An organization dedicated to common standards for Canada’s life insurance industry called Friday for a meeting of 150 life insurance industry senior executives on Jan. 26 to develop an initiative aimed to standardize new applications for life insurance policies through electronic transactions.

The proposed new standard — which will require carriers’, managing general agencies’ and software vendors’ chief information officers, chief operation officers and presidents to come to a consensus — could result in significant costs savings and reduced waiting times for Canadian life insurance firms, MGAs and advisors, according to CLIEDIS, the Canadian life insurance standard association.

“We’re trying to put together a business initiative in which we will change the way the life insurance industry does business, from paper based to electronic based,” says Byren Innes, senior vice president of NewLink Group Inc. and a member of CLIEDIS’s executive board. “Our first target is new business applications.”

Currently, advisors fill out new business applications with their clients, then send them through to their MGAs or dedicated life insurance agencies, which in turn forward the applications directly to the carrier. At each phase, data quality errors could occur, as there are three different entry points for the information, Innes says.

By setting these new standards, the process would be streamlined, resulting in estimated cost savings of $200 million annually for the life insurance industry, while the average time to process new life insurance applications of 36 days could be reduced to about a week for those applicants who are younger and in good health, Innes says.

CLIEDIS and Innes stress that the process is intended to include all members of the life insurance industry, as there have been concerns from some companies that a new process could result in advisors sending applications directly to insurance companies, therefore bypassing their MGAs and cutting them out of the process.

“There’s fear of the unknown, but the smarter, more sophisticated MGAs know the costs of processing business,” and the value they would obtain from having a standardized process, Innes says. “On Jan. 26, we’re aiming to develop an industry case [for a standardized electronic-based process].”

Although CLIEDIS has no authority to compel the life insurance industry to adopt standards, earlier initiatives have enjoyed wide industry acceptance. Innes says that small, but significant steps have been made with the various CLIEDIS Canadian insurance transaction standardization (CITS) initiatives, as 87% of the industry has bought in.

As for setting the new standards for new applications, Innes says the process could be quite fast. “The technology already exists and people are using pieces of it, but there is no common platform,” he explains. “Assuming the industry buys into it and we build the solution, we could see it in months, not years.”

IE