CAIB 4 Ch 8 - PPT (1).pdf

CAIB 4: Chapter 8 Technology and Brokerage Operations CAIB 4  CAIB 4 Section 1 Technology in the Brokerage Impact of Technology on the Insurance Industry Technology has revolutionized insurance transactions Informat...

CAIB 4: Chapter 8 Technology and Brokerage Operations CAIB 4  CAIB 4 Section 1 Technology in the Brokerage Impact of Technology on the Insurance Industry Technology has revolutionized insurance transactions Information is recorded and transmitted faster and more accurately Brokers can now improve service, reduce costs, and handle more work Technology reduces the likelihood of human error CAIB 4 Technology in Client Service and Convenience Modern clients demand convenience and accessibility Technology enables online insurance quotes and transactions Brokers must adapt to client expectations CAIB 4 Impact on Broker- Company Relationships Technology has redefined how brokers and insurance companies interact Faster communication and data exchange through digital tools Brokers need to understand brokerage technology fundamentals CAIB 4 Strategic Technology Planning A brokerage’s strategic plan must include an IT component Define clear technology strategies, objectives, and goals Align technology with business needs and growth projections CAIB 4  Objectives of Brokerage Technology Meet client expectations Balance benefits for clients, Manage increasing volumes shaped by technology in other insurers, and brokers and complexity of information industries CAIB 4  Modern technology drives profitability in brokerages Enhancing Reduced labor costs through automation and efficiency Profitability with Technology Technology enables brokers to increase revenue per employee CAIB 4 Building Client Relationships with Technology Database technology helps brokerages understand clients better Predict and respond to clients' future insurance needs Target marketing efforts more effectively CAIB 4 Improving Effectiveness Through Technology Streamline administrative tasks, Standardized office procedures Technology frees brokers to allowing brokers to focus on selling minimize errors and omissions enhance client service CAIB 4 Broker Management Systems (BMS) Overview Effective management systems integrate client, product, accounting, and admin functions Simplifies access to key client information Supports multiple operational processes in one system CAIB 4 Client File Database in BMS Centralized access to client data including quotes, claims, and contact history Supports business analysis and sales management Enhances client relationship management through accurate records CAIB 4 Product Management in BMS Supports rating and quotation processes for new business, renewals, and endorsements Allows brokers to compare multiple quotations without re- entering data Enhances sales efforts with seamless integration of product data CAIB 4 Accounting Functions in BMS Full general ledger and accounts receivable system integrated within BMS Streamlined invoicing, cash receipt tracking, and financial reporting Ensures accurate reconciliation of insurance company statements CAIB 4 Administration Tools in BMS Simplifies policy processing and reduces time spent on repetitive tasks Automates document creation for letters, memos, and confirmations Enhances operational efficiency through administrative automation CAIB 4 Communication Tools in BMS Integrated email and fax systems for faster client communication Supports seamless communication between departments and offices Reduces communication delays, improving client experience CAIB 4 Training for Technology Use Technology changes rapidly; continuous training is necessary Training plans should accommodate different learning styles and speeds Effective training ensures maximum use of brokerage technology CAIB 4  CAIB 4 Section 2 A Technology Action Plan The Role of Technology in Brokerages Technology is not a matter of "if," but "how much" and "when" for brokerages. Technology adoption is a major investment that affects all aspects of the business. Technology must align with specific needs. CAIB 4 Planning Technology Investment Technology investments should be planned and aligned with business needs. Thorough planning is required due to the scale of the impact. CAIB 4 Understanding Business Needs Technology action plan should be part of the brokerage’s strategic plan. Plan should be practical, flexible, and involve all employee groups. CAIB 4 Building a Technology Team Consider an internal team or external consultants. Management must understand what technology can achieve for the brokerage. CAIB 4 Analyzing the Current Business Situation Conduct a detailed Understand the analysis of the brokerage’s brokerage’s competitive external opportunities and position. internal strengths. CAIB 4 Projecting Future Business Needs Consider the future evolution of Ensure current systems align the brokerage. with future strategic goals. CAIB 4 Key Criteria to Evaluate Technology Reporting System Support & Cost capabilities. capacity. training. considerations. CAIB 4 Reporting Capabilities THE SYSTEM MUST GENERATE TRACK KEY BUSINESS METRICS AND ACCOUNTING AND MARKETING EXPIRIES. REPORTS. CAIB 4 Capacity Considerations Systems must handle multiple locations. Integration with other hardware and software is essential. CAIB 4 Support & Training Vendor support should be readily accessible. User training should be ongoing. CAIB 4 Cost Beyond Initial Investment Consider long-term maintenance and support fees. Total cost of ownership must be evaluated. CAIB 4 Technology Implementation Strategies IMPLEMENTATION MAY CONTINUOUS SUPPORT VARY BY COMPLEXITY. FROM MANAGEMENT IS CRUCIAL. CAIB 4 Addressing Implementation Challenges Develop contingency plans for Ensure continuity during the unforeseen problems. transition. CAIB 4 Maximizing Technology Use Many brokerages only use 40% of their system's capabilities. Maximization requires ongoing commitment. CAIB 4 Ensuring Technology as a Management Tool After a year, technology should be fully integrated as a management tool. Continuous improvement and evaluation are necessary. CAIB 4  CAIB 4 Section 3 Brokerage and Insurance Company Interface  Brokerages and Insurance Companies: The Interface INTERFACE INVOLVES ELECTRONIC INITIATED BY INSURERS FOR COST- KEY BENEFITS INCLUDE TRACKING COMMUNICATION AND SAVINGS BUT HAS BROADER CLIENT ACTIVITIES AND REDUCING INFORMATION EXCHANGE. ADVANTAGES FOR BROKERAGES. WORK DUPLICATION. CAIB 4 Advantages of Electronic Data Interface (EDI) Tracks client activities Lowers mailing costs and reduces and improves duplication. communication. Single-data entry and Permanent faster policy transaction records. processing. CAIB 4  Information is entered once into the brokerage system and sent in batches. Types of Batch transmission updates Interfaces: the brokerage’s system later. Single-Entry Interface Communication costs lower due to off-peak transmissions. CAIB 4 Disadvantages of Single-Entry Interface DELAY IN RECEIVING POLICY ERRORS CANNOT BE CORRECTED SOFTWARE COSTS CAN BE HIGH DOCUMENTS. IMMEDIATELY; MUST WAIT FOR THE FOR BOTH BROKERAGES AND NEXT BATCH. INSURERS. CAIB 4 Interactive Interface Direct connection between brokerage and insurer. Allows immediate access to insurer’s system for real-time updates. Errors and omissions can be flagged immediately. CAIB 4 Disadvantages of Interactive Interface DUPLICATE DATA ENTRY MAY ONGOING TRAINING NEEDED LACK OF STANDARDIZED STILL BE REQUIRED. FOR EMPLOYEES AS SYSTEMS SCREENS AND PROCEDURES EVOLVE. ACROSS INSURERS. CAIB 4 Additional Considerations: Costs of Interface Costs include communication hardware, software, and network usage fees. Some costs may be absorbed by insurers, but many are brokerage responsibilities. CAIB 4 Confidentiality and Security of Transmitted Data The internet offers many advantages but poses confidentiality risks. Security of data must be a priority in all electronic communications. CAIB 4 The Future of Electronic Data Interface Internet-based systems are being developed for policy and rate information exchange. Substantial cost savings are expected, but issues around confidentiality and standardization remain. CAIB 4