Avoiding BPO Mishaps: A Cautionary Tale

The California Department of Insurance recently reported that Athene and Accordia ran into huge trouble because of a BPO mishap with their policy administration. This was due to the fact that there have been a significant number of accusations logged against these companies—over 100 since early 2016—and that they have failed to meet California service standards for about 50,000 policies issued to California residents. The results were any carriers’ nightmare and a story of caution for any merger or acquisition activity.

Problems arose with policyholder billing, servicing, and payments, creating a service nightmare for Accordia and Athene, a complete loss of confidence from the affected policyholders, and state expectations that the carrier provide remedies for the policyholders affected by the policy administration problems. Many companies likely have the stories of lessons learned for platform conversion or consolidation of disparate platforms initiated due to a business acquisition. In any business, and especially insurance where the trust of your policyholders is at risk, recovery comes at a significant price once the trust is broken.

Here are some thoughts on how to avoid BPO disasters:

• Contract a partner, not a transaction processor: Contracting with a BPO service provider is a long-term relationship. They should be intimately involved in your business and have a deep understanding of your process, culture, and service expectations. After all, they are servicing your book, so they are representing your company and your brand.
• Validate the data: Policy conversions are long and detailed. Test validation after the conversion is critical to validate the success of data scrubbing and mapping to the new platform. Poor testing leads to poor results.
• Manage the relationship: As good as BPO providers can be, you still need to manage the relationship to ensure your service levels are being achieved and the quality you have contracted for is being delivered.
• Periodic quality reviews: It’s easy to toss the processing over the wall and forget about it until a problem comes up. Periodic review of process, quality metrics, and service level execution is key to ensuring everyone is happy at the end of the day and goes a long way to insuring against unfortunate services miscues.