By John Knotek, Vice President Operations – Payments, InsurePay
This article originally appeared in the October 2015 issue of the Toronto Insurance Conference News Bulletin.
Doing more with less. Overused phrase or reality? In looking at your brokerage, no doubt this may be more of a reality than a catchphrase in recent years. When faced with this reality then, there is a growing need to find operational efficiencies.
But where can you look for some quick gains, the proverbial low-hanging fruit? Payments.
The current payment processes within the insurance ecosystem negatively impacts productivity. This includes paying monthly agency bill payments in generating the payment, getting approvals, printing or emailing policy information and dropping in the courier bag. The effort does not stop there as it is followed by communication with carriers on items including: reconciliation issues, missing data or lost checks. For single policy payments that are paying for a premium increase, replacing insufficient funds for a direct bill client or binding a new policy, the steps involved seem incredulous in today’s state of advanced technology.
Checks are Expensive
Given that the vast majority of payments are made with checks and paper based account current reports or other policy descriptions, there are inherent inefficiencies. These inefficiencies include: duplicate handling, unproductive communication with industry partners, chasing down signatures and exposing the brokerage to fraud. A very conservative estimate is for every check written the true cost to the brokerage exceeds $20.
While that cost may shock you, what is more attention grabbing is the number of payments. Paying premiums to industry partners or refunds to clients represents over 70% of total payment volume for the average brokerage. So if you are looking for bang for your buck, focusing on improving these payments produces the best return.
The Need for Simple but Secure
While conventional electronic banking seems to be an obvious solution, there are valid reasons why virtually all brokerages still issue checks and more than 70% of brokerages are heavily reliant upon them. Speaking from experience, brokerages have regarded the set up of electronic funds transfer to be a duplication of efforts plus heavy on costs with setup fees, monthly fees and report upload fees. Additionally, rich remittance data has to be sent separately, so your accounting professional does this manually for every payment. Lastly, brokerages can be reluctant to obtain, retain and maintain carriers’ account information. In this age of increasing cyber security, holding this information represents a potential exposure. Looking into the future, don’t be surprised to see the requirement to have some certification (at a cost) if you choose to hold bank account information in your system, much in the same way compliance with the Payment Card Industry Data Security Standard has evolved.
Direct Integration with your Agent Management System
The good news is that InsurePay has a solution for brokerages that lowers risks, elevates employee satisfaction, improves collaboration with industry partners and brings operational efficiencies. Payments and account current information originates from within your broker management system and InsurePay works to move the funds and data electronically while preserving existing signing controls. All of this with the accounting team not having to leave the agent management system or communicate with carriers, which results in reduced steps and more savings.
The new reality is yours to pick.