Address Verification System Delivers Results
Insurance Networking News, July 1, 2008
Getting it right the first time became a goal worth pursuing for this Hastings, Mich., P&C insurer.
A few years ago, Hastings Mutual Insurance Co. experienced a big problem with undeliverable mail. At one point, the number of policies with incorrect address information approached 30,000—nearly an eighth of the company’s total. Direct costs to the carrier were around $80,000 annually for additional labor, printing and postage to correct and resend documents. But the indirect costs—delays getting policies out to customers, slowed invoices, even incorrect ratings on some personal lines—thanks to inaccurate ZIP codes-were potentially far more damaging.
Advertisement
“A big problem for us was that cancellations and restatements could be delayed or not mailed,” Krista Loftus, Hastings Mutual’s underwriting processing manager, says. “If there was a substantial delay in getting an invoice to an insured, sometimes we’d go into cancellation.” Further, Hastings Mutual’s system might cancel a policy due to non-payment of an invoice that the customer had never received, she explains.
Customers would complain to agents, and agents would complain to the carrier. “It makes for a tough relationship when you’ve got your insureds yelling at your agents and, of course, your agents are upset with you. You have some real issues when you have mail being delayed,” Loftus continues. Even incorrectly addressed mail that somehow makes it to the insureds can leave a bad taste. “If the first document the insured gets from you doesn’t have the address right, that doesn’t leave a very good impression,” she says.
Hastings Mutual began life as the Michigan Mutual Tornado, Cyclone and Windstorm Insurance Co. in 1885. In 1880, and again in 1882, tornadoes caused heavy damage to the southwest Michigan town of Hastings, and local farmer and founder D.W. Rogers saw a need — and an opportunity — to protect his neighbors from the twisters.
In 1959, the carrier reorganized as the Hastings Mutual Insurance Co., and though still based in the small town where it was born, it currently offers 18 insurance lines, mostly P&C, to individuals, businesses and farms. It sells its lines through independent agents in Michigan, Ohio, Indiana, Illinois and Wisconsin.
CAUSE AND EFFECT
Sources of the incorrect address problem varied, according to Loftus. Sometimes an agent or even an insured might enter inaccurate information. A data entry person at the company might transpose numbers in a ZIP code. Part of the problem, Loftus says, was new technology at the U.S. Postal Service. At one time, letter carriers knew everyone on their routes, and mail would reach the addressee even if there was an error in the address. Today, Postal Service systems are more likely to kick back invalid addresses.
Whatever the cause, over time the problem grew worse. Hastings Mutual adds more than 40,000 new policies annually and, as the company grew, so did the number of incorrect addresses in its files. The problem got bad enough that Loftus and her colleagues decided something had to be done to fix the inaccuracies for good.
As a first step, the company required all of its new policy processors to verify addresses against information on the Postal Service’s Web site, or that of another vendor. “We had about one-and-a-half full-time people reading these reports, researching addresses and making sure they were right,” Loftus recalls. Each address had to be entered twice, once for verification and a second time into Hastings Mutual’s system.
But that only solved part of the problem. When the bad addresses topped 30,000, thanks partly to a software change, the carrier knew a broader effort was needed, and assigned five to seven of its employees to work part-time on the clean-up effort. “We spent about six to eight months of manually working through the reports part-time, just to get us to the point where we had a reasonable number of bad addresses-where we had fixed our portfolio,” says Joe Sacco, Hastings Mutual’s project manager. “That’s when we started looking at point-of-entry address verification as a way to prevent these from being inaccurate in the first place.”
The decision to use an address verification system began almost serendipitously. “Krista [Loftus] brought me into a meeting one day with a representative for QAS [a Cambridge, Mass., developer of address verification software],” Sacco says. “We were somewhat intrigued.” The product, QuickAddress Pro, “looked like it might help us on the front end.”
For more information on related topics, visit the following channels:
