The already intricate insurance industry has been traumatised by a vast amount of regulations imposed on financial intermediaries during the past 24 months. In addition, personal lines insurance is increasingly complex to administer and this trend is certain to gain momentum in the future.
"To survive a reliable, integrated administration and claims system that adapts to a changing environment, while efficiently and effectively handling every aspect of the insurance business, is vital," says Jans Wessels, Managing Director of Dex Data.
Deregulation of commission is expected to alter the face of the insurance industry in the near future. The impact on brokers will be enormous, as it suggests that brokers can negotiate commission structures, based on their portfolios and performance. Successful negotiation will be determined by the broker`s ability to monitor his business accurately and efficiently, and to react promptly to any trends identified.
Brokers are further encumbered by Policyholder Protection Rules (PPR), the FAIS (Financial Advisory and Intermediary Services Act 2002) legislation, FICA (Financial Intelligence Centre Act, 2001) and requirements concerning the format of VAT certificates.
According to Wessels, these increasing legislative business requirements have created a huge differentiation between system suppliers. "In the past, systems with limited functionality could have supported the broker`s business. However, the situation has changed drastically. In the radically new insurance environment, the progressive broker will understand the necessity of a flexible system that covers all areas of the insurance business. Such a system ensures the complex administrative processes and requirements are streamlined, allowing brokers to focus on client acquisition and servicing."
The only effective, proven way for brokers to adhere to the myriad of legislative requirements while retaining core business focus and administrating large volumes of polices, is through the use of appropriate, practical administration systems, harnessing the power of information technology to accurately and efficiently process large volumes of information.
Wessels points out a few important considerations for brokers when selecting a business solution.
Firstly, a system must be capable of managing multiple classes of business, multiple products, multiple contracts and variable payment frequencies, yet operate in one environment, providing client centricity and single-system training. Ownership of data, independence and ability to sell or move clients and business to preferential products and facilities are crucial.
Secondly, the system should handle comparative quoting on multiple industry available products, quote and policy integration, package combinations, add-on products, claims, policy administration, correspondence, data exchanges and portfolio management in one simple solution. The system must cater for the collection of premiums, premium financing, multiple levels of variable commission structures and commission payments. The design must support out-bonus concepts linked to various criteria and the system should be able to pull all the information together for analysis and profit share calculations. Running separate systems for any of these various components presents unmanageable complications and therefore full integration is key.
Finally, the system must have a multi-tier design with an easy-to-use front-end, enforce system and underwriting conditions and streamline record-keeping, incorporating imaging and voice logging, various distribution and communication channels and provide accountability and audit ability. This provides essential control and accountability.
The exchange of data between various parties involved is critical. In many instances, certain portions of the business process are outsourced to third-party providers, including claims administration, premium collection and portfolio management. To facilitate this process, accurate and timely information must be exchanged among all the relevant parties in an orderly and secure manner.
"Dex IT, as a South African company with international insurance clients, currently administers a combination of systems with the design concepts to support this dynamic environment and provides this service to more than a thousand brokerages of varying sizes worldwide. The designs are based on separating business logic from program logic, making product and business components configurable without having to alter programs. This allows setting up of new products within days and enables brokers to immediately react to trends and market requirements."
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