The Canadian life insurance industry is pulling together to develop a new electronic application processing system, which advisors say would boost their productivity and cut costs significantly.

On Tuesday, CLIEDIS — the Canadian Life Insurance Standards Association — held a summit in Toronto on the shift to “straight through processing.” The association is pushing for this type of electronic processing to replace the current paper-based system, in which paper applications are manually entered into many different computer systems.

Under the proposed system, the advisor would complete the application with the client electronically, and answers would be checked for completeness and clarified on the spot. Key data from the application would then be available immediately for all parties involved in the process, including the advisor, the advisor’s distribution company, the insurance company, and industry partners for arranging medical tests directly with the client.

Advisors expect that a wide array of benefits would result from this type of system, according to a survey conducted by CLIEDIS in late December and early January. Increased productivity and time savings was the top benefit named by the 133 advisors surveyed, along with reduced administration time and costs, increased revenue, increased accuracy and increased professionalism.

The advisors estimated that the electronic system would result in a 20% to 30% increase in productivity, and a 20% to 30% reduction in expenses associated with administrative work.

“Advisors see this change as resulting in a more satisfied customer,” said Byren Innes, senior vice president and director with NewLink Group Inc. a consultancy firm to the life insurance industry. “For the advisor, they see a significant decrease in administrative workload resulting in increased resources available for client communication, and servicing as well as greater professionalism.”

But advisors are uneasy about certain aspects of the new system. For instance, the advisors surveyed expressed concerns about the privacy and security issues associated with transmitting confidential information electronically. In addition, respondents displayed some uneasiness about the technology involved in the system, including the requirement to have access to the software at point of sale, and the potential failure of the software.

Overall, however, most of the concerns are issues that can be addressed and resolved as the new system gets developed, Innes said. “There’s no major barriers there,” he said during a CLIEDIS conference call on Wednesday, in which he summarized results of the advisor survey.

Industry representatives warn that developing a new electronic processing system will likely be a long process, since all members of the life insurance industry must be on board and involved.

“This must be an industry initiative. It can’t be driven by any one quarter of the industry,” said Scott Sinclair, chief operating officer of Transamerica Life and a member of the CLIEDIS executive, during the conference call.

But Sinclair said Tuesday’s summit was encouraging. It was attended by 130 delegates from all corners of the industry, including insurance company executives, distributors and suppliers.

“There is a real visual representation of a willingness to partner on this,” he said.

As the next step in the process towards developing the new system, a bridge group comprised of Sinclair and seven other representatives from different parts of the industry will compile a set of key conclusions from the summit, and then determine specific actions to be taken.

“We need to frame specific questions and we need to frame specific steps that would be involved in the next level of engagement,” explained Sinclair.

The bridge group will then contact each person who attended the summit, as well as other industry members, in an attempt to get the entire industry to commit to moving forward.

Sinclair said he hopes the concept of electronic processing will continue to gain momentum.

“We need to fundamentally modernize this industry so that we’re serving our customers more effectively,” he said.

IE