An Evolving Industry and a New Way to Work
The insurance industry and the technology that supports it continue to evolve, and licensing and registration operations remain at the forefront, providing extraordinary levels of efficiency and continuous assimilation of best practices.
The Growth of Call Centers, Evolving Role of Technology
For example, call centers, both internal and outsourced, have grown as a result of the insurance industry’s increased digitization and the popularity of robo-advisers. These shifts have been driven by a new generation rising higher through the business and by overall evolving expectations of what technology should provide. In addition, there are products that are conducive to online purchases, such as term life. When a call center is a part of the distribution model, the ability to onboard and off-board agents rapidly is absolutely critical. This includes credentialing for multiple jurisdictions: licensure, appointment, and completion of mandated product and industry training.
Once a Liability, Now an Asset
Another trend is strategic and has to do with recruiting and retaining top talent. The C-suite has begun to view onboarding, licensing, and registration operations as a vital element of revenue generation rather than as a necessary cost center. Top agents and advisers prefer tech-savvy firms that provide them with a seamless experience, and insurance companies acknowledge that such first impressions of themselves are paramount. These producers, many of whom belong to an emerging younger generation, expect a firm to know who they are as well as to know what their credentials are and where they are held. They also expect a frictionless process for onboarding, being affiliated and appointed, and placing business day-to-day. This is especially relevant to insurers, for which independent agents sell products for a dozen or more carriers. The ability to earn and maintain agent loyalty is key—chief distribution, revenue, and sales officers depend on the allegiance of their agents to achieve sales and revenue goals.
Consolidation’s Far-Reaching Effects
Widespread consolidation in the insurance industry continues to drive changes in technology as well. A record 744 insurance agency mergers and acquisitions occurred in 2020. That was 15% more than the 649 transactions in 2019 and was more than double the 362 deals that were done in 2014. M&A activity remains brisk as companies seek to gain market share, leverage their scale, and increase profit margins.
Broker-dealer mergers and acquisition levels have also reached record highs for similar reasons, topping a record 159 transactions involving registered investment advisor firms. As broker-dealers consolidate the separate systems and operations they inherit from recent acquisitions, the most innovative firms have consolidated disparate operating functions into unified centers of excellence. To enable such a high level of continuous growth, they depend on highly efficient onboarding, licensing, and registration operations. This means employing for-purpose technology that automates licensing, CE, and renewal processes, and outsourced solutions provide scalability over numerous acquisitions—in some cases, 30 or 40 by a single firm in a year.
Scaling and Streamlining
A more exacting and demanding regulatory landscape has been an unwitting contributor to the industry’s consolidation. To achieve a scale that supports more stringent compliance requirements and the necessary technological infrastructure, many firms have had to consolidate, divest, reclassify their products, or otherwise regroup. For example, fewer carriers sell variable annuity products, and many have divested their broker-dealer businesses. There is consolidation among vendors as well. Many firms are mitigating vendor risk by relying on fewer trusted partners with the ability to fulfill the more exacting requirements traditionally provided by niche participants. This is often a C-suite decision to gain economies of scale and lower the lifetime cost of ownership.
The COVID-19 Crisis and Working from Home
As it seems to approach its end in the US, the coronavirus pandemic has created a new reality, affecting licensing and registration operations as companies have embraced remote work, many apparently permanently. In every way, organizations have become even more dependent on IT, including by adapting single sign-on processes.
Meanwhile, though transaction volumes fell in the early stages of the pandemic, they have since risen back to previous levels, and in some cases, have gone higher. Many companies used some of the early downtime to bring new products to market. Others have seen a rise in term life policies, streamlining underwriting processes in response.
Leading companies have gained have gained insights into transaction volumes and organizational performance through RegEd’s Xchange solution, using operating and productivity reports to compare pre-pandemic and post-pandemic metrics and facilitate all aspects of working from home.
Most licensing and registration requirements can be executed from a remote working environment, but there are exceptions. For example, paper checks still need to be issued for state insurance commissioners. In such instances, companies have had to adopt new processes and procedures for compliant close-out.
Continuing education for call center agents has also been affected by the transition to work-from-home. Typically, agents have attended brick-and-mortar classes where their paperwork was collected. But firms dependent on call centers have had to adapt quickly to electronic education and document management to ensure health and safety during the pandemic.
Whether it has been the pandemic or the insurance industry’s ongoing consolidation or continued digitization, sweeping changes keep driving advances in technology and new ways to work. And licensing and registration operations continue to lead the way.
RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.
Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.
Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please visit www.reged.com.