Given the pace of technological innovation over the last decade, the number of manual and complex processes within the financial services industry is mind-boggling. One area that is top of everyone’s mind right now is group insurance.
Late last year, the Australian insurance industry released the Insurance in Superannuation Voluntary Code of Practice (the Code). The intent of the Code is to improve both the insurance offered to super fund members and the processes by which insurance benefits are provided.
Since its release, the Code has come under attack on a number of fronts, with one of the key criticisms being its voluntary nature. If it’s not mandatory, it’s not enforceable and critics say the industry has missed a key opportunity to lift the bar for members.
To date, most funds have been supportive of the Code’s overall principles, with the country’s largest industry super fund, AustralianSuper, amongst the first to confirm publicly that it would be signing up to the Code.
However, funds and service providers alike have warned of the significant costs that will be incurred to align business processes and systems to the Code’s standards, as well as the ongoing additional compliance costs.
The expectations and standards set out in the Code appear to be very reasonable. Take some of the service level commitments by way of example: five days to send a form to a member doesn’t seem impossible in this day and age. In fact, in our digital age, it sounds near prehistoric.
And therein lies the problem. If this is the standard the industry is looking to set, it gives you some insight into the level of inefficiency and complexity that’s inherent in group insurance processes and practices today. Addressing this inefficiency and complexity is entirely necessary, but will take considerable cost, time, and effort to do so. Products, systems, and operational processes all will need to be overhauled across the entire value chain, encompassing funds, insurers, administrators, technology providers, and employers.
However, it’s also an enormous opportunity. Funds like AustralianSuper that approach the Code more as a means for driving real competitive advantage rather than purely a compliance requirement, stand to win. On the flip-side, funds that take a literal approach to the Code and work to re-engineer processes to meet new service standards, for example, may miss out on the bigger opportunity.
Take the previous example of the form: rather than thinking about how to get a form to a member in five days, funds should instead think about how to optimise the end-to-end -journey: from the moment a member initiates a request through to the fulfilment of that request. This approach will likely reveal more opportunities to improve the member experience and make the engagement more efficient and cost-effective.
Signing up to the Code will require significant investment. But for smart funds, there’s considerable gain.