Why is policy check lag 65+ days?
The insurance industry is a $120 billion business that has often been slowed down by delays and inefficient processes. In this blog, we discuss the reasons why policy check lag is as high as 65+ days.
Insurance companies rely on manual processes to complete & track policy checks.
Forming teams of skilled insurance professionals armed with yellow highlighters and red pens to manually check policies that run into hundreds of pages isn’t efficient. Bringing in centralized processes and standardization is a 90’s solution to a 21st-century problem, this just allows the problem to be shifted to a different group of people who still need to spend time to review, highlight and notify E&O with perceived quality as against definitive quality This often results in a lot of errors and omissions.
Hours of combing through pages and pages of policy language, coverages and endorsements are extremely tedious work and this is why critical information is missed or overlooked.
In reality, employees merely spot-check 10 to 50% or less of the policies due to lack of manpower.
Manual policy checking processes lack flexibility and are difficult to scale. Each stage has its challenges and nuances that make it difficult to speed things up. The only way insurance brokers can review more policies with these time limitations is to hire, train and assign more workers to the task. Let’s face it, task-oriented, high volume work like policy checking is boring and mundane resulting in a very high rate of errors.
What are the most time-consuming steps/processes/stages of policy checking?
Let’s discuss what the different stages, tasks and processes are, how long they take. We illustrate why policy checking lag-time is as high as 65+ days below:
Document comparison, often referred to as redlining, is primarily used to identify changes between two versions of the same document for editing and review.
Insurance professionals have to compare two dissimilar documents, like comparing a binder to a new policy or an existing policy or a new policy. As a policy and a binder are two differently structured documents of different lengths, comparing them manually is a navigationally difficult and attention heavy process. It takes anywhere between 2-5 days for completing this step. This is just the start as most often the documents need to be compared against multiple documents, for eg – current policy vs proposal, current policy vs prior term policy, current policy vs Quote, etc
If the documents need to be digitized and more often than not, they will need to be; the data re-keying can take an entire day.
Time taken: 2-5 days
There is a lot of information trapped in insurance documents. The challenge is to read, extract, classify, and analyze policy-level data trapped in documents hundreds of times.
Red-lining is just the start. The insurance worker needs to pull the relevant pieces of information, assigning value to the words, and intelligently analyze the policy and convert the unstructured information into a usable format.
A key step in being able to recognize and compare the insurance-specific data points such as:
- Policy number
- Producer
- Named insured name
- Street address
- City
- State
- Zipcode
- Policy period
- Limits
- Premiums
- Deductibles
- Exclusions
- Endorsements
Time taken: 5-10 days
Visually using the policy checklist to identify potential errors and omissions such as missing endorsements, incorrect limits, address errors, or premium shortfalls are laborious and need skilled workers to spend countless hours manually reviewing lengthy and complex documents.
Time taken: 2-3 days
Once the review stage is done, staff has to review findings and laboriously identify inaccuracies.
Time taken: 1 day
Inability to indicate errors or omissions.
Time taken: 1 day
Nonstandard next steps in the workflow.
Time taken: 1 day
No clarity or process to list items that need to be addressed in the policy for contract certainty.
Time taken: 1 day
Lack of an audit trail that keeps track of errors and omissions identified and corrected, along with timestamps and sign-offs from the account manager.
Time taken: 1 day
No way to cross-reference and verify all documents at once to validate accuracy.
Time taken: 3 days
Bad data hygiene and the need for lengthy back and forth email exchanges, time spent responding to requests for corrections and updates for identifying potential errors and omissions.
Time taken: 3 days
Lack of intelligent workflows when dealing with high volume, repetitive manual processes.
Time taken: 3 days
No way to check each policy against relevant source documents and flag any variation for your Account Manager, who can instruct the team to perform the next steps.
Time taken: 2 days
No way to delegate processing tasks to Account Managers.
Time taken: 2 days
No clearly defined and proven procedures, or staff to ensure the process moves quickly and is done accurately.
Time taken: 2 days
Lack of discipline to update the agency management system cascading issues.
Time taken: 2 days
The pileup of backlogs.
Time taken: 2 days
No way to resolve cross-departmental inquiries faster.
Time taken: 2 days
No way to improve accuracy in coverage and premium calculations.
Time taken: 2 days
Lack of integration with legacy and downstream systems and operations.
Time taken: 2 days
No single view of consolidated policy history.
Time taken: 2 days
No central policy calendar for scheduled policy life-cycle events.
Time taken: 2 days
Frustration and time from having to work with multiple, fragmented systems and business processes.
Time taken: 2 days
When the policy checking process isn’t tailored to the organization’s business model, it slows you down.
Time taken: 2 days
Sporadically integrated workflows, ad hoc communications and manual calculations.
Time taken: 2 days
Regulatory compliance, security and no unified data archive.
Time taken: 2 – 10 days
Lack of an integrated Policy Book of Record causes slowdowns.
Time taken: 3 days
No way to share policy information and transaction history across departments.
Time taken: 2 days
No way to provide a consistent, integrated customer service experience and support flexible organization structures and business models.
Time taken: 2 days
No centralized premium and coverage calculation system to ensure consistency and reduce errors.
Time taken: 2 days
Automate to win
If you want to get rid of the inexorable wait that is a part of the policy checking process, you need to embrace policy checking technology.
Exdion automates policy checking using AI, ML and NLP. Imagine a system that helped you check documents of different sizes, without the need for complicated systems or huge investments. Exdion Policy Check is that system and it helps you scale your operations from 1 to 100 in a short period.
