or partnering with experienced third-party insurance consultants can help your organization identify violation-worthy practices and discover areas you hadn’t considered that could expose you to compliance violations. These “mock” market conduct exams can also help identify gaps between what your policies articulate and how your organization actually operates.
Some companies choose to handle mock market conduct exams internally, but many companies lack the human resources to devote staff for the time needed to conduct a comprehensive mock exam. External insurance consultants can get into the nitty-gritty, pulling random files and double checking against the same criteria that an examiner would–things like claim files, whether or not notices are sent in the correct number of days, adjusting to average reserves; if not, do you have the right documentation in the file? This close scrutiny ensures that you’re looking as deeply as an auditor would.
At Perr&Knight, we don’t just perform mock exams, we advocate for our clients. In addition to identifying potential weaknesses, our regulatory compliance services help companies figure out how to bridge the gap between their current conduct and what they should be doing. This helps companies get on track before the market conduct examiner arrives. Self-identifying problems gains points in the eyes of the examiner since examiners place value on proactivity and self-awareness.
Get comfortable with the fact that it’s only a matter of time before your company is subject to a market conduct exam. Your best bet for minimizing the impact of a negative market conduct exam is to allocate time and resources in advance. In addition to mock market conduct exams, we recommend regularly reviewing your policies and procedures with staff and making sure that these rules are being followed. Also, study market conduct exams on state DOI websites and look at the NAIC regulator handbook to obtain specifics on areas that will be covered, should you receive an exam notice. As with everything in the insurance industry, the best defense is a thorough and complete offense.

For more information on mock market conduct exams and other regulatory compliance services from Perr&Knight, contact us today.

Producer Licensing: Unglamorous and Unavoidable

by Diane Karis

Producer licensing is not complicated but too many agents put it on the backburner. Since it doesn’t bring in revenue, in the rush of day-to-day business, insurance licensing falls to the bottom of the list of priorities. The very skills that make a successful insurance producer are the traits that can cause them to deprioritize unglamorous tasks like filing paperwork and remembering to issue fees. True, there’s no creativity in this primarily “busy work” task, but failure to renew licenses can lead to significant challenges down the road.

Game Over – For Now

Ignoring license renewals creates complications and headaches that require time and money to sort out.  If a producer’s license lapses, it’s basically game over–for now. That agent can’t legally sell insurance. Your insurance agency could be exposed to hefty penalties and the producer could lose their agency appointment. You can also run into problems if the producer’s license is reinstated but his or her appointments have not. Therefore, helping agents to renew on time is simply smart business practice.
These challenges with licensing are not insurmountable. However, like almost everything that falls under the umbrella of regulatory compliance, it’s easier–and more cost effective– to get ahead of the game than to play catch up.

Challenging for Agencies of All Sizes

Managing producer appointments is a time-consuming task for agencies–especially if your agents operate regionally. Every state has a specific process for renewals and you must adhere to each set of requirements carefully. It’s not possible to cut corners. We notice that startups are most susceptible to challenges with licensing since the administrative load is so overwhelming when starting a new agency.  However, mid-size agencies who have been operating for years also have a hard time managing producer appointments after growing their staff or undergoing a territory expansion from a few states to ten or more.

The Benefits of Outsourcing

For some agencies, the smartest solution is to offload this time-consuming, detail-heavy task to an insurance support services company to manage on your behalf. We offer this service at Perr&Knight because we’ve seen the complications–most of them avoidable–that happen when agencies fall behind. Our suite of producer licensing services includes:

  • Submission of name and address changes
  • Tracking of upcoming renewals
  • Issuing of renewals reminders
  • Completion of paperwork for all 50 states and electronic submission (where applicable)
  • Issuing fee reminders to producers

Many agencies try to assist their agents by handling licensing renewals in-house. It’s a viable solution for small agencies but we’ve seen many instances where agencies grow and a single individual (or even small department) just can’t keep up with the paperwork. As a result, licenses lapse.
Another common scenario is when an individual who is overseeing renewals changes jobs or retires–and takes their knowledge, calendar and renewals status with them. This is where an outside insurance support services partner can alleviate the burden by supervising your producers’ licenses for you.
Failure to submit insurance licensing renewals on time seems like minor hiccup but it’s an oversight that can snowball quickly. Licenses are a necessary part of maintaining compliance and lapsed licenses can jeopardize your ability to operate at all. Managing producer appointments falls into the pesky category of “things that don’t make your agency money, but can cost you money if overlooked.” Helping your producers stay on top of their license renewal lessens their load, so they can focus on what they do best: selling insurance.

Get help with your insurance licensing renewals. Contact Perr&Knight to find more about our support services.

How to Achieve More Effective Program Monitoring

by Adrienne Lewis

In the insurance industry, program monitoring is usually about tracking loss ratios and production figures—that is, the various aspects specific to insurance-related metrics. But program monitoring has many other valuable applications for an insurance organization.
Monitoring your marketing initiatives will equip your sales team with important insights. Tracking the implementation of a new underwriting strategy will benefit your underwriters. And of course, actuaries will be interested in all the data they can get their hands on. In addition to identifying areas to course-correct internal programs, you can also monitor competitor actions and industry trends to make sure you’re not missing a valuable marketplace opportunity.
Though all insurance companies are conducting some level of program monitoring, your initiatives might not be achieving their maximum potential.
Here’s how to strengthen the effectiveness of your programs.

Everything starts with quality data

As with most things in our industry, success boils down to the data. You can’t monitor your program if you don’t have detailed, sufficient data to capture relevant metrics, on both policy and sales sides. For a truly complete picture, you need front-end policy data as well as back-end claims information. Make sure you are capturing current, relevant data that populates specific reports with detailed objectives.

Involve all departments

Program monitoring is not always about making corrections– it’s about updating priorities and realigning business strategies. Reports can help you identify the problem, but can’t help you solve it. This is where your teams come in. Each individual department supplies an important perspective to help determine the best decision, so collaboration is crucial. All the areas of your business must work together to determine the ideal solution.

Useful suggestions

During our decades of providing insurance support services, we’ve seen what works–and what wastes time and resources. Here are some key techniques that have been proven to increase the effectiveness of program monitoring for insurance organizations of all sizes.

  • DO automate reports so they are produced regularly with limited effort.
  • DO prioritize analysis. Just because you generate the report, doesn’t mean anyone is analyzing it. Raw data is useless without a qualified analysis. 
  • DON’T create so many reports that you can’t look at them. Ask your end users which reports aren’t bringing much value and eliminate those.
  • DON’T get so detailed that the results are too volatile and impede drawing any useful conclusions. Instead, aggregate the data to a larger group or produce the report less frequently.

When to work with an insurance support services consultant

Designing effective program monitoring initiatives takes time, attention and expertise. Many insurance organizations simply do not have the internal resources available to devote to shoring up program monitoring processes. Companies specializing in insurance support services can speed up the process tremendously by filling in the gaps. Partnering with an experienced insurance operations consultant can reveal areas where you can begin to achieve results immediately.
While there are some useful software-based reporting tools on the market, these tools are limited in their ability to analyze the reports they generate. At Perr&Knight, we believe in the importance of creating effective program monitoring strategies that provide valuable insights for end users in every department.  By taking a close look at your managing entity, products and the jurisdictions in which you operate, Perr&Knight provides these services to elevate the effectiveness of your program:

  • Designing strategies to automate report production
  • Recommendations for metrics to evaluate regularly
  • Illustrative sample reports
  • Layout designs that are more meaningful to end user
  • Peer review of report calculations or internal audits
  • Data warehouse redesign recommendations

Effective program monitoring allows your company to track trends, identify problems, and reveal potentially undesirable results early. From there, you can address inefficiencies, correct errors or narrow the focus of your programs before getting too far down the line. Monitoring your programs allows you to track actual vs. expected impacts, which can enable you to make adjustments based on real-world impact. Review early warning or key indicator metrics regularly to ensure that your company stakeholders have the info they need to make intelligent business decisions.

For more information about how to make your program monitoring more effective, contact Perr&Knight today.

How to Run a Successful Vendor Selection Engagement

by Rob Berg

There’s a tendency in the tech world to go with the safe bet. Like the old adage says, “Nobody ever got fired for buying IBM.” But not only are insurance companies missing out on emerging opportunities from providers that are truly suited for their organizations, investing in the wrong technology or operations solution–even if it seems like a safe bet–can be crippling in terms of money and time spent.
During our decades of insurance consulting, we’ve seen what works and what wastes time. Here are our tips for conducting a vendor selection engagement that leads to success.

Tip 1: Determine what you want to accomplish

First, start by getting clear on what you’re trying to achieve with this vendor engagement.

  • Take a look at your priorities:
  • Are you trying to lower costs?
  • Grow your customer base?
  • Upgrade your user interface?
  • Streamline your back-office operations?

Keep your goals in mind during every step of the process. Don’t become distracted by bells and whistles that don’t support the mission at hand.

Tip 2: Assess the big picture before you begin

As part of our insurance consulting intake process, we ask our clients, “If you look at all the pieces that make up your organization, from a tech perspective, where does what you’re trying to buy fit into that picture?” Then we literally draw a picture. What’s usually revealed is that this new piece of technology will interface with many more components than were previously realized. Keep these things top of mind as you proceed.

Tip 3: Gather your functional requirements

These are the actual functions that you’ll need your system to perform. We call them the “Thou Shalts” –as in, “The system shalt do X, Y, and Z…” Identify these items by speaking with staff to uncover areas of frustration, duplicate work or manual processes. Make this list as long as it needs to be and add to it as new requirements become apparent.

Tip 4: Conduct an internal readiness assessment

Take a hard look at your organization and determine if you’re actually ready to tackle a project of this magnitude, as these changes will likely impact every part of your organization. Make sure you have the appropriate staff in place and evaluate whether your new technology will be compatible with your existing teams, or if they’ll require additional training. If it makes more sense to undertake a project of this scope at a different time, adjust your schedule accordingly.

Tip 5: Look for deal-breakers during pre-qualification

Before sending out your RFP to a long list of vendors, be on the lookout for the areas where vendors simply cannot meet your criteria. For our insurance technology consulting engagements, we help our clients develop a pre-qualifying questionnaire that cuts right to the chase. Quickly evaluating at a basic level whether or not a vendor can meet your needs saves you from wasting valuable time on inappropriate partners.

Tip 6: Go beyond simple answers–ask for a narrative

As you down-select from 10-20 vendors, look for more than just simple answers. Ask open-ended questions that require a narrative around how their solution works. Ask vendors to outline their process, providing examples of real use cases and describing their approach to each scenario. You’re looking for a vendor who can clearly articulate how their solution works and how it has performed in situations similar to yours. Don’t be surprised if these responses run into the hundreds of pages.

Tip 7: Replace subjectivity with objectivity

Determine a system to compare apples to apples that eliminates personal or emotional bias. At Perr&Knight, we have created a numerical ranking tool that helps our insurance technology consulting clients evaluate proposals and assign a score. This enables companies to quickly eliminate vendors who don’t meet the minimum score requirements, while the most suitable vendors become immediately apparent.

Tip 8: Script your own demos

Once you have reached 3-5 final vendors to evaluate, write the script you would like them to follow during their in-depth product demonstrations. If not, the vendor will lead you through THEIR demo and focus on areas at which they know they excel, rather than what you need. This also allows you to compare vendors directly since they will each cover the same material. Don’t rush through these demos. Each should take around 2-3 days for you to obtain the complete scope of their capabilities.

Tip 9: Always have a backup

Your final down-selection should leave you with at least two vendors: the winner, and the backup. With so much at stake, keep your second-choice vendor in mind in case your prevailing vendor disappoints you, or to use as leverage during contract negotiations. Don’t close the door on the second-choice vendor until the ink is dry with your first choice.
Vendor selections are long, deeply-engaging processes that generally run at least 6-9 months. Take the time to conduct proper due diligence–on both your vendors and your own company–to make sure that expectations are clear and can be met by all parties.

Perr&Knight helps insurance companies select ideal vendors for all aspects of technology and operations. Contact us today at (888) 201-5123 x 3 and we’ll find the right fit for your organization.

3 Reasons You Need to Audit Your Operations Now

by Terri Hitchcock

When people think of auditing, they often imagine a team of IRS agents storming into the office and demanding massive compilations of tax-related documents. However, audits–especially self-imposed audits of operations and internal processes–can be so much more meaningful.
Internal audits are a way to review areas where your operations are thriving and where you can streamline systems to achieve greater efficiency and profitability. Insurance is an industry based on the idea of being “better safe than sorry.” Internal operational audits can uncover opportunities to tighten up your business before you’re faced with an operational crisis.
If you haven’t conducted an audit lately, here are three reasons to get moving right away.

Reason 1: Compliance, Compliance, Compliance

In an industry as highly regulated as insurance, this is the most obvious reason to conduct an operational audit. Compliance must be taken seriously. Whether you’re an insurance company, MGA, licensing agent, broker or provider of any other insurance-related service, you are subject to a long string of regulations up and down the chain of command.
State statutes for rates and forms, federal statutes for the same, privacy rules, disclosure rules, information sharing, guidelines for proper use of credit, protection of social security numbers, bank transfers, matters covered by the Gramm-Leach-Bliley Act, rules governing methods and means of communication – all create a minefield of potential regulatory pitfalls.
Each of these processes faces scrutiny by some regulatory body. Operate in violation of any of these regulations and you put your organization at risk for hefty fines or the suspension–or even loss of–license or certificate of authority. An audit by insurance operations consulting experts will reveal areas where you are out of compliance so you can correct those immediately.

Reason 2: Expose Leakage

Operational audits can reveal ways your company is suffering from various forms of leakage– that is, areas where you’re bleeding money of which you are currently unaware. This can be anything from late-paying customers who cause you to miss out on the benefit of interest to unscrupulous or lackadaisical employees who are gaming the system.
When you conduct an audit, either internally or with the help of insurance operations consultants, you confirm that your organization is already using the most effective processes. Or, you reveal areas where you can shore up your operations to reduce unnecessary overspend and make sure you’re collecting everything that is due in a timely manner.

Reason 3: Keep Pace with the Marketplace

Auditing your operations gives you the opportunity to review whether you are keeping pace with not just your competitors, but the marketplace as a whole. Who are your core customers? Who will they be in 25 years? Are your operations and processes geared toward millennials and how they expect to communicate, pay, file a claim and take out a new insurance policy? An operational audit enables you to uncover these trends and determine if your current business trajectory is set to evolve with your clientele, or if your operations are fixed while your customer-base changes.
You can assign an in-house team to audit your operations, but it’s usually a smarter move to work with an insurance operations consulting firm who can look at your business with fresh eyes. An unbiased third party can reveal areas for improvement that might not be obvious to internal teams.
No matter who you decide should perform the audit, it’s a small investment that can pay off huge in revenue increases and protection from expensive fines.
If you’d like to know more about how an operational audit can help your business, contact us today.