In the insurance industry, policy lifecycle management involves creating insurance products that meet the needs and account for the risks unique to each policyholder. Needs, circumstances, and risk exposure can transform over the lifespan of the policy. Lifecycle management requires reassessing the policy and the client’s situation to detect and define these changes.
Policy lifecycle management usually requires using data to assist with the initial underwriting and policy creation process. Insurers continue relying on information systems to collect data related to the policy and the client. They can use these insights to decide if coverage or pricing modifications are necessary to account for new risks or other changes.
Here is a closer look at how policy lifecycle management can provide benefits to insurance companies and ensure those they insure get the necessary protection.
Policy lifecycle management strategies can help insurance companies increase the accuracy of their coverage so that customers get what they need and do not have any gaps. At the same time, it can reduce cost for insurers by defining risks and allowing for coverage adjustments that alter the details of the policy to limit exposure.
Policy lifecycle management can affect different aspects of insurance coverage. Here are three of the most common examples of this process in action.
Insurers can enjoy certain benefits if they have a well-planned policy lifecycle management system, which typically includes software that collects necessary data and automates some of the processes.
Here are some of those advantages.
One of the most important advantages of a well-managed policy lifecycle is the ability to perform ongoing risk assessments. Risk assessments can offer early warning about changes that could increase risk exposure. With this information, insurers can adjust policies to avoid unnecessary risk exposure.
An insurance policy starts when the client asks for a quote or begins an application process. It runs until the policy expires, at which time it can be renewed, replaced, or discarded.
Here is a closer look at the steps.
Policy administration software can automate aspects of this process, especially when it comes to data collection and renewals.
Automated policy lifecycle management can bring cost savings in multiple ways.
If all the information is centralized on one platform, it can serve as the primary source of information about the policy for everyone involved in serving the customer. Underwriters, claims agents, customer service reps, and insurance brokers can have access to the same data to ensure they offer personalized service and the most accurate pricing.
Policy lifecycle management can be challenging for several reasons. Firstly, some companies and stakeholders in the insurance industry are resistant to change. While you may have adopted technology to better manage data, compliance, and policy renewals, some of the information you get will still have to be entered and processed manually.
You may also come across outdated technology that is not compatible with your more-modern, efficient system for policy administration.
Even with the newest automated software and platforms for policy management in place, it can be difficult to keep up with the pace of change in some sectors. Tools like predictive analytics can be integrated with a policy management platform. In this context, they can help provide early warning about changes that could affect policy details for existing customers. Also, they can help inform the underwriting process for new enrollees.
Insurance management tools can help automate various aspects of the policy lifecycle. This automation can be especially important when it comes to complying with regulations governing the industry. These rules can be different from state to state, meaning they can get confusing for insurance providers who operate in more than one jurisdiction. With compliance requirements built into policy creation, claims, and renewal systems, you can take mistakes out of the process. This feature alone can help mitigate risks associated with compliance.
Automated systems can also use data from claims, trends, and other factors to define key risk indicators (KRIs), which are possible events that may outweigh the current level of preparedness. Insight into KRIs is essential for managing the insurance policy lifecycle.
With the right software to manage an insurance policy lifecycle, an insurer can cut down on operating costs, improve efficiency, and help you create more accurate pricing for policies and renewals.