Improved electronic application technology has cut the average time between an agent applying for life insurance coverage and receiving a response by more than a week over the past nine years, new research indicates.
For underwriters of life insurance policies with face amounts of $400,000 or more, the average cycle time has decreased from 52 days to 44 days, according to a report by the consulting firm Celent.
For underwriters of policies with face amounts of $400,000 or less, average cycles times have gone from 42 days to 33 days.
The reduction in cycles times were observed for the period between 2007 and 2016, consultants Karen Monks and Colleen Risk write in a 2016 report titled “The Doorway to Straight-Through Processing."
Faster cycle times allow agents to process more applications and close more business, which translates into more income.
New electronic systems reduce cycle times by flagging not-in-good-order (NIGO) applications quickly so they can be refiled within hours or days.
NIGO alerts range from outdated or incorrect forms, illegible writing, missing signatures, missing applicant information, missing or incomplete agent or producer information, missing dates and licensing issues.
In a paper-intensive world, applications suffering from NIGO status would take much longer to correct and prove a stumbling block for agents looking to close higher business volumes.
In a 2012 study, Celent found that simply waiting for missing information added as much as 20 percent to the cycle time of a life insurance application.
Industry benchmarks have placed NIGO rates at greater than 50 percent, Monks and Risk write.
But with better software and more efficient workflows, technology vendors such as Ebix, iPipeline and Majesco have helped insurers install new processing systems.
The proper technology can have a dramatic effect on outcomes.
Great American Insurance in Cincinnati, which recently refreshed its agent portal and deployed an electronic application system for annuities, improved processing time by 75 percent, researchers Rob McIsaac and Steven Kaye said in a separate 2016 report.
NIGO rates, meanwhile, have been cut in half at Great American, according to Novarica consultants McIsaac and Kaye.
Voya Financial, which has invested tens of millions of dollars to expand its technology platforms in recent years, has implemented a NIGO tool for the annuity business, said Carolyn Johnson, CEO of Annuities and Individual Life for Voya Financial.
For older agents who prefer physical paper, an optical character recognition system will catch mistakes and alert agents that the paper application needs to be amended or corrected.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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