The insurance market is exponentially growing due to changes in customer sensibilities. With this, insurance companies need an overhaul of workflows to reduce the turnaround time period and improve service delivery. In addition, having backlogs (the prime reason behind process-related delays) indicates that your company is unable to meet customer demands, affecting your company’s reputation in the market.
Many insurance business owners, management staff, and workforce do not see backlog as a problem. Unfortunately, other companies that consider it as a severe issue are either unaware of the solutions or lack the resources to solve the problem.
You must know that backlog caused by even a single employee can turn into a bottleneck for another or other teams and can eventually affect your entire company. Therefore, it is time to find practical solutions to backlog problems; but before that, let’s discuss how it can create more problems for your insurance company.
Common Consequences of Backlog
1. Process Discrepancies & Customer Service Challenges
A backlog can create discrepancies between departments, leading to incorrect information on systems or delayed and unsatisfactory claim settlements. Moreover, when your customer’s information is not updated in your database, it becomes challenging to provide outstanding customer service.
Backlog makes customer care representatives tackle the customer’s question with a response that might fail to satisfy customers; for example, “we will look into this and get back to you as soon as possible.” Such a response makes your customers compare your company with your competitors. You don’t want this to happen as this comparison can make customers choose other insurance companies over yours.
Given that technology is helping insurers manage processes and company data efficiently, failing to provide a prompt and satisfactory response (especially in today’s highly competitive environment) to a customer’s request becomes a little embarrassing.
Above all, backlog and its consequences can cost your company time, money, and reputation.
2. Job Burnout
Backlog can directly affect;
- Your staff’s morale
- Their attitude toward work
- Their interaction behavior with customers
An employee who has been dealing with backlog often becomes unable to keep up with deadlines, resulting in workplace stress. Moreover, many times you might assign more work to your best employees. Consequently, their workload gets heavier than their colleagues, and thus, the backlog never gets cleared regardless of the extra time and effort.
3. Solutions that don’t Address Core Problems
A company’s failure to properly rectifying backlog problems will ultimately impede its growth. Therefore, many companies try to solve backlog problems by picking people from other departments and devoting them to backlog clearance. Others will hire additional staff to reduce the backlog, while many companies allow overtime and pay employees extra for that.
All these solutions cannot resolve the root causes of backlogs; here’s how.
1. Ineffective extra force and overtime
Adding extra people to eliminate the backlog does not address the exact cause that led to the creation of the problem. The old piles might get cleared, but the process of creating new piles remains unchanged. Overtime is not always effective until an onsite manager is present on the site to supervise.
Also, most service providers will utilize this specific time to get done with their routine work, and the backlog will remain untouched. Thus, the agency will pay an extra amount for the work that the employees regularly do as a part of their job.
2. The increasing demand gap between the multi-generation customer bases
Internet and rapid digitization have brought drastic changes in the past 12-15 years. Therefore, it can be a little challenging to balance operations and imply new technology for the insurance companies whose clientele range is vast, from young to older people.
Like firstly, there are maturists, who still put their wages on paper rather than ‘digital’ as they lack the understanding, which leads to hesitation. Then come the baby boomers, the hardworking employees who have the same preferences as their predecessors.
Next, Genx, the successor of the baby boomers, has worked for a decent amount of time but still has an ample amount of career time ahead. These have developed open minds and are trying to fit in and acquaint themselves with the new, ‘digital’ methods of getting things done. And lastly, the millennials and the GensZ, the technology-dependent surfers of the digital wave.
So, the insurers must brainstorm that how they will cover such a broad target audience with such different perspectives and preferences. One effective way can be to create interrelated customer experiences on both traditional and digital mediums to establish refined customer loyalty.
3. The Covid-19 halt
The pandemic at present has resulted in numerous job losses, salary cuts, and other negative impacts. The lockdowns are not allowing brokers and insurers to interact face-to-face or meet physically with the customers. Also, the customers are requesting the premium amounts to be trimmed till the economy has stabilized a little. So, the situation at hand makes it mandatory for the insurance companies to launch ‘Stay at Home’ products for the clients that can be accessed through mobile or any other digital device. This will ensure greater reach and success for the insurers.
How to Take Care of Backlog?
It is essential to understand the main cause of this messy situation before initiatives address the distressing backlog problem. The lack of a standardized workflow is one of the main reasons for creating backlogs in the agencies. For example, similar transactions are handled differently, application of renewal timeline is not exercised, and many other issues hinder the routine.
Also, the duties of producers, CSR’s and others get entwined, leading to uncertainty regarding the responsibility of transaction completion. Full authority is also not furnished with service providers, so they cannot decide or delegate work when required.
1. Adopting Digital Technologies
Deploying modern technology can boost companies’ efforts to access their risk and serve their customers in a better manner. Thus, insurance industry must increase the implementation of digital technologies in their methods of working.
The adoption of digital technologies in the industry has increased by 20% over the past year. As per a TransUnion survey, 40% of respondents used a mobile app, website portal, or email to file their claim last year, and 32% said they find communicating with an insurance provider via email most preferable.
As clients are turning to digital solutions rapidly, the insurance companies should follow the same if they want to achieve success. Also, slow claims handling is one of the most significant shortcomings in insurance companies’ internal processes. As per the 2016 U.S. insurance companies’ study, agencies lag with claim filing and other associated formalities across five main fields:
- Handling claims timely
- Termination notices of compliant policies
- Claims and underwriting file documentation
- Complaint grievance and appeals process
- Complaint claims and underwriting disclosures
To counter these backlogs, delays, and inaccuracies, the insures must turn towards robust automated software to make sure that claims are created and handled on time and there is no risk of regulatory violations to the business.
2. Taking Assistance of Insurance Outsourcing Companies
Insurance BPO services in property and casualty insurance industries have averagely secured cost benefits of 20 percent. The procedure of insurance outsourcing is significantly cost-effective due to three reasons.
Firstly, in this model, the full-time equivalent (FTE) pricing method used by the contenders is replaced by a transaction-based pricing model that enables you to effortlessly scale up or scale down the insurance BPO to match business requirements and fluctuating volumes.
Secondly, these insurance back-office services providers bring alluring economics to customers due to their location of operations. Thirdly, these companies focus exclusively on the insurance sector and can produce highly impressive outcomes of both skill and scale.
Backlogs contain too much risk hidden in them. Therefore, it’s necessary to eliminate them and make sure all the policies are checked for inaccuracies and are in compliance with the deadlines. After removing the burden of your business process backlog from your head, you can utilize your internal resources for planned initiatives that will help you expand and serve the customers in a better manner. This will significantly aid you to stand out in today’s cutthroat competition in the insurance industry.