By Cyril Tuohy
New agent- and customer-facing portal technologies and core policy administration systems are the hot investment areas for life insurance companies in 2013, as health insurers compete with life carriers in the group market, insurance technology experts say.
“Life insurers, up until a couple of years ago, roamed the earth like dinosaurs and were masters of their kingdoms,” said Chad Hersh, managing director for Novarica, an insurance technology consultancy. No longer.
Because life insurers are seeing much of their premium growth coming from cross-selling annuities and benefits to employees at the worksite, group life underwriters need systems that are flexible and the scalable, Hersh added.
Big life insurers prefer building their own custom systems to track different policies but those huge systems are inflexible, which means carriers can’t adapt easily to change. Maintaining such systems is also expensive.
As more off-the-shelf software choices have become available, though, carriers have new options. "The group life market is changing,” Hersh said. “Health insurers and individual insurers are entering this space and that means they have to support faster product development cycles.”
Faster business decisions mean carriers have to be more efficient at managing their contracts. Attracting and retaining top advisors also means the carriers need better, simpler systems to generate certificates faster and automate underwriting accurately, according to Novarica’s research report on technology trends in group life, annuities and benefits.
The report, released in February, was co-authored by Hersh, senior researcher Steven Kaye and principal Rob McIsaac.
North American life insurance companies are projected to spend $23.7 billion on information technology in 2015, up from $20.2 billion this year, according to a separate report published last month by Celent. Total IT spending by North American insurers is projected to be $58.4 billion in 2015, up from $51.1 billion this year. Catherine Stagg-Macey, senior vice president with Celent’s insurance group, called the North American spending projections “respectable.”
Individual underwriters have undertaken modernization initiatives. Last December, Munich American Reassurance said it had updated its EDGE online and life disability insurance underwriting manuals to function on mobile platforms including iPads, Nexus 7s and Kindle Fires, according to the Novarica report.
Last year as well, Trustmark picked Sapiens’ ALIS policy administration system for voluntary benefits administration. Unity Financial deployed a private online cloud platform based on EXL LifePRO for policy administration, the Novarica report also noted.
Symetra Life implemented Wynsure for group life and disability policy administration and Loyal American launched an iPad version of its Express App, allowing agents to quote and submit new business for health benefits and critical illness products, Novarica said.
The largest group life insurance carriers, who count the cream of the Fortune 500 crop as clients, have to invest in the latest systems even if it’s just for one product – a short-term disability product, for example – because the value of the deal is so big. “So having that flexibility in their system is a very big deal,” Hersh said.
A clean, modern and flexible “front end,” or agency portal system, which is supposed to make life easy for agents and advisors to connect to underwriting systems, is also “must-have” for life carriers, Hersh added.
Group life carriers want the agent portals to provide illustrations and needs calculators, and to make it easy for agents to view policy details, account values, billing cycles, claims history and beneficiary information.
Carriers also want systems to spit out group policy changes, and they insist the systems be integrated with employer human resource payroll systems so that agents can see what percentage of an employee population has chosen a particular type of coverage.
Recent examples of insurers upgrading their front-end systems include Assurant Employee Benefits, which last year introduced an online disability plan comparison tool to help agents assess how indexing methods affect benefits, Novarica said.
Companion Life upgraded its website to include landing pages for agents. MassMutual’s PlanSmart Analysis tool helps retirement plan advisors, sponsors and participants assess the percentage of employees on track to replace specified levels of retirement income.
Cyril Tuohy is a writer living in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at [email protected].
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