A lot has changed in collections. Jade Jensen, MD of Fulcrum Collect, explains how Fulcrum is working to make this process smoother.
Collections used to be simple and straightforward. “When I started working at Fulcrum, we filled the gap between the broker or the intermediary and the insurer, and we’d facilitate those collections and the reporting that surrounds that,” says Jade Jensen, MD of Fulcrum Collect. “But the more you look at the business the more the complicated it becomes.”
FSCA regulations, the demands of deadlines and the high-pressure nature of the business have all compounded to make collections far more complex than it used to be. “The process itself should be simplistic but here’s a lot of tech and services, and reporting in terms of the type of data that all the different stakeholders want to see.” All of this adds layers of complexity, she says.
Finding A Balance
To simplify an unnecessarily complex process, one needs to approach it from a different angle, and Jade’s experience as a CA and business expertise from different industries help with this.
Insurance is a service-oriented industry, says Jade. “You’ve got this combination of the high- level tech required to achieve all these objectives with the relationships that are built between the brokers and the insurers and the collections agencies as well.”
“As a whole, the insurance industry is very relationship-based; it’s about talking to each other. And I think that’s where the brokers and the intermediaries come in so strongly.”
And therein lies the conundrum; avoid tech and you sit with too much admin or go too heavy on tech and you lose the personal touch.
“Everybody keeps talking about the digital world and AI giving advice and all the rest but I think the vast majority of people want to speak to a human being and particularly when you’re in the insurance environment,” says Jensen.
“When you’ve got a claim type of situation, you want human interaction. You want someone to understand what you need and how it’s going to happen,” she says.
“It’s highly service-driven within Fulcrum so we place a huge amount of emphasis on that with our service consultants and relationship-building.”
The challenge is finding that balance where the broker has enough digital support but can still focus on using their people skills to drive their practice.
“Companies like Fulcrum can offer that peace of mind and the knowledge that the tech is there, the data is there, the reporting ability is there”.
Added to this is the fact that intermediaries can outsource the hassles of regulatory administration.
Rallying Against Red Tape
“Regulation is a big thing in our world and it has a real impact on income,” she says, adding that there’s a lot of uncertainty with the regulator with regards to what kind of fees or capping that might be applied to their brokers.
“Along with the FIA, Fulcrum has been we really engaged with FSCA on a very high level to champion the intermediaries’ rights as well to try to curtail the amount of income or fee that a collection agency can actually pay to a broker for services the broker provides to Fulcrum,” says Jensen.
“Historically, we’ve always paid for these services in some form or another, and I know FSCA is quite intent on saying that brokers only deserve to own commission and nothing more. But there’s a lot of other expenses that are covered by the brokers and the services that are supplied to Fulcrum, so we’ve really engaged heavily with FSCA and with the FIA to motivate as strong as we possibly can that that income flow remains.
“They did give us an extension until the end of January 2023 at the very last minute, “she adds.
“From an insurer perspective, there are a lot more requirements coming out of the regulators in terms of the level of information that’s required,” says Jensen. “We sit in that nexus that we are able to do that for both the broker and the insurer.”
The Importance of Integrity
Because of this position Fulcrum is in, they have to exercise a certain amount of selectivity when working with intermediaries. “We do get into situations we do reject business,” she mentions.
“Our ethics are very much intact,” Jensen says. “We have a fully fledged legal compliance department within Fulcrum. We obviously have a TPP license that is issued by CASA as well.”
“We take all of those responsibilities really seriously, so when we take on a client we do our due diligence. We see our brokers as partners, just as we see insurers as partners. So we certainly don’t want to partner with someone with some kind of questionable background,” she emphasises.
“The debit order business – not necessarily from an insurance perspective – hasn’t got exactly the most wonderful name in terms of your R99 debit order fraud schemes so we take that seriously.”
The Evolution of Collections
The first of three collection models is the legacy model, explains Jensen. “This is the age-old one that everybody has been doing for years.”
They still operate some of these but have launched CollectDirect. This model ensures that the policyholder premium is directly collected from the policyholder account to the insurer- owned bank account, mitigating the risk from the insurer perspective, she explains.
“However, there’s a lot of efficiencies that could still be improved on. It’s a lot more admin- intensive from both a broker and an insurer perspective, although it achieves all your risk mitigation requirements.”
Because of this, they’ve been working on a new model called AirCollect which will enable them to make the process more efficient.
“Basically, we’re taking it all in-house and that’s where we’ve become more of a tech company in more recent times in that we understood that we need a bespoke type of software that will handle what the industry needs.
“Which is why the tech side has become as important as the service side. Whereas previously it was more service, less tech so we’ve embarked on a massive project to improve the CollectDirect process and the collection process with this AirCollect model which will allow us to actually split a lot of premium collections ‘in the air’ as such.”
“It will ensure that the insurer only gets the premium portion of the collection, not the entire amount, the broker gets the commission portion instantaneously, the back provider gets their back portion immediately as well, and Fulcrum gets its fees.”
“In addition, it provides a lot more transparency throughout the whole process and also allows for integration between the broker’s management system because each broker has their own management system with Fulcrum’s internal collections system so that data runs at real time.”
“It allows them to do their jobs better, which is interacting with the policy holder, with their clients, rather than trying to figure out what has happened with your collections,” she points out.
Perhaps the ideal calibration on the digital-analogue continuum when it comes to collections is when the intermediaries don’t need to think about it.
“Collections is something that they shouldn’t have to really have to worry about,” explains Jade.
That’s our objective: to make them as painless and seamless as possible so that the broker doesn’t waste time on the tech that sits behind it.”