Chapter 8 Flashcards
Technology & Brokerage Operations
What are the three objectives of brokerage technology?
Enhance Profitability
Build Client Releationships
Improve Effectiveness
How does technology aide in enhancing profitability?
Reduction in labour cost as a percentage of total revenue. Reduction in number of employees required to maintain production, or improvement of ability of existing brokers to generate revenue.
How does technology aide in building client relationships?
Faster response to client. Database improves ability to target appropriate market segments.
How does technology aide in improving effectiveness?
Reduces administrative tasks, and frees producers to make sales. Helps standardize office procedures such as abeyance processes and file documentation. Follow-up activities are better coordinated and potential for E&O’s is reduced.
What are seven key components of a broker management system?
Client File Database Product Management Accounting Administration Communication Training Service & Support
BMS - Client File Databases
Important to create, retain, and enhance client relationships. Should include past quotes, current active files, closed files, accounting information, renewal dates, claims information, sales management reports.
BMS - Product Management (Rating Function)
The rating function supports the process of issuing quotations and proposals for new business, policy changes, and renewals. The brokerage needs the ability to issue these items quickly and without double-entry.
BMS - Accounting
Should support all new business, endorsements, and renewals. Should include an accounts receivable component, and should be able to monitor direct bill transactions and reconcile company statements.
BMS - Administration
Word processing, client database management, spreadsheets are examples of administrative applications. The broker should not have to recreate letters, memos, and confirmations each time they are needed.
BMS - Communications
Email transmission is immediate and inexpensive. Fax machines and telephone systems are areas of importance. Clients should be able to be transferred from one department to another seamlessly.
BMS - Training
Many software applications have “Help” files to smooth over implementation processes.
BMS - Services & Support
Technology vendors usually support their products with a help desk or customer service assistance. This responsiveness and helpfulness adds great value to the technology solution.
What needs to be determined to understand technology needs within the brokerage?
- Analyze the Current Business Situation - Undertake an analysis of threats, opportunities, strengths, and weaknesses and determine the competitive position the brokerage and causes indicative of this position.
- Project the Future - How does the strategic plan call for the brokerage to evolve? Project where the brokerage intends to go and create a technology plan to satisfy future needs.
What are the four criteria to evaluating technology?
Reporting Capabilities
Capacity
Support & Training
Cost
Evaluating Technology - Reporting Capabilities
Accounts receivable & payable, income, billings, and payroll. Run marketing reports such as client profiles, orphan accounts, claims, type & mix of business by class & company. Track expiries, abeyances, and other reports.
Evaluating Technology - Capacity
Should be able to serve multiple locations. Should also consider back-up devices and other hardware and software.
Evaluating Technology - Support & Training
Vendor should be stable & established. Should have ready-access to vendor support. User training should be on-going.
Evaluating Technology - Cost
Consideration of the initial acquisition and implementation as well as ongoing maintenance and support fees.
What are the three keys to technology implementation?
- Management Attitude - Managing change*
- Contingency Plan - Unforseen problems, system failures. Important to keep productivity and employee morale.
- Maximization - Use technology to its fullest potential for the best results.
What is EDI?
Electronic Data Interchange - Two way electronic communications between brokerage and insurance company.
What are the advantages to EDI?
Track client activities
Reduction in work duplication
Reduction in mailing costs
Improved communications and working relationships
Fewer human resources associated with insurance transactions
Single-data entry
Faster turnaround on quotes and policy issuance
Permanent record of communications and transactions
What are the two types of EDI interface?
Single-Entry Interface
Interactive Interface
Define Single-Entry Interface
Single-entry multiple-company interface means that information is entered into the brokerages computer system. It is stored for a given period (usually 1 day) and then batched together by the brokerage and transmitted to the insurance company for processing.
Define Interactive Interface
Interactive interface is done through a direct connection between the brokerage and the insurance company. The brokerage is entering the information directly into the insurance companies online system.
What are the advantages & disadvantages to interface systems?
SE Advantages: Lower communication costs, training time is reduced and productivity is improved.
SE Disadvantages: Response time is not immediate, delay in correcting errors, software costs may be extensive.
II Advantages: Little investment in software, insurer can make changes without updates to software being required on broker side, immediate access to policy, claims & billing information.
II Disadvantages: Duplicate information entry, ongoing training, procedures between companies are not standardized.
What other factors should be considered with EDI?
Costs - Software, communications, network usage, terminal enhancements.
Confidentiality & Security - Potential for privacy breaches
