When and Where STP Will Reach Insurance? FTCE Panel Debates Strategies

With insurance carriers focusing more and more on reducing costs and improving efficiencies, many are turning towards end-to-end processing. However, as a panel of industry executives pointed out at this week's Financial Technology Conference & Expo in New York City, straight-through processing (STP) in insurance is no slam dunk.

While the panel, including Mike Kryza, managing director, US, Worldinsure; Steven Landberg, founding partner and managing director with Alpha Financial Services Consulting; and Patrick McCarthy, manager and insurance practice director at Arc Partners, acknowledge that end-to-end processing in insurance can provide speed and efficiency, there are hurdles to overcome.

For starters, asked McCarthy, "What is STP and where does it actually start?" He added that some say STP starts when the transaction reaches the carrier's systems and others define it as starting at the agent or policyholder. "Depending on your definition, STP may already exist at some carriers."

Landberg pointed out that for end-to-end processing to be truly successful, carriers should focus on processes and procedures for getting information to and from producers, adding, "Ninety percent of business goes through producers."

However, Kryza noted that, especially with certain complex life products, there "may not be a desire to be bound immediately. There is a certain ability to do one-click binding, but there is also a value-add with agents who can serve the customer's needs and check information," he said.

Regardless of the complications involved with STP, the panel did agree there is a place for end-to-end processing in insurance-starting with simple products. "Simple commodity-type products will be the first to have end-to-end processing," McCarthy said. "Products such as travel insurance and certain annuities are already processed straight-through by some carriers." Other products, such as personal auto and homeowners insurance, are more likely to be moved to a straight-through process before other complex products, such as certain life and commercial lines policies.

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio