More than 40 percent of all life insurance policies are considered orphans with no active agent servicing the policyholder. And the problem is only getting worse. LIMRA estimates that 25 percent of all life agents will retire in the next five years. That equates to one policy for every man, woman and child currently living in California, New York, Texas and Massachusetts COMBINED.
Imagine the daunting task in trying to contact and service that many policyholders. Where do you start? How do you attack the problem?
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The opportunity
Taking these numbers into consideration, it's worthwhile to examine exactly how orphan policies are managed and what can be done to address the onslaught of new orphan policies over the coming years. Most orphan policies are managed reactively as BGAs and other agents scramble to take on stray in-force books as colleagues unexpectedly leave or retire. With no infrastructure in place, orphan policies often slip through the cracks and add up to millions of dollars of lost revenue opportunities, as well as unsatisfied clients.
But what if orphan policies could be managed proactively instead? With proper tools, safeguards can be put into place so that turnover doesn't stop a policyholder relationship in its tracks.
Step 1: Create a central infrastructure for contact management
When agents leave the industry, the first problem arises with their contact lists. Agents may store contact information on their personal cell phones or computers, which makes it impossible to recover that information when they leave. Over time, the contact information listed on the in-force policy may fall out of date, or multiple iterations of a contact may be mixed in with accurate information.
A centralized database that can be updated from any device will make it easier to update policyholder contact information and ensure data is clean and usable. Cloud-based functionality ensures that agents can still access the database on their preferred devices, but if they leave the files won't be stuck on their physical hard drives.
