I recently read somewhere (an now I have forgotten where, DOH) that it takes an average of 39 days to issue a life insurance policy from start to finish. That's a long time, and sadly I would say it is probably accurate, if a little on the optimistic side. I personally have two policies I have been working on for well over 6 months. One of which dates back to August 2009. In the good old days, or so I am told, it used to take a work week to get a policy issued.
Day 1: The advisor meets with the client and writes up the application.
Day 2: The application goes in the mail to the insurance company.
Day 3: The underwriter reviews the application and decides to issue or decline the policy.
Day 4: The policy goes back in the mail to the advisor
Day 5: The policy arrives on the advisors desk for delivery to the client.
These days things aren't so simple or so speedy. We have all sorts of things which add time, complexity and frustration to the process. The modern day time line looks something like this:
Day 1: The advisor meets with the client and writes up the application. The client forgot their cheque book, and since insurance companies no longer accept credit cards as payment no temporary insurance policy can be issued. The client really wants the temporary insurance so will get the advisor a cheque in the near future.
Day 6: The clients cheque arrives so the temporary insurance can be issued. The application is mailed to the Managing General Agency (MGA). The MGA acts as a middle man coordinating, problem solving and expediting between the advisors on the ground and the insurance company head office.
Day7: In the mail
Day 8: The application is received by the MGA, copied, sent to the insurance company
Day 9: In the mail
Day 8: The client completes the mandatory medical examination.
Day 14: The underwriter receives the application and the medical results. There is something missing, or a question, from the medical exam. An Attending Physicians Statement (APS) is ordered.
Day 16: The doctors office receives the information request and promptly ignores it for two weeks.
Day 30: The doctor finally completes the APS
Day 32: The Insurance Company receives the APS report from the doctor. In the meantime, the clients drivers license has expired and proof of the renewal needs to be provided.
Day 35: The advisor receives the new expiry date on the clients drivers license and sends it to the MGA.
Day 36: The MGA forwards the drivers license to the insurance company.
Day 38: The motor vehicle record search with the new drivers license shows a speeding ticket within the last 3 years, a motor vehicle questionnaire needs to be completed by the client. the Insurance company sends the request to the MGA.
Day 39: The MGA forwards the information to the advisor.
Day 40: The Advisor informs the client that a driving questionnaire needs to be completed. The client is on holidays for the next week, an appointment is scheduled for 9 days from today.
Day 49: The motor vehicle questionnaire is completed and forwarded to the MGA
Day 50: The MGA receives the questionnaire and forwards it to the insurance company.
Day 56: All the outstanding items are accounted for. The policy is approved and issued.
Day 58: The policy is printed in eastern Canada, it is mailed to the MGA.
Day 61: The policy is received by the MGA, they make a copy, add a pretty cover and forward it to the advisor.
Day 62: The policy arrives in the advisors office, the date of birth is incorrect. The policy is returned to the insurance company to be corrected.
Day 70: The correct policy is received by the advisor for delivery.
Day 72: The policy is delivered to the client.
I have had each and every one of the problems listed above happen, though not usually all on the same policy. The example above is exaggerated for comedic effect, but not by much. The system in place is so slow, chaotic and error prone it makes my head hurt at times. With MGAs, AGAs, different insurance offices and the like; the time it can take to get a policy issued can seem like eons. I know why they got rid of 5 year term, by the time the policies were issued, they had already expired. I harp on MGAs sometimes, but they do keep me on track and up to date on the progress of my clients applications. The insurance companies and MGAs aren't all to blame, I screw up sometimes too. My most recent disaster involved writing up an application with a client, only to find out that the paper form was out of date, and was invalid. a second appointment with the client had to be scheduled to go through the new app which I swear was exactly the same as the "old" one. How embarrassing.
So what can be done?
Every few year there seems to be a big push by one company or another to embrace electronic applications, but they always flop. Scanning and email are great for removing postal delays, but electronic signatures are still not accepted. The incredibly low rates for insurance we enjoy these days are due in part to extra diligence of the insurance companies. This extra diligence takes extra time, be it medical records or additional questionnaires. I have started the habit of sending two copies of everything, originals to the insurance company and a copy to the MGA. This adds time and effort on my end but has thus far improved my turnaround time slightly.
I honestly don't have an answer, problems occur all throughout the chain
- Advisor
- Client
- Courier
- MGA
- Doctors
- Insurance company
- Paramedical company
- Reinsurance companies
If there is anyone working in logistics at UPS or FedEX and you want to earn a bundle in consulting fees please help us fix our system, it's broken.
I think the real nut of the problem is that there is a bevy of companies with no reason to want to inter-operate. If they don't have to inter-operate then they won't, it's like vendor lock-in.
ReplyDeleteThere are ways to speed up the process though.
1) Do everything via web requests.
a) The requests build the policy and the rules-systems sends back a response which details what the system wants(medical exams, proof of ID, etc...)
b) You print out the policy but it has a 2D barcode on it for identifying the policy. So even if the ins. co needs a real signature they can do a quick scan & go instead of dealing with manual input.
2) For things like Dr.'s exams go to a scan-tron system as much as possible. Less to fill out means faster returns. If it was vaguely standard then people could get these filled out beforehand :O
3) Take CC's yourself? I know the processors take 1-2% off the top but it might be worthwhile to look into it.