Best Practices

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.

The Importance of Collaboration in Product Development

by Terri Hitchcock

Authors: Michael J. Covert, FCAS, MAAA, Principal & Consulting Actuary, and Terri Hitchcock, JD, Director, Product Design
Collaboration in your insurance organization occurs at multiple levels, all of which are important. During product development, your company’s internal collaboration among actuarial, underwriting and marketing departments is a must. External collaboration between your teams and outside consulting firms keeps your product design, compliance, and actuarial consulting partners on the same page. As consultants, on our end, collaboration between and among our own teams is crucial, as all our departments must operate cohesively to ensure that we can meet our clients’ needs in a timely fashion.
Successful collaboration is not just about making engagements run more smoothly–it also has tangible benefits that are immediately evident.

Collaboration leads to the creation of new and innovative products

Don’t waste time developing insurance products that you won’t be able to realistically implement or that your sales team can’t sell. When you solicit input from key departments, you’re able to think holistically about the products you develop and how they will best serve your customers. Begin brainstorming early with all relevant parties. Keep everyone involved throughout the entire process, to make sure you can adjust your product if needed and address potential hurdles likely to arise from regulators.

Collaboration helps consultants serve you better

Sometimes our clients think that partnering with an underwriting, operations, or a consulting firm like Perr&Knight gives them free license to hand over the project and never touch it again. While it’s our job to take on the lion’s share of the work in many cases, the most successful engagements are ones where insurance companies maintain at least some ongoing involvement. Yes, consultants provide guidance and produce recommendations, but there are still many decisions that can only be made by you. Non-involvement creates the additional need to track down required information that can slow down timelines dramatically and potentially result in needless errors.

Collaboration leads to faster approvals

Not only should all your internal teams and external consulting partners be on the same page, but you should loop in regulators as early as possible. This piece of the puzzle is often overlooked. Regulators are often seen as the “big bad wolf,” but the more open you are in your communication, the more of a friend the regulator can be. Another benefit is that, ultimately, fewer questions arise and less back-and-forth is required. 

Tips to maximize the benefits of collaboration:

  • Understand the need for your continued involvement with external consultants. Know up front the role you’ll be required to perform. At the onset of the engagement, confirm the expectations on all parts as to your required involvement. This will prevent possible misunderstandings down the road.
  • Facilitate ongoing collaboration among all involved parties when developing new insurance products or launching a new IT solution. For example, before you get too far into the development of forms and rates, make sure your IT infrastructure capabilities match what you want your policies/rates to do for you. Get input before you start making the big decisions.
  • Don’t rush too much. Never prioritize speed-to-market over thoughtful insurance product development and due process. By deliberately involving all relevant parties–from internal teams to regulators–you can avoid the oversights and errors that cause unnecessary delays.
  • For large engagements, implement regular status updates. In addition to a good project plan, weekly calls, emails and/or an ongoing status report allows everyone to see priorities and how the project is proceeding.
  • Trust your subject matter experts. Whether you’re launching an entirely new product or tweaking an existing product, solicit input from product design, compliance, and actuarial consulting firms before going deep into development. This will help you understand realistic expectations about the viability of your proposal and your estimated timelines.

Remember, ultimately insurance is a people business. At the end of the day, the decisions you make will have a real-world impact on the individuals and businesses you serve. Don’t hesitate to pick up the phone in place of an email. Sometimes the most effective form of collaboration can be simple voice-to-voice communication.
For ideas about how to facilitate greater collaboration within your organization or with consulting partners or regulators, contact Perr&Knight at (888)201-5123 ext. 3.
 

Expert Tips to Speed Up State Filings Approvals

by Perr&Knight

by Courtney Hughes, JD, CPCU, Manager, Regulatory Compliance
There are many reasons to try to expedite your state filings approvals. Whether you are changing rates, launching a new product, or updating a product to meet your customer’s needs, speed is critical in today’s immensely competitive insurance market.
Obtaining approvals quickly is a huge competitive advantage. Bureau filings, in particular, can be especially difficult to keep up with, because new circulars and info come out every day. For ISO, AAIS or other bureau-based products, staying on top of the frequently-changing requirements gives you a significant edge over companies that are lagging behind.  For independent products, it’s all about getting your new product or coverage to market before your competitors.
Speedy approvals can help lighten your workload by ending that process sooner, allowing you to focus your attention on the next big project. Here is a list of useful tips that can help you avoid the stumbling blocks that slow down state filings approvals.

Get prepared before submitting.

Thoroughly research the filing requirements for the states in which you plan to file well in advance of your target filing date. Understanding and complying with these requirements up front avoids the issue of states coming back to you requesting that you correct avoidable procedural issues, such as providing the wrong edition of a required transmittal document. Issues like this can delay your approval by weeks.
You can obtain current information from state department of insurance (DOI) websites, SERFF or your insurance consulting services partner. For bureau adoption filings, make sure you have collected and organized all the information from the circulars before you begin so you can provide the states with all necessary pieces of information, like the ircular number, bureau filing number and state filing number.

Submit compliant, complete, and consistent material,

Reviewers can’t approve filings that are not in compliance with their state laws. Every time they kick your filing back with questions, it slows down the time to approval. Make sure that your product development staff and actuaries, or your insurance consulting services partner, confirm that the forms, rates, and rules you plan to submit are in line with state requirements. Not all objections or issues can be prevented, but where possible, anticipate the state’s requirements for your product and try to answer any expected questions in the explanatory memorandum you submit with your filing.
Completed material also goes a long way in speeding up approvals. For example, some states require a form usage rule in your manual for each form submitted. By providing the form usage rules in your manual at submission, you avoid the objection coming in and having to scramble to create the form usage rules and get internal stakeholder approval before the deadline.
Finally, consistency is important because it makes your filing easier to review so it is more likely to be approved quickly. After the forms, rates, rules, and supporting documentation have been developed, take some time to review them carefully. Make sure, for example, that your program name is consistent between the documents, or that your explanatory memo is not referring to a form you decided not to file.

Submit your objection responses ASAP, but always before the due date.

DOIs like to speed up their workflows too, so give them everything they need to close the filing as soon as it becomes available. If you received an objection with a due date in a week, submitting your response by that deadline is good, but submitting it within two days is even better. And always be sure to respond to the state by the due date they set. If you know you will not be able to respond by that due date, contact the DOI analyst and request an extension. If you miss a due date, there’s a good chance your filing will be disapproved or rejected, putting you back to square one.

Have a plan for objection responses and status checks.

Staying on top of filings once they have been submitted is challenging because there are lots of moving pieces to manage. You need to keep track of DOI questions and their due dates and ensure that you are consulting the right internal teams for answers. You will also want to keep track of when filings have been submitted so you know when it is time to check in with the DOI to see how their review is progressing. Before you submit, you should have a plan in place for how you will keep all of the outstanding filings organized. 

Use tracking software designed for insurance.

When you have a clear insurance software tracking system in place instead of a hodgepodge of spreadsheets, databases, SharePoint, and/or emails, you can easily keep track of DOI questions and due dates. The more seamlessly you can manage the questions the reviewer throws at you, the sooner you can get the ball back into their court.

Avoid double work.

Review your internal systems to make sure they’re not slowing you down. If you use an ad hoc tracking process, you are likely doubling up on data entry, entering the information once in SERFF and again in your company’s tracking system. This can cause delays in your ability to respond to reviewer questions or use the time of valuable internal resources who could be focused on the next project. Evaluate your company’s state filings process, looking for areas you can streamline. Working with an outside insurance consulting partner can help reveal inefficiencies that you might overlook.
There are never any guarantees with state filings approvals. But preparation, planning, and organization can mean the difference between a product that is launched on time, and one that gets lost in a maze of questions and confusion.

If you have questions about strategies to speed your company’s state filings approvals, our team of insurance experts can help.

7 Pitfalls to Avoid in Providing Accident & Health Product Rate Filing Support

by Crystal London

Going through the process of a nationwide rate filing, or even filing in just a handful of states, can be a complex and lengthy process. Addressing the specific requirements of all 50 states plus DC, and provinces can get overwhelming, especially with new product filings. Each state has different filings requirements, and sometimes the differences between states are dramatic. No matter what, your end goal is profoundly important: to avoid objections, disapprovals, or the need to withdraw your filing. Ensuring that things are done properly from the get-go will make the process more streamlined in the long run.
In our decades of providing insurance state filings service for companies in all jurisdictions that write all lines of business, we’ve seen many of the common mistakes that result in lost time and wasted resources. These pitfalls can be avoided–if you know what to look for and how to take action.

Pitfall: Not knowing all state regulations and statutes

This is the single most common trap we see in state filings. Understanding the specific requirements for each state is a complicated and cumbersome process. But there’s more to it. In order to make sure your filings proceed smoothly, you also need to be aware of what we call “drawer regulations”–the unwritten rules reviewers may follow but aren’t written into the state statute. Knowing the written as well as unwritten requirements can reduce the chance of your filing being kicked back. Working with a knowledgeable actuary or state filings unit can help significantly when it comes to knowing these regulations.

Pitfall: Not knowing each state’s minimum permissible loss ratio requirements

Each state has different minimum permissible loss ratio requirements, which in turn affect rates. First and foremost, these loss ratios vary by group versus individual coverage. Individual minimum permissible loss ratio requirements are often based on NAIC individual loss ratio guidelines, however, not all states follow this guideline. Furthermore, some states extend the NAIC guideline to group coverage, while other states have their own requirements. Loss ratios can also vary by type of coverage and renewability clause, as well as invoking low or high average premium adjustments. Your rates will be different in those states based on those specific regulations. Be sure to equip yourself with these important pieces of information prior to filing to make sure you provide for the correct loss ratio for the type of policy you’re writing in a particular state.

Pitfall: Not knowing which supporting documents should accompany your filing

As we have stated before, it’s smart to file exactly the supporting documents that your state requires–and nothing more. Some states require that you submit transmittals, checklists, rating examples, underwriting guidelines and/or experience rating guidelines. Some states also have specific requirements for components that need to be included in the Actuarial Memorandum. It is also recommended to restrict the information you provide to only what is necessary to reduce the number of objections and questions; otherwise, you risk opening Pandora’s box.

Pitfall: Not taking into account time it takes to address objections

While all state filings may receive objections, limiting your number of objections not only preserves your company’s reputation with the reviewer, it reduces the amount of time required to respond, thus keeping you on schedule. In certain states like Florida, the department of insurance tries to turn around a review in 30 to 45 days. If that time period is close to expiring and you can’t respond quickly enough to the objections you receive, you risk disapproval or needing to withdraw your filing altogether.

Pitfall: Prioritizing speed-to-market over due process

Most of our clients want to offer products with the goal of launching them in as many states as possible, as quickly as possible. Due to our experience as an insurance state filing service partner, we know which states are file and use versus prior approval. Certain states allow you to begin marketing your product the moment you hit “submit” on your filing. Others require that you receive full approval before you can market your plan. Knowing the correct state standards can save you from serious infractions.

Pitfall: Lacking an end-goal for the product

It’s always a good idea to make all stakeholders sign off on your entire product, from forms to rates, in the planning phase before you get to your actual state filings. If you want a particular product to have variability, your rates need to coincide to reflect those variations. If you don’t outline these details going into the initial filing, inserting those components after the filing process has begun may require re-filing. This can be costly, time-consuming and frustrating for your entire team.

Pitfall: Inconsistency between rate manuals and forms

Inconsistency is a surefire way to elicit questions and objections from the reviewer. When we provide insurance state filings service to our clients, we always work closely with the product design unit and forms department to make sure that rate manuals are consistent with forms. This is especially important when a product’s allowed benefits vary from state to state and impact rates. Double check all relevant documents to make sure everything matches.
State filings are a complicated process that requires close attention to detail. A seemingly minor oversight can have a huge impact down the line. It’s always a good idea to partner with state filings experts who can help you manage your filings and make sure all your ducks are in a row before you begin.

If you have questions about how your filings process can be improved, contact Perr&Knight and we can discuss ways to streamline your operations.

Compliance Reporting: Complex, Costly and Crucial

by Jason Hudson

Authors: Jason Hudson, Principal & Director, Statistical Reporting & Data Services and Mark Nawrath, PMP, MBA, Principal & Director, Account Management
Statistical reporting requirements are always evolving. This fact won’t change anytime soon. Insurance companies still grumble about regulatory compliance but it’s best to just accept it: compliance reporting is an unavoidable cost of doing business.
Admitted insurance companies in the U.S. are required to send their premium, policy and claims data to a designated statistical agent. If you send incorrect data or your data is not delivered in a timely manner, your company can be fined–or shut down. Yes, it negatively impacts your bottom line. No, it’s not optional. Try to dodge reporting or cut corners and you’ll end up paying for it later in lost time, penalties or costs associated with bringing your reporting system up to date.
Here’s what you need to know about compliance reporting–and how to do it the right way.

Compare apples to apples

When working with legacy systems and forms requirements that vary by state and line of business, it’s a challenge to generate quality data in a usable format. Though it sounds like a simple mapping exercise to match data points and formats, it can actually become a time- and labor-intensive process that still results in data omissions. Since ratings agencies and other regulatory bodies require data that is derived based on their respective reporting requirements, it’s smart to work with an insurance operations consulting firm who can ensure that you’re capturing and reporting the correct information, no matter from which system you are drawing your data.

Begin with the end in mind

Remember: compliance reporting is not optional. You need to establish data capture and reporting processes that meet agent and state requirements and every line of admitted business your company writes. Implement a statistical reporting best practice that addresses the whole picture, even if it means capturing data that you might not appear to “need” right now. The more quality data you capture, the more easily you will be able to meet the conditions of the statistical agents, Departments of Insurance and/or the NAIC, even if they change over time.

Get ahead of the curve

Stay on the front end of developing your stat reporting best practices. Don’t be reactive. Take into account the lead time required to incorporate new codes and new and updated insurance products, while staying on top of the constant influx of data from the products you currently offer. Putting a comprehensive compliance reporting strategy in place frees you from attachment to individual staff members who might retire or otherwise move on, taking your company’s compliance processes with them.

Process experts aren’t necessarily insurance experts

In an industry as heavily regulated as insurance, no error or oversight is ever insignificant. When working with an outside consultant to develop and implement a compliance reporting plan, partner with a consulting firm with specific expertise in insurance. General operations and technology consultants may offer assurances that they can manage insurance compliance, but they lack the in-depth knowledge required to develop a plan that addresses the increasingly complex insurance bureau requirements. Speak candidly with your insurance operations consulting firm before buying a new software system or implementing a new process so they can ascertain the extent of your needs and help you develop a system that addresses all aspects of your reporting. 

Software designed by insurance experts

Managing so many forms of disparate data can quickly overwhelm an insurance company’s internal compliance department. One option is to use statistical reporting software tailored specifically to the needs of insurance companies. We developed the Perr&Knight data model solution for precisely this reason. The software’s powerful insurance-specific algorithms process your company’s data and formats for appropriate reporting to various regulatory bodies.
However, keep in mind that software is no substitute for insurance expertise. We’ve seen insurance companies purchase expensive data management systems that were billed as having the ability to do stat reporting but ultimately can’t deliver. These systems can capture data, but because they were not designed with complex requirements for compliance reporting in mind, they don’t have logic in place that can normalize the data, apply the appropriate rules and ultimately meet bureau specifications.

Stay on top of reporting by going “over the fence”

At Perr&Knight, another option is available: we can handle statistical reporting for you, using what we call the “over the fence method.” We ask our clients to simply toss all their data, in its various formats, “over the fence” to us. We then create and execute a series of processes to combine data sets, resulting in a clean format that matches the requirements of various regulatory bodies.
For a mandatory practice, regulatory compliance is remarkably complicated to manage. Mistakes are costly and most in-house compliance departments have a hard time keeping up. Implement a well-thought-out process and you’ll put your company in the best position to maintain compliance, no matter the requirements, and to be best prepared when changes arise.

For questions about how to streamline or update your company’s statistical reporting, contact Perr&Knight at (888) 201-5123 x3.

Expert Tips to Avoid Accident & Health State Filings Form Rejections

by Susan Cornett

State filings form rejections waste your company’s time and money. When you are forced to resubmit your forms, your company is on the hook to resubmit state filing fees (where applicable) and SERFF fees. These fees might be nominal in some cases, but if you are required to resubmit multiple forms in multiple states, they can range from a few hundred to thousands of dollars. Depending on the state, when you resubmit, you also run the risk of re-starting the approval clock from zero. This can result in delays of weeks or months, and lost revenue due to delayed insurance product releases.
During our decades providing state filings services, we’ve seen almost every reason a form is likely to be rejected. We also know that many of these setbacks are avoidable. Here are some of the most common mistakes that lead to rejection–and what you can do to prevent them.

Tip #1: Pick the appropriate type of insurance (TOI)

When you file through SERFF, you must specify the correct code for the exact type of policy you are submitting. In most cases, a sub-TOI is also required. These codes are crucial because they let the department know what to expect when reviewing your forms. The reviewer evaluates your form through the lens of your selected TOI, looking for particular information. A wrong TOI code subjects your form to review under the wrong classification and may result in unnecessary objections. It can also make your submission look sloppy. Submitting a filing under an incorrect TOI is one of the fastest ways to get your form rejected outright.
NAIC publishes updated codes every January. Each state’s DOI has the authority to control the number and types of insurance codes that they accept each year. Depending on the types of policies issued in their states, commissioners can “turn on and turn off” codes at their discretion. Insurance consulting companies that offer state filing services regularly review these changes, looking for new codes that apply to emerging products and codes that are no longer in use.
But what if your policy doesn’t exactly fit a particular TOI? No matter whether your product is an exact fit or not, you must pick a TOI code. For policies that don’t exactly match a particular state’s TOI code in SERFF, select the code that most closely aligns with your policy, then address individual points of variation in the filing description. Unfortunately, there are no guarantees that a reviewer will read your description, but it’s your best course of action. If you’re unsure about which TOI to select, work with an experienced insurance consulting company that specializes in state filing services. They’ll help you evaluate the code that most closely applies to your form.

Tip #2: For group policies, correctly identify your market

Selecting the correct group designation (“employer,” “union,” “association,” etc.) is hugely important. Your form is subject to rejection if the designation is incorrect or does not match what is allowed in a particular state. As with correct identification of TOI, the self-designation sets the lens through which the reviewer will check your forms. If you are missing required accompanying forms (i.e., association by-laws) for a particular type of group designation, your filing is likely to be rejected.

Tip #3: Pay close attention to the requirements of each state and line of business

Checklists, transmittals and certification requirements vary by state and by line of business. Health-specific plans that are subject to the Affordable Care Act (ACA) require additional considerations, including form and rate requirements and other ancillary forms. It’s easy to get lost in the weeds. You must have a clear understanding of the questionnaires and filing certifications required by each state. These requirements are usually­–but not always–listed on SERFF. Pay attention to these details. Missing or incomplete information will stop your filing in its tracks.

Tip #4: Include required information–and nothing more

Pay close attention to the specific information that should accompany each filing. Include what is required by SERFF but do not include additional information. Doing so can open your filing up to questions and confusion.
The sheer volume of work required to track filing requirements that change frequently and vary by state can present challenges for internal departments at most insurance companies. We recommend working with an insurance services partner who provides detailed content reviews as part of their state filings services. Their breadth of experience and deep understanding of all specific statewide filings can save you time, money and runaround.
When it comes to avoiding state filings form rejection, the most important thing is to take your time. Hasty work leads to oversights and careless mistakes that can set your filing back to square one.
Have questions about your state filings process? Contact us today to speak to our state filings experts. 

How to Uncover Hidden Value in Everyday Operations

by Rob Berg

Insurance companies are complex organizations managing multiple levels of service and product offerings, so there is always a risk of varying degrees of costly inefficiency. As experts in operations consulting for insurance companies of every size in every industry, we have developed tools to help carriers streamline their processes and start achieving greater value from their operations. Even small bumps in profitability can have a major impact, both long- and short-term.
In our experience providing insurance support services, we have discovered that there is plenty of low-hanging fruit that insurance companies can begin to capitalize on, beginning immediately. Here’s how.

Where to Start

You might be familiar with the Pareto Principle, also known as the “80/20 Rule”. This is the idea that 80% of your organization’s problems stem from the same 20% of root causes. Address these causes and experience exponentially improved results. This is especially true in the insurance industry since so many aspects of an organization are so deeply interconnected. Many insurance companies recognize that they have an efficiency problem but have no idea where to begin. We say: find the quick win and start there.
Take an inventory of your operational processes and separate your core processes from your supporting services. Your core processes are those that directly contribute to your customers’ experience with your company. Supporting processes are all the ancillary functions that surround your core processes.
Once you separate your core and supporting processes, create a ranking scale of core processes from least to most dysfunctional (i.e. those that cost too much, take too long, or receive the most customer complaints). Then rank the same items based on the amount of resistance you expect to receive when making change. Finally, evaluate your core processes based on the amount of investment (time or money) required to improve the process.
Find the processes that rank highest in dysfunction and lowest in resistance, time, and cost. These are your first priorities. By evaluating based on these criteria, you can reduce a list of potentially hundreds of areas for improvement to two or three that you can address right away. Once you have tackled the issues that are easiest to fix, you should move on to those that require deeper investments of time and resources.

The Power of People

As insurance providers, your business is necessarily financially-focused. However, keep in mind that at its core your operation revolves around people–your customers and your staff. During many of our insurance operations consulting projects, we see companies fall short of their process improvement goals because they forget to address the strong psychological component that surrounds change. The most successful companies carefully build staff buy-in before and during change implementation.

This can be done in a number of ways:

  • Solicit input from staff about what they think needs improving and why
  • Demonstrate the direct connection between their feedback and process updates
  • Discuss proposed solutions before implementing to uncover potential resistance
  • Provide sufficient training for new processes
  • Establish clear goals and offer incentives for process adoption

Finally, remember that change takes place from the top down. Leadership must clearly communicate the vision and context for change, and must consistently reiterate this message until the change becomes institutionalized.

An Outside Perspective

Many companies contract an outside party to evaluate their processes and find ways to achieve greater value. This can reveal areas for operational improvement that have become so entrenched in an organization as to become nearly invisible. We recommend that you work specifically with insurance support services specialists, instead of a general business process management partner, due to nuances specific to the insurance industry. General consultants can only provide general advice.
Outside insurance operations consulting partners also bring discipline to the process. They facilitate communication between departments, gather and interpret organization-wide input and can act as a conduit to ensure that important information makes its way up the chain.
Whether you hire an insurance operations consulting firm to evaluate your hypotheses about whether a particular change is a smart investment, or you turn over the entire project for soup to nuts implementation, a third party can often be more effective in evaluating ways to uncover hidden value in your operations and helping you achieve it.
When it comes to process improvement, there’s an old saying, “Don’t try to boil the ocean.” That is, if you attempt to tackle everything at once, you’ll likely become overwhelmed and shelve the whole project. Instead, take a holistic look at your desired changes and how they impact your customers, staff and operations and start where you can make measurable gains right away. Remember that progress is all about incremental improvements.
Ready to find value in your everyday operations? Contact us today for a consultation.

Streamline Bureau Monitoring and Stay on Top of Compliance

by Courtney Hughes

Keeping up with bureau changes is a critical aspect of compliance for every insurance company. Depending on the states and lines of business your company writes, your organization might need to track form, rule, and loss cost changes from just a handful–or more than two dozen–rating and advisory organizations per month. Some bureaus, such as Insurance Services Office (ISO), post twenty or more circulars per day. Other bureaus post updates only once every few months. For the frequently-posting bureaus, simply managing the onslaught of updates can pose a challenge. For the less-frequently-posting bureaus, there is a higher risk of forgetting to check the bureau’s site and take action based on their updates.
Adding to the challenge is the process of determining what form, rule or loss cost changes you can implement without filings and which you need to file to be able to use. That depends on three things: whether a state allows the bureau to file on behalf of companies, whether your company has given filing authority to the bureau, and the filing law in that state for that line of business. Even if the new or changed bureau material is filed on behalf of your company, you need to ensure the changes are made in your policy writing and rating systems by the effective date.
No matter the number of bureaus the company tracks, insurance companies face the same challenge: avoiding a breach of compliance by keeping up with bureau changes, including systems changes and the state filings needed to adopt or non-adopt based on state filing law.
As providers of insurance consulting services for companies in all lines of business and in all fifty states, we have seen first-hand how companies fall behind and the chaos it causes when their in-house regulatory compliance services cannot meet their company’s needs.
Here are some helpful insights that can assist your company in wrangling administrative work so you can focus on managing your business.

The challenge of maintaining ever-changing information

The sheer amount of time it takes to mine the bureau sites to compile and analyze relevant information can quickly overwhelm in-house regulatory compliance departments. After gathering information from the bureau sites, compliance staff may need to discuss whether the company would like to utilize the bureau’s changes with key stakeholders. Based on that discussion, they outline the necessary steps for filing to adopt or non-adopt, and request the needed system changes. To track these steps, many insurance carriers rely on ad hoc systems of spreadsheets and emails, thereby risking the accuracy of their information and creating the potential for forgotten or delayed state filings.

Lighten the load with a dedicated bureau monitoring service

To save time, maintain accuracy and streamline the bureau-based state filings process, we recommend outsourcing bureau monitoring and state filings to companies that provide insurance consulting services. These insurance experts monitor bureau changes, can recommend a detailed course of action depending on your company’s lines of business and the states in which you operate, and complete the necessary state filings.
Automating much of the minutiae of monitoring and tracking bureau circulars can relieve your regulatory compliance department of massive amounts of administrative work, freeing them up to focus on big-picture problem-solving.

Use specialized bureau monitoring services developed by insurance experts

Perr&Knight developed Bureau Monitor, a subscription service housed within our StateFilings.com system, specifically to streamline this process. Our compliance analysts review, track and organize circulars for all bureaus and lines of business and put them in one central repository. We keep your account up to date with relevant bureau information and the system keeps you informed in clear, concise terms as to which updates apply to you and what your company needs to do to use the update, including whether your company needs to make any state filings.

Reduce administrative work for faster decision-making and gain time to focus on what matters

Regulatory Compliance departments are often kept busy with compliance issues and filings to make desired changes to your company’s unique products or features. Streamlining the bureau update process enables your compliance department to focus on what matters most to your company while keeping the company in compliance and up to date with key industry changes.  
Being able to see status and recommendations for all circulars at a glance significantly improves your efficiency when trying to keep up with the furious pace of insurance bureaus, especially those that require multiple filings per month. If a filing is required to use a bureau update, systems like Bureau Monitor lighten the load because the information your filings staff needs (like the bureau filing number and effective date plus a link to the circular on the bureau’s website) is all in one place. Your compliance staff can also use automated bureau monitoring systems to know which bureau updates will require changes to policy writing and rating systems and indicate the necessary filing has been submitted or approved.
Internal compliance departments can get quickly overwhelmed by the onslaught of changes from frequently updated bureaus, or might simply forget to update material and systems based on updates from the bureaus that post circulars infrequently. Whether you choose to maintain a homegrown system or use an automated bureau monitoring service that augments your team, the most important thing is to maintain a clear, documented process that ensures that no deadlines are missed and all stakeholders have access to the information they need.
If you would like to discuss Bureau Monitor, StateFilings.com or any of the regulatory compliance services or expert insurance consulting services offered by Perr&Knight, call us at (888) 201-5123 ext. 3 and we’ll gladly provide a solution that works best for your business.

Insurance Company Licensing: What to Expect

by Diane Karis

Whether you are submitting a primary application to license a new insurance company, seeking to expand coverage to additional states or adding a line of business so your company can write a new product, every insurance company’s goal is to obtain a speedy approval to begin binding policies as soon as possible.
All types of insurance company licensing share common characteristics. However, many companies proceed full-steam ahead without thoroughly understanding the challenges with licensing that can delay approvals and drain resources in the process.
Based on our extensive experience providing insurance company licensing support in all lines of business in every state, here are some of the top considerations to keep in mind as you submit your insurance license applications.

Expect slightly different requirements from each state.

About 80% of your licensing application information will be standard across the board. But the difference contained in the remaining 20% may jeopardize your approval. If you receive the same question from more than one state, it’s probably something you should address in all of your applications. All states grant the ability to withdraw your application without prejudice, so be proactive about amending your applications and re-submitting. If your company does not have the resources to review each individual application for state-specific requirements, consider working with a specialized consultant whose experience managing each state’s insurance company licensing process can limit unnecessary delays.

Details are critical.

Incomplete applications are a primary cause for delays, rejections or resubmission requests. Keep in mind that departments of insurance will not refund your filing fee once your check has been cashed.
Therefore, it’s smart to take the time to make sure that every question on your application is answered completely. If you don’t understand a question or a specific requirement, contact the state’s Department of Insurance directly and ask. Failure to submit complete, accurate information can cause your application to get kicked back, stalling your approval before the review process has even begun.

Consider your license’s capital requirements.

Your license approval may require your company to outlay a significant amount of additional capital. Your approval might stipulate that you meet certain capital requirements, such as increasing your capital and surplus or your statutory deposit. Consider your company’s process for informing your Board of Directors and the steps your financial department will need to take to ensure that you can access the requisite amount of funds.

Expedite approval of application fees with your finance department.

Your application is not considered complete unless it includes your full submission fees. Take your company’s accounting process into consideration, including the time between payment requisition and obtaining a check in hand. We’ve seen this process sidetrack our clients’ submissions, so our policy is to advance most fees when submitting applications on our clients’ behalf. This enables our clients to generate a single payment to us that covers every portion of their filing, including payment for our service.

Follow up with State Departments of Insurance.

Don’t just submit your application and wait. Though you might submit to multiple states at once, one of the challenges with licensing is that each state reviews applications on their own timetable. Follow up directly with each State Department of Insurance to make sure your application has been received and is getting the attention it deserves. If you lack the manpower for this level of involvement, partner with an insurance consulting services company that is experienced in following up with DOIs and has a tracking system in place.

Expect a mountain of paperwork and many, many man-hours.

Even with paperless submissions and electronic tools, licensing still requires copious amount of paperwork. California alone issues an 80 lb. box of paper.  Therefore, create efficiencies wherever possible. Submit forms via the UCAA electronic application, use digital tracking tools like StateFilings.com, or work with an insurance consulting services company who can manage your applications for you.

The Departments of Insurance make the rules. It pays to follow them.

Though there might be a rule or requirement that seems illogical to you, DOIs are not likely to change their processes anytime soon. Therefore, it’s in your best interest to supply the information they request on their timetable. Prepare to lose a few battles in the interest of winning the war.
Insurance company licensing is a lengthy and detail-intensive process that can take anywhere from six months to a few years. This is not an extensive list of challenges but by keeping the above in mind during your submissions, you can set achievable expectations and timetables.
If you have questions about insurance company licensing, call Perr&Knight at (888) 201-5123 x3 and we will discuss ways we can help streamline your licensing approvals.

Eight Tips to Maintain Adequate Carrier Rates

by Dee Dee Mays

As featured in Carrier Management:
Adequate rate maintenance is the cornerstone of an insurance carrier’s profitability, solvency, and overall business health. Since there is a clear and traceable relationship between policy premiums and claims payments, the end result goes straight to a carrier’s bottom line. Maintaining appropriate rates is about more than just being able to pay out on claims. It’s about structuring an insurance business to meet future growth goals. The danger is that, without careful monitoring, indications of inadequate rate might not show up immediately, but can have disastrous consequences in the future when the damage has been done and it is already too late.
Read the full article on Carrier Management.