Missing information is a prevalent problem in the insurance industry. Whether it is a result of producers never obtaining the data or policies being submitted and bound with incomplete information, the results are typically ‘subject to’ items, numerous follow ups and difficulties renewing policies.
Regardless of the reason, missing information and excessive follow ups are frequent. Follow ups are often defended with statements like, “a follow up only takes a couple of minutes,” or, “our competition will bind everything ‘subject to’.” A couple of minutes may feel like an insignificant amount of time, however in practice that couple of minutes ends up being closer to ten minutes when you factor in all the work that is involved in each follow up: reorienting to the file, reviewing the item, placing a call, following up with an email, documenting the file, etc.
So, what does it really cost?
Here are the results of one agency we analyzed:
Average time per follow-up is 10 minutes
Typical account during the renewal process has 5 follows ups.
Frequency of follow up is a result of non-responsive clients, incomplete information – submitted in pieces, not asking for all of the ‘need’ items upfront, inaccurate information, etc…
So to start, we have 50 minutes being spent on follow-ups per account. Wait, there is more…
For this agency, their book of business consists of 1,054 renewal accounts, and these follow ups equate to approximately 878 hours annually.
These 878 hours account for more than 1/2 of a full time employee’s time annually.1
The average fully loaded compensation2 for an Account Manager or Underwriter doing the follow up is $36.34 per hour.
At a rate of $36.34 per hour, taking 878 hours, the cost of follow up is $31,906.52 per year!
What can you do?
Here are a few ways to reduce the expense of costly follow ups:
1. Standardize the method of follow up.
For example, create a template email that requests the needed information, with minimal information population required, instead of recreating the request for each client or occurrence.
Through our work, we have found that templates can reduce processing time by at least 20%. In the example above, 20% would save two minutes per follow up.
Here is why the impact of these two minutes is significant:
– 2 minutes each for 5 follow ups
– 10 total minutes saved per account
– 176 hours saved per year
$6,395.84 saved annually
2. Collect as much information up front as possible
This may sound easier said than done, but our experience has shown that meaningful improvements can be made.
Here is one approach to solving this challenge:
- Collaborate within your office to determine the minimum information requirements at each milestone in the process (i.e. quote, bind, issuance, renewal, etc…) Each milestone inherently sets a due date and expectations
- Publish these requirements on your website, applications, etc…
- Remind your client during phone calls and meetings
- Observe these requirements consistently and stop the process from moving forward until necessary information is received
3. Reduce the frequency of follow up
Collecting as much information up front and clearly communicating your needs is a good start to reducing the frequency of follow ups.
Nevertheless, we understand that it can be difficult to obtain information from some clients and follow ups will still be required. However, due to the fact that it is not time or cost effective on most accounts to be following up endlessly, a few additional steps can be taken to reduce frequency:
- As noted above, stop the process from moving forward until all necessary information is received
- Collaborate within your team to determine the appropriate frequency
- Standardize the frequency – revise processes and procedures to incorporate and observe the standardized frequency, and implement a consequence for not returning the information (i.e. notice of cancellation or non-renewal notice)
- Adhere to the revised processes and procedures consistently
Assuming 10 minutes are spent per follow up from the original example, if the average frequency was reduced from 5 to 3, the impact would be:
– 20 total minutes per account saved
– 351 hours per year saved
$12,755.34 saved annually
Implementing the changes to collect information up front and reduce the frequency of follow ups will require re-training of clients on how to transact business with your firm, but we have found from working with our clients that this short-term pain produces long-term gain benefiting your organization and your clients. Ensuring that needed information is received reduces the number of pricing changes, notices of cancellations, etc… which are much more difficult conversations to have with customers.
Remember, while adhering to the implemented changes and requirements, every exception made creates a precedent that the information is not truly necessary and in turn can result in more follow ups and more difficult client conversations.
1Full time employee – 1610 hours per year (35 hours per week, 46 weeks per year to account for vacation, sick time, etc…
2Salary ($45,000 annually) + 30% load (bonus, commission, payroll taxes, bonus tax, 401K match, employee insurance, education, etc.) = $58,500 per year