Open enrollment season is to health insurers what the holiday season is to retailers. While there’s no Black Friday per se, those few weeks in November and December play outsized roles in an insurer making its annual numbers.
Sales performance management (SPM) solutions, also known as distribution management systems, prefer no particular season, but they continue to be a competitive differentiator and vital to insurers’ top and bottom lines. Evolving competitive and demographic landscapes are growing their importance. What has changed? And how should what has changed – and what’s stayed the same – influence what insurers look for in an SPM solution?
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The competitive and demographic changes in health insurance sales have been happening for some time now. On the competitive front, there’s been a move from captive sales teams to independent sales channels with an eye on cost. This leads to reliance on independent and field marketing organizations (FMOs), MGAs, GAs and more. With respect to demographics, a generational shift is afoot as retirements move experienced hands out and new producers with a mobile-first ethos in. Both changes have implications SPM solutions help address.
Unlike captive teams, independent channels are free to choose the carriers they do business with. That introduces an additional layer of competitive pressure: Not only must an insurance product appeal to the end user, but ease of doing business and an insurer’s sales approach and infrastructure also must appeal to the agents selling it. That’s where SPM solutions come in. They must be easy to use, they should help agents work more efficiently and provide insights into their books of business, and they must get them paid quickly and accurately.
The generational shift among agents is an important part of all this. Improving agent experience with easy-to-use self-service tools, lots of automation, and intuitive workflows allows carriers to become first-choice insurers with an emerging generation of independent agents. That reduces churn, which lessens the need for constant sales enablement, offboarding, and other expensive administrative processes.
In evaluating SPM solutions, here are some features to look for.
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Agent onboarding and credentialing. First impressions are important. Making the producer onboarding experience a seamless process, one with centralized compliance and background checks, allows newly recruited producers to get to selling rapidly. That positively impacting a carrier’s top and bottom lines.
Quick, accurate payments. An insurance sale often involves multiple players, from lead generation to brokers and agents to staff at the insurance carrier. They must be compensated. There are clawbacks and retroactive adjustments. Compensation management processes within SPM solutions should simplify the process and ensure timely payment to the right people, and that keeps agents and others being compensated happy.
Regulation navigation. HIPAA. SOC 2. HiTrust Compliance. Business associate agreements (BAAs). State licensing boards. Health insurance is heavy on compliance. SPM solutions track those requirements and make sure they’re being met over time.
Modern technology. A surprising number of decades-old, insurer-built SPM solutions are still running, and quite a few of them sport green-screen interfaces. Young agents have no desire to tab around mainframe emulators on their laptops, much less on phones or tablets. But usability isn’t the only concern. Legacy custom systems rely on in-house experts who are moving toward retirement. An insurer IT manager recently told me that the youngest person with deep knowledge of the shop’s SPM solution was 58. In addition to lacking the feature sets, user interfaces, and mobile functionality of their cloud-based counterparts, too many legacy SPM solutions have sharply limited maintenance and development paths.
Handling of diverse payors. Most of the above pertains to insurance offerings. SPM solutions must also deal with the payor side of the equation, because an SPM solution’s payments to agents and others depend on getting paid in the first place. That means handling the various payors on Affordable Care Act exchanges and, perhaps foremost, Medicare and Medicaid. The Centers for Medicare & Medicaid Services (CMS) aren’t alone in dictating prices and payment terms. But they add another layer of complexity, and SPM solutions must manage it.
Going with outside agents has very real business benefits for insurers. But with those benefits come challenges including making and tracking payments, compliance, licensing and appointments, providing a rich experience for agents, and managing hierarchies with an accurate reflection of books of business.
Today’s SPM solutions help tackle those challenges in ways that provide competitive advantage and allow insurers to support and expand into a very complex selling environments – no matter the season.
Photo: champc, Getty Images]
Rahul Iyer is general manager for sales performance management at SAP.
