Streamlining Collections: Using Tech to Improve Service

A lot has changed in collections. Here's how Fulcrum is working to make it smoother.

?On the surface, collections appear to be straightforward. "We fill the gap between the broker or the intermediary and the insurer, facilitate debit order collections and produce the reporting that surrounds that," says Jade Jensen, MD of Fulcrum Collect. "Sounds simple! But the more you look at the business the more complicated it becomes."

?FSCA regulations, the demands of deadlines and the high-pressure nature of the business have all compounded to make collections far more complex than they used to be. "The process itself sounds simple but there's a lot of tech and services, and reporting in terms of the type of data that the different stakeholders expect to see."?

?All of this adds layers of complexity, she says.

?Finding A Balance

To simplify an unnecessarily complex process, one needs to approach it from a different angle, and Jade's experience as a CA and business expertise from different industries help with this.??

?Insurance is a service-oriented industry, says Jade. "You've got this combination of the high-level tech required to achieve all these objectives with the relationships that are built between the brokers and the insurers and the collections agencies as well."

?"As a whole, the insurance industry is very relationship-based; it's about talking to each other.

?And I think that's where the brokers and the intermediaries come in so strongly."

?And therein lies the conundrum; avoid tech and you sit with too much admin or go too heavy on tech and you lose the personal touch.

?"Everybody keeps talking about the digital world and AI giving advice and all the rest but I think the vast majority of people want to speak to a human being and particularly when you're in the insurance environment," says Jensen.?

?"When you've got a claim type of situation, you want human interaction. You want someone to understand what you need and how it's going to happen," she says.

?"It's highly service-driven within Fulcrum so we place a huge amount of emphasis on that with our service consultants and relationship-building."

?The challenge is finding that balance where the broker has enough digital support but can still focus on using their people skills to drive their practice.

?"Companies like Fulcrum can offer that peace of mind and the knowledge that the tech is there, the data is there, the reporting ability is there".

?Added to this is the fact that intermediaries can outsource the hassles of regulatory administration.

?Rallying Against Red Tape

"Regulation is a big thing in our world and it has a real impact on income," she says, adding that there's a lot of uncertainty with the regulator regarding what kind of fees or capping might be applied to their brokers.

?"Along with the FIA, Fulcrum has engaged with FSCA on a very high level to champion the intermediaries' rights. They’re trying to curtail the amount of income or fee that a collection agency can pay to a broker for services the broker provides to Fulcrum," says Jensen.

"Historically, we've always paid for these services in some form or another, and I know FSCA is quite intent on saying that brokers only deserve to earn commission and nothing more. But there are a lot of other expenses that are covered by the brokers and the services that are supplied to Fulcrum, so we've engaged heavily with FSCA and with the FIA to motivate as strongly as we possibly can that that income flow remains.”

?"They did give us an extension until the end of January 2023, to allow for further negotiation," she adds.

?"From an insurer perspective, there are a lot more requirements coming out of the regulators in terms of the level of information that's required," says Jensen. "We sit in that nexus that we can do that for both the broker and the insurer."

?The Importance of Integrity

Because of this position Fulcrum is in, they have to exercise a certain amount of selectivity when working with intermediaries. "We do get into situations where we do reject business," she mentions.

?"Our ethics are very much intact," Jensen says. "We have a fully-fledged legal & compliance department within Fulcrum. We have a TPPP license that is issued by PASA as well."

?"We take all of those responsibilities seriously, so when we take on a client we do our due diligence. We see our brokers as partners, just as we see insurers as partners. So we certainly don't want to partner with someone with some kind of questionable background," she emphasises.

??"The debit order business – not necessarily from an insurance perspective – hasn't got exactly the most wonderful name in terms of your R99 debit order fraud schemes so we take that seriously."

?The Evolution of Collections

The first of three collection models is the Legacy model, explains Jensen. "This is the age-old one that has been in operation for years.”

?Fulcrum continues to perform collections using the legacy model, but the majority of their debit orders make use of the Fulcrum CollectDirect model, pioneered by Fulcrum in 2018. This model ensures that the policyholder premium is directly collected from the policyholder account to the insurer-owned bank account, mitigating the risk from the insurer's perspective, she explains.

?"However, there's a lot of efficiencies that could still be improved on. It's a lot more admin-intensive from both a broker and an insurer perspective, although it achieves all your risk mitigation requirements."

?Because of this, they've been working on a new model called Fulcrum AirCollect which will enable them to make the process more efficient and far less labour intensive.

?"We're pulling our tech development and support in-house. We are becoming a lot more?tech-focused in that we understand the need for a bespoke software platform that will handle what the industry needs.”

?"Tech has become as important as our service side. We've embarked on a massive project to improve the Legacy and Fulcrum CollectDirect collection processes with the soon-to-be-launched new cloud-based Cirrus system. The Fulcrum AirCollect model, which will allow us to split debit order collections 'in the air' as such, will be the most exciting addition."

?"It will ensure that the insurer only gets the premium portion of the collection instantaneously, not the entire amount,?the commission portion is directed to the broker, and the VAP provider receives their VAP portion separately as well, with the Fulcrum fees being calculated up-front."

?"In addition, it provides a lot more transparency throughout the entire process and allows for integration between the various broker management systems (BMS) and Fulcrum’s internal collections system. Data is exchanged on a real-time basis. What happens on the BMS produced bordereaux also happens within the Fulcrum AirCollect insurance, or cash, reconciliation."

?"It frees up time for the brokers to do what they do best, ?interacting with the policy holder, with their clients, rather than trying to figure out what has happened with their collections," she points out.

?Perhaps the ideal calibration on the digital-analogue continuum when it comes to collections is when the intermediaries don't need to think about it.

?"Collections is something that they shouldn't have to have to worry about," explains Jade.

That's our objective: to make them as painless and seamless as possible so that the broker doesn't waste time on the tech that sits behind it."

Ends

Link to review article as it appeared in FIA Insights

https://www.fulcrum.co.za/2022/06/14/streamlining-collections-using-tech-to-improve-service/