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From Resource, September 2007
Copyright by LOMA
Taking a Benchmarking Tool into the Digital Age
In an effort to keep pace with the constantly changing information needs of
member companies, LOMA recently gave its annual Life Insurance & Annuity
Service Turnaround Times surveys (STTS) a high-tech upgrade. Say hello to STTS,
Version 2.0.
By Ted Hatcher
Insurance Operations Associate, LOMA
The advent of new technologies
has taken the old norms for measuring productivity and processes and turned them
on their heads. For many organizations, long gone are the days of enormous file
rooms and clerks pulling policy files, when every transaction involved touching
paper or manually calculating annuity payouts and the processing of incoming new
business took weeks instead of days. With the passing away of many of the old
ways of doing business, many companies are taking a new look at their processes
and procedures and how they measure them. As a result, companies are looking for
help in establishing standards and benchmarks for their Policy Owners Services,
Underwriting and New Business divisions, among other back-office processes.
The
term “benchmarking” gets tossed around a lot these days, but I have come
across two definitions that I feel best describe the benchmarking process. The
first definition goes something like this: “Benchmarking is the continuous
process of measuring products, services and practices against the toughest
competitors, or those companies recognized as industry leaders.” This
definition has mainly been used in the manufacturing industry, but I feel it
applies just as well to insurance and financial services organizations.
According to the second definition, which is shorter and more to the point,
benchmarking is “the search for industry best practices that lead to superior
performance.”
Regardless
of how you define benchmarking, the term has now become ingrained in the lexicon
of today’s business world. Benchmarking has become a valuable tool for
companies looking to control their costs, set productivity standards and
increase their competitive edge, and it’s here to stay. Because many
organizations are increasingly turning to benchmarking to see where they stand
in the industry, LOMA decided not to conduct the annual Life Insurance &
Annuity Service Turnaround Times surveys (STTS) for 2005. The consensus at LOMA
was that the report needed to be updated in order to be more relevant to
organizations seeking benchmarking information and to provide a better snapshot
of what’s going on within the industry.
Fast
forward to 2006: LOMA’s Insurance Operations Division got to work on retooling
the Life and Annuity STTS survey and reports. Their first order of business was
the removal of the contact/call center section of the survey, which eventually
became a standalone benchmarking survey. Sections were added to gather
information related to underwriting, service standards and back-office
functions. The previous version of the STTS report was manually assembled, bound
into a report, and mailed to the participating organization—a method that we
at LOMA felt was an outdated and inefficient way to produce the survey reports.
At
LOMA, we also strive to use technology that will make our products and services
easier to use. We now produce the STTS report in an electronic format and
convert it into a PDF file for delivery. Now, when organizations receive their
report, they can easily share it with others in the organization, and the report
can be electronically archived for later use. Another advantage of the new
format is that a report purchase request can now be turned around in less than
24 hours, whereas before, it could take weeks to receive a report.
Following
the weeks of work it took to create the new Service Turnaround Times Surveys,
more than 40 companies signed up to participate. The information was collected,
and LOMA rolled out the first edition to participating companies in September
2006. We immediately began to receive feedback on how easy it was to read and
understand the report, as well as how nice it was to have the reports in PDF
format, instead of old hard-bound reports. Participating companies said they
were very pleased with the final product and how easy it was to compare their
results to those of the overall survey.
Industry
Trends
One of the benefits to LOMA of
conducting the life and annuity STTS each year is that we are able to observe
trends and changes within the industry. The more noteworthy trends we have
spotted this year include the following:
Companies
are increasingly focused on reducing their amount of NIGO (Not in Good Order)
business. They have made it a priority to educate agents about application
requirements in order to reduce the amount of NIGO
applications.
Companies
are devoting resources to speeding up the underwriting process in order to
increase their placement rates.
There
is greater emphasis on leveraging technology to increase productivity and lower
or control costs across the board.
Another
added benefit of the new Service Turnaround Times Reports is that we are now
able to offer customized peer-to-peer reports that enable participating
companies to compare their data to that of other participating companies of
their choice (four minimum). Many organizations found this very beneficial, as
they could choose some of their direct competitors for comparison. They later
received a report showing how they compare to the aggregate results for the
group of companies they selected.
But as
far as keeping the Service Turnaround Times Survey up-to-date and relevant to
today’s insurance and financial services industry, LOMA’s work will never
truly be done. The survey is a product that we will continually modify as needed
to best meet the ever-changing needs of our member companies and the industry as
a whole. With that in mind, we solicited feedback from participants, committee
members, and other LOMA members on improvements we could make for 2007. Based on
that feedback, we have further broken down our product types, included variable
products on both surveys, and added several clarifications and sections on NIGO
processing. These additions have helped create what we at LOMA feel is the best
edition of our Service Turnaround Times Survey yet.
For
more information on how to obtain a copy of the 2007 LOMA Service Turnaround
Times Survey report or the 2007
Contact
Center
Benchmarking Report, please contact Ted Hatcher in LOMA’s Insurance
Operations division at (770) 984-6407, or via e-mail at
hatchert@loma.org.
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