What is zero back office and why does it matter for insurers

Insurers are struggling to catch up with the times. 

Even in 2020, too many core processes in the insurance business still rely on people and paper – from customer acquisition to onboarding and policy issuance to claims handling and agent and broker management. Often, back offices have thousands of people responsible for data-entry tasks that feed essential customer data into those processes.

This tremendous amount of manual processing is costly and slow. It often results in errors, bad customer experiences, and Not-in-Good-Order (NIGO) document rates that require an additional investment of time and labor to correct.

The main problem? 

Insurers are in the business of selling policies. But selling policies in 2020 requires them to reinvent themselves into customer-oriented, digital, and agile companies. Plus, customers want digital customer journeys in insurance. Consumers are searching for the Amazon one-click purchase experience, not a trip to the post office and a 30-day wait.

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The insurance industry has not yet structurally addressed operating costs

When it comes to cutting down on operational inefficiencies, insurers are hitting a brick wall.

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As the dream of zero-back office and rapid, large-scale process automation becomes a possibility, insurers cannot afford to miss this opportunity to change. And yet, they are increasingly falling behind.

“Unlike other industries which have been able to capitalize on their investments in digital technologies, insurance hasn’t increased its overall productivity in the past ten years.” 

Insurance companies must streamline back-office operations to save on time, manual work, and costs. Faced with fierce competition from newcomers to the industry who are not slowed down by inefficiencies and legacy systems, incumbent insurance carriers must step up their game. 

Bloated back-office operations that depend on manual processes and paper are the main culprits in skyrocketing operational costs. On average, admin expenses in the industry average 20% of the net profit of Gross Written Premium. This means that even a slight improvement in efficiency can have an enormous effect on an insurer’s bottom line.

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Five insurance back-office operations requiring a complete overhaul

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Data and form processing

Insurance is a highly regulated industry, and a certain amount of paperwork is a necessary evil.

Endless numbers of forms need to be processed relating to customer onboarding, policy issuance, claims, applications, payroll, and medical information, to name just a few. 

One way insurers address this problem is by investing in OCR and RPA technologies and outsourcing manual data entry to third parties. In the race for efficiency gains, insurers are increasingly investing in RPA, making it the fastest-growing technology in the insurance industry, with a CAGR of over 30%.

However, all these investments are not solving the underlying problem. Customer data collection is still performed in archaic and inefficient ways involving paper forms, PDFs, and primitive web forms that are not adequately integrated with insurers’ internal systems.

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Broker management

Communications about commissions and data management between a carrier and its agents are often very complex. The processes involved are usually managed on an ad hoc basis without a streamlined process.

Different types of policies involve different procedures for information exchange and the calculation of commissions payable to agents.

Often insurers outsource broker and commission management, but this doesn’t solve certain fundamental inefficiencies plaguing processes between carriers, agents, and the end customers. 

Claims management 

Claims handling must be based on accurate data about the customer, the policy, and the incident giving rise to a claim. It is necessary to collect and check all the data related to each policy, and then all the relevant records must be verified before a settlement of a claim can be made. 

Manual data collection is inefficient and generates numerous errors, making claims handling and resolution a long, drawn-out, and tedious process. 

The problem? Customers are not having any of that. Besides costing insurers millions in back-office expenses, manual claim processes often result in a bad customer experience during the sensitive period of claims resolution, resulting in lost business.

According to Accenture, 83% of customers who were not happy with the way their claim was handled are likely to switch to another insurer. 

Automated and fully digital data collection methods that are fully integrated into internal systems and allow a 360-degree view into the customer are the only way insurers can compete with fully digital newcomers.

The credibility of an insurance company is at stake with every claim, and insurers can no longer afford not to streamline their process by using the latest front- and back-end technologies. Business as usual is simply bad for business.

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Policy processing

Devising new policy covers is a core business activity, yet policy processing is still often handled manually.

Vast amounts of in-house manual data entry and data processing drain an insurance company’s precious resources. Outsourcing of this work doesn’t address this problem, as policies are still processed slowly and inaccurately, resulting in the loss of customers.

IT data processing 

Insurance companies make huge investments in IT and data processing infrastructure. But when the data that is fed into these systems is inaccurate, the whole back-office operation is derailed. 

Without proper data capture and verification capabilities, insurance carriers struggle with sky-high Not In Good Order (NIGO) rates. This means that the data feeding their core business processes is incomplete, illegible, inadmissible, or inaccurate. 

Such errors require expensive manual work to correct, causing disruptions and bad customer experience, hurting insurers’ bottom lines.

Zero-back office is unachievable as long as paper and manual processes remain in the mix 

The goal of a zero-back office cannot be achieved when customer-facing processes still rely on paper and manual processes. Customer data collection must be entirely digital, user-friendly, and integrated into core systems and processes.

Significant opportunities exist for insurers to drive efficiency and productivity by increasing digitization levels in the front-end customer data collection processes that feed the back-end automation systems.

Only reworking customer-facing process architectures to eliminate paper and manual data collection can ensure that insurers achieve their zero-back office goals. 

The time has come for a technology that helps financial enterprises and insurance companies create and manage their front-end interactions with customers at market speed and reasonable cost.

EasySend is a revolutionary smart eForm builder built to answer the unique needs of such companies. Our SaaS, no-code platform helps insurers ditch paper processes and streamline and accelerate data collection across all customer touchpoints, resulting in fully integrated, responsive, and user-friendly digital customer journeys. No coding is required. EasySend can help you with:

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• Onboarding
• Customer-broker-carrier processes
• Policyholder Services
• Claims processing
• Policy renewals

By taking the paper and manual data collection and processing out of the mix, insurers can achieve five times the amount of conversion rates for new policies, improve customer experience, and significantly boost productivity in the back office.