New employees typically are thrilled when they hear they qualify for employee benefits. That's before they have to call Company A to enroll in the medical plan, company B for dental insurance, and finally company C for their life and disability insurance policies. To be a patient requires the patience of Job.
Kevin Coleman wants to change all that. Coleman, the founder of the Coleman Group, an outsourcing contractor based in Washington Depot, Connecticut, wants to take the pain out of dealing with insurance companies by putting their benefits administration on-line.
Coleman sees the Web as one way to make benefits administration easier for everyone. Employees of Coleman's customers can have secure access to their company's Web site, which contains a host of information about the company's benefits program. "Everyone always wants to know what their health plan covers," the executive notes. Firms have scanned in their benefits books so employees can peruse it on-line.
Some high tech companies allow their employees to do their own personal maintenance at the site. A Web-based system allows employees to do much of the tedious entry work on-line. They can correct their addresses if they move, change their beneficiaries or update their marital status if they get married or divorced.
Saving 60 Percent on Quotes
Traditionally, insurance divisions have been individual domains. Each division had its own systems and processes. Different divisions maintained their own databases and rarely shared information with their counterparts, Coleman observes. A far better solution from a customer service standpoint is to integrate all the IT functions into one standard process.
The core businesses of an insurance company include developing products, selling the policies and handling claims. The Coleman Group outsources almost everything else an insurance company does in its home office in Connecticut and offshore at its offices in the Philippines
Insurance quotations are a big area for Coleman's group. A typical insurance company will only sell about five percent of the policies it quotes. A price quotation costs an insurance company $12.50 per quote because an operator has to manually enter all the data before the computer can crunch the numbers and print out a price. That means the insurance company has to spend $250 in quotation costs for every policy it sells.
Coleman's office in Manila uses proprietary programs as well as local labor to prepare these quotes. He can charge the insurance company $100 per quote and still make money. At that price the insurance company saves 60 percent of its quotation cost. All communication between the insurance company and the Manila office is done electronically, so it doesn't matter what time zone the quotations are coming from.
In addition to cutting costs, Coleman guarantees error free processing. His contracts use 99.9 percent accuracy as their benchmark. The U.S. error rate is about five percent, he reports. Because his staff is based in the Philippines, he says he can afford to devote the financial resources that are required to be error free. "Our benchmark is prohibitive in the U.S.," he says.
Outsourcing also allows an insurance company to offer a wider variety of programs. Today, in order to compete, carriers are trying to sell employers a whole host of offerings. An employee favorite is car insurance because car insurance is far cheaper if it is purchased as a group. Employers typically tell the insurance companies they would love to offer group car insurance, but they don't want to bear the added cost and headache to administer it.
Coleman says a typical human resources department employee will spend almost 60 percent of his/her time on administrative tasks. Filling out forms fills up much of the day. That includes enrolling and unenrolling members in group plans or completing COBRA paperwork for former employees. "That doesn't leave enough time for the tasks that they should be doing, like training, hiring and education," says Coleman.
Insurance companies who are outsourcing with the Coleman Group use the outsourcing contract in their sales pitch. They tell the prospects that if they choose an offering like group car insurance, they don't have to administer it. The Coleman Group's BPO expertise is part of the package. "The carriers love this because we overcome the major objection," the executive says.
The Coleman Group operates on a facilities management plan. Each insurance company receives a dedicated team and a back up team. Coleman says the carriers are relieved thattheir employees are not plucked from a large pool but are people who are familiar with their business. The back up team helps with peak workloads and fills in when someone at the home office is sick.
It also works with insurance consultants and insurance brokers who deal directly with insurance companies. "When we get enough volume, we hope to link both these groups together," Coleman says.