How Premium Processing Drives Sales in Insurance
20 September 2023
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4 min read
Intro
In the world of insurance, there’s a unique interplay between two essential aspects that often doesn’t receive much attention. On one side, you have the dynamic world of sales, traditionally led by brokers and underwriters who work tirelessly to secure insurance placements at the correct price. For them, the primary goal is closing the deal, and the specifics of how the cash ultimately lands in the account is secondary. On the flip side, we enter the meticulous realm of premium processing, where accounting and money experts hold the keys to a company’s fiscal well-being. Here, decisions are made with the gravity of finality, as every choice is carefully logged and considered.
Daily, these two worlds collide, with Finance often seen as the unsung caretaker, tasked in isolation with managing the aftermath of the more important sales. But how often do Finance processes in insurance play a pivotal role in facilitating more sales or preventing the restriction of sales? This blog post sheds light on this crucial dynamic, exploring precisely how premium processes drive policy sales in the insurance industry.
Part 1
The Crucial Role of Relationships in Insurance
In the insurance industry, relationships are the lifeblood of the business. It’s arguably the sector that relies most heavily on personal connections. But here’s the catch - these valuable connections often remain un-digitised. This means that a wealth of knowledge about closed deals resides primarily in the minds of brokers and underwriters. Consequently, when it comes to premium reconciliation, essential information might be missing.
Sure, some questions can be addressed with diligent research, such as consulting policy documents or reviewing system notes. However, sometimes, the best solution is simply asking the sales lead for additional insights. This, however, results in distractions and redundant checks. More often than not, the sales lead may not have the immediate answers and must rope in their counterpart at the broker or insurance organisation. This inadvertently diverts both parties from focusing on their primary goal - closing future sales - to tackle backend issues. For many sales-focused brokers and underwriters, this translates into spending approximately four hours per week chasing down and clarifying premium payment-related questions. It’s a considerable chunk of time that could be better utilised closing sales or enhancing risk assessment models.
Part 2
Sales Insights from Payment Behaviour
In the insurance landscape, hidden within the intricate patterns of client payment behaviour, lies a sea of invaluable insights. By meticulously examining how clients and distribution partners engage with their premium payments, insurers gain a deeper understanding of their clients’ needs and financial situations. Delayed payments, for instance, can serve as indicators of potential financial struggles, sluggish processes, or a lack of respect for business terms. On the positive side, such behaviour presents a remarkable opportunity to offer financing options to potential customers who might not yet be aware of such offerings. Additionally, payment behaviour data can also unveil additional sales insights, such as trends in purchasing behaviour, which can further refine product offerings and targeted sales distribution.
The challenge lies in extracting structured payment information from a complex transaction journey. Yet, once harnessed effectively, it opens the door to a wealth of opportunities. It wouldn’t be surprising to witness new and exciting factors making their way into underwriting models and sales strategies, all based on this rich payment data source. Ultimately, with a structured premium function, sales strategies in the insurance industry can undoubtedly be improved further.
Part 3
How Compliance Stops Sales from Stopping
In the realm of insurance, adherence to regulatory standards isn’t just a suggestion — it’s an imperative. This industry operates under a heavy regulatory umbrella, and for good reason. When a promise is made to settle a claim in the future, ensuring the safekeeping of funds becomes paramount. This becomes even more critical in an intermediated insurance chain where money passes through various hands. Concepts like Client Money, Fair Value, and Consumer Duty underscore the need for robust financial processes. Falling short of these regulations can lead to dire consequences. Regulatory bodies hold the power to impose restrictions and even bans on non-compliant entities, significantly limiting sales volumes.
To illustrate the real-world impact, consider a live example where a firm was prevented from acquiring another business to expand its portfolio due to non-compliance with client money rules. This incident underscores the tangible consequences of regulatory missteps. Therefore, maintaining compliance through well-structured premium processes is not just a matter of ticking boxes — it’s a strategic move that reduces the risk of having regulations hamper sales efforts. In fact, it positions new regulatory initiatives as positive enhancements, ultimately elevating the service offering for the original insured parties, and fostering a stronger and more trustworthy relationship between the insurer and the insured.
Conclusion
As we wrap up our exploration into the intricate relationship between premium and sales in the insurance industry, one thing becomes abundantly clear:
As we journey forward, the importance of finance processes in sales will continue to flourish. They will not only be a support system but also a driving force behind the insurance industry’s pursuit of growth, innovation, and enhanced customer service. By embracing these premium intricacies, insurers and brokers can look forward to a future of expanded horizons and new success in meeting the evolving needs of their clients.
