Program Administrators Reveal Industry's Toughest Challenges
By JACK ROBERTS, consults with brokers, program administrators, insurance carriers and publishing companies
Upgrading existing technology systems and adopting state-of-the-art technology and finding younger talent are the two big challenges facing program administrators today, said David Hampson, national partner for Willis Programs.
""The level of legacy systems within the insurance industry has hindered the investment in state-of-the-art, single-entry-rate, quote-and-issue systems," Hampson said.
Jeremy Hitzig, CEO of the New York-based program administrator The Distinguished Programs Group, is an advocate of technology. Distinguished Programs has invested in both systems and process technology.
"Technology is both a challenge and opportunity for the industry," Hitzig said. "There are no simple solutions, but part of our strategy is to turn technology into a competitive advantage."
Distinguished Programs Group is about to launch a product they call "DPExpress.com"
The system allows a broker to "quote, bind and issue a policy in a single session," one that that will allow clients to offer "a superior customer experience," according to Hitzig, president of the Target Markets Program Administrators Association (TMPAA).
In short, it moves the mechanics of brokerage from a manual to an automated operation, and that makes it better suited to operating in the real world of deadlines and last-minute scrambles. The system, he said, is designed around the strategy of rapid response.
"While we would like to have our brokers come to us three months before policy renewal, more often they come and need coverage within 48 hours of the expiration date," he said.
In 2003, Hitzig's firm started "ReSource Pro," a firm that outsourced to its operations in China many of the repetitive, back-office broker services offered to managing general agents (MGAs), program administrators and other brokers.
"A technology investment can be overwhelming. We think about and invest in technology all the time," Hitzig said.
Technology isn't the sole focus of brokers, of course. For a carrier like Zurich in North America, for example, sophisticated analysis is at the core of the program operations.
"We look for the underserved, misunderstood segments of the market," said Jino L. Masone, head of marketing, programs and direct markets for Zurich North America Commercial.
Zurich is focused on data. For the market that Zurich looks to insure, "we want data that backs up the program administrator's experience," Masone said.
Some carriers, he said, do technology better than others. "Carriers have legacy systems that can date back 10 years or more. Working with a program administrator that has a state-of-the-art proprietary system such as The Distinguished Programs Group is a good way to address the technology issues that can give brokers and carriers an edge."
The other big challenge, Hampson of Willis said, is recruiting younger employees. "The industry must deal with aging leadership. We have a wonderful story to tell to would-be program professionals. Program specialization allows you to focus on a passion."
He used one of Willis' programs as an example: "Our MountainGuard program team has a passion for the sport of skiing, and as such they are great at what they do. If you have a passion for what you're doing, you tend to be great at it," Hampson said. "We look for people from the industry sector, not just from insurance. We have been successful recruiting, but you really need to be diligent about promoting the business."
Promoting the program administrator business begins at the college level.
"Whenever I'm on a college campus or with a group of college-age individuals, I talk about our industry," he said. "It's misunderstood and not well appreciated. Once it's explained, they get it. More are saying to me today, 'The potential in the insurance program business seems more promising and exciting than other financial services industries'."
Bill Mecklenburg, CEO of the Mission Viejo, Calif.-based specialty program provider Redwoods Managers, said that there is a good opportunity to attract younger people to program business because of the startup nature of many program administrators.
"Program administrators are virtually all entrepreneurial," said Mecklenburg. "We have the ability to sell because we're small and nimble. And young people today are entrepreneurial. Often, the smaller the company, the more attractive it is to them because it sounds like a Silicon Valley Internet startup."
Redwoods' focus is on YMCAs, and Mecklenburg sounds almost evangelical in the industry's ability to reach beyond itself and change those around it.
"For us, you don't want to just insure the risk, you want to improve the risk," he said. "We can improve society, improve working conditions, improve product viability and help the local community. That makes us a very attractive enterprise to people who want to make a difference."
May 1, 2011
Copyright 2011© LRP Publications