Technology from the view of Scott Diehl
The hot topic in the insurance industry is connectivity – specifically Electronic Data Interchange (EDI).
Word & Brown has a long history of innovation, but technology itself doesn’t solve all problems. You may have experienced EDI on a large group benefit administration platform; connecting payroll and employee benefits programs in a single platform expedites processing qualifying events as well as employee additions and terminations. However, these connections aren’t without potential pitfalls.
Case in point, one of our carrier partners processed a new-hire from a system in which the employee had applied the wrong date of hire and the carrier kicked the person out as a late entrant. Payroll didn’t miss a beat and deductions began. This error was caught and corrected, but not without a fair amount of time and effort from all parties.
While transaction issues aren’t the norm, they do present obstacles to deploying a connected solution for the small employer market. Smaller employers lack an element advantageous to the operation of such platforms – a dedicated resource.
We often muse that small business owners wear multiple hats: sales representative, account manager, order supply clerk, payroll, and Human Resources. Such divided attention doesn’t allow the employer to focus on details such as the accuracy of data submitted by employees. Additionally, while there are systems through which these transactions are processed, some do not permit an employer review prior to carrier and other vendor submission.
Aside from midyear processing, there’s also initial enrollment. Word & Brown has undertaken a significant development project: building an Application Program Interface (API), essentially the latest version of EDI. This integration will, initially, be able to transmit employee data to our carrier partners.
A whole process precedes this submission; we’re still sending a Master Application, Check, DE 9C (where applicable), and any necessary corporate paperwork prior to the API submission. This data has been transmitted electronically for years via a Comma Separated Value (CSV) and Extensible Markup Language (XML) worksheet. The new method provides a 12-hour advantage over the prior method, which has achieved a 24-hour approval from clean submission.
What is often overlooked in the discussion of General Agency service when it comes to integrated platforms is the value of two of our most-used services: in-person enrollment and Underwriting. No existing system can assist with complicated scenarios of prescription, doctor, medical group, and medical equipment to provide employees with information that allows them to make the best decision for coverage.
While documents can be supplied, they are not as helpful as a person guiding employees on coverage options and the insurance system itself. Having a resource available to answer questions is critical to overall employer and employee satisfaction with any installed benefit program. If employees don’t understand it, they don’t use it – or they use it incorrectly – and what should be a valuable benefit turns into a nightmare of denied claims and overages.
Carriers protect their risk pool by using underwriters to screen qualifications. The idea being that if they catch groups that aren’t qualified for coverage due to any of a large number of reasons, they can decline them and keep the pool as clean as possible; a clean pool reduces risk.
General Agencies are more like brokers; it is our goal to write good clean business – and we even take on the effort of underwriting a case on behalf of the carrier, so they can be assured of its qualifications. (Did you know Word & Brown General Agency cases are well-known to be clean and ready for approval?) This frames our effort a little differently; it places the underwriter in the position of finding ways and means to write business, identifying rules and alternatives where necessary to define a path for policy issuance, if not with the intended carrier with another.
Unless these underwriting services become integrated into emerging platforms, they could be missed since most platforms are directly connected to carriers. This could lead to denials that cause longer delays and cost employers thousands in additional premium amidst the ever-rising costs of renewals.
While changes continue, one thing is certain: General Agencies will always provide value to those who leverage the resources and free services we provide. The truth is, most business is transacted through General Agencies for this very reason. And for this reason, ensuring we are given a seat at the system-to-system interconnected world that lies ahead is essential to everyone in the chain of employee benefit installation and administration.
That’s my view anyway. What do you think?
Scott Diehl, PMC-III, is Vice President of Product Management at Word & Brown.