SOPs for Insurance Companies & Agencies

Insurance Industry

Winning customers’ trust and confidence is one of the success mantras in the insurance industry. A prime example of this would be India’s Life Insurance Corporation. There was a time when it was nightmarish for private companies to draw customers away from the brand perception enjoyed by this recently-listed company with majority shareholding of the Government of India. That LIC is backed by the government was a significant USP for the company ever since its inception. But keeping the marketing and branding aspects aside, LIC also has a robust operational and administrative framework. The company kept upgrading itself from time to time. This also included the adoption of digital transformation.

The example of LIC is here to highlight that it is possible to efficiently and effectively operate a massive insurance company with robust process management. Today, the operational challenges of insurance companies are diverse. These challenges emanate in the areas of risk evaluation (underwriting), customer onboarding, documentation and data entry, agent management, timely collection of premiums, claim processing, etc. Overcoming these challenges is important for insurance companies and agencies to maintain their brand perception. Any operational flaw eventually hits the customers and that is not good in the business of insurance. Thus, operational planning plays a pivotal role in defining how an insurance company works. It brings with it the significance of SOPs for insurance management.

Role of SOPs in Achieving Operational Excellence for Insurance cos.


Underwriting is the process of evaluating the risks of providing insurance cover. It is critical for insurance companies to assess the risks associated with to-be insured subjects. Because the insurance companies become liable to pay the insured sum, it is important for them to know what kind of risks they are exposed to, how much should be insured, what should be the insured sum, etc. In doing so, the factors and procedures are established in advance. For example, if a person wants to insure his/her swimming pool, there is an established process of underwriting defining what factors have to be checked and how the procedure should be carried out.


Underwriting-( SOPs for Insurance Industry )

Underwriting is a process involving critical and minute considerations and methodical execution. SOPs help define it as per the required standards. SOPs also help ensure that nothing significant is missed out or there are no lapses in executing the process. 

The most important part of underwriting is to check that the assessments are in line with the policies of the insurance company. Extending the example of getting insurance for a swimming pool, it will be worthwhile to check the brick-and-mortar condition of the pool, the condition of the water filter, the stability of the earth under the pool, etc. All these aspects get covered in SOPs. There may be separate SOPs for evaluating each factor.

Customer-Onboarding-( SOPs for Insurance Industry )

Customer Onboarding

Customer onboarding for insurance companies is similar to that in the banking industry. There is a KYC process involved. The required forms and documents have to be collected from customers. Assessment and inspection reports are collected from the underwriters and agents. When all the paperwork is ready and insurance cover is approved, customers are asked to make the payment. After payment, customer information is entered into the IT system of the insurance company. Welcome emails and SMSs are sent to the registered email addresses and phone numbers of customers.

The entire process of customer onboarding could be carried out using SOPs. It provides an operational roadmap to the team executing the process. Having a process map eliminates the chances of making mistakes by defining duties and responsibilities with accountability and reporting. If there is any deviation from the established process, they would know what needs to be done to get things back on track.

Agent Management

Many insurance companies appoint agents (not employees) for sales, business development, and other core services. They form the bridge between customers and an insurance company for delivering the latter’s services. In a more contemporary sense, they act like relationship managers for customers as there are nowadays in the banking sector. In return, the agents are paid commissions and bonuses. Companies like LIC provide enormous professional growth opportunities for their agents.

Agent-Management- SOPs for Insurance Industry

But how do insurance companies manage their agents? Agent management is a crucial function for insurance companies that operate via this model. Similarities could be drawn from the hiring of employees or appointing franchises. There is an appointment process that aspiring candidates have to go through. Agents may also have to appear for examinations for obtaining a license from regulatory bodies. Once appointed, the agents carry out their defined duties and responsibilities. As the network of agents expands, it keeps on getting more challenging to manage their affairs.

Whether the number of agents is less or more, the ideal practice is to develop processes for agent management. These processes could be for recruiting and appointing agents, PMS for agents, billing and payment to agents, routine supervision, etc. Using SOPs to define these processes ensure that the agent-company operational relationship consistently stays intact and within the ambit of the company’s policies and control.

Premium-Collection-( SOPs for Insurance Industry )

Premium Collection

Premium or the price charged by companies for promising to cover risks is the primary source of income for insurance companies. The revenue generated from premiums is further invested into other interest-generating destinations. Premium revenue combined with interest income offset by claim payments and administrative/operational costs determines the profitability of insurance companies. Basically, the premium is bread and butter for insurance companies. Therefore, the timely and accurate collection of premiums is critical for the growth and sustenance of the business.

In today’s technological environment, premium payment reminders are sent to customers over digital mediums like SMSs and emails. If not paid, it is followed up with reminders. Post-due date, even penalties may be charged. There could also be options for premature closure of policies. Going further, deliberate non-payment may even require legal intervention. The whole thing runs in a logical sequence of activities that could be mapped in the form of SOPs. Even with technology and automation, SOPs are still required to dictate how the IT and communication systems shall work.

Claim Processing

Claim settlement is one of the main operations of an insurance company. Claims are formal requests made by customers to invoke the terms and conditions of an insurance policy related to payment of the insurance cover. Insurance companies are liable to process legitimate claims raised by customers. Whether the claims are approved or not is a different matter. The complexity with claim processing is that insurance companies have to align three important factors – internal policies, regulatory stipulations, and customer experience.

After a claim is raised, it is reviewed and evaluated by insurance companies. After approval, the payments are released to customers or their legal representatives. In this process, all the due protocols are thoroughly observed. If claims are wrongly assessed and payments are released based on such assessments, it can be a hurdle to get that money back. Several internal and external entities are involved in a claim settlement process. Insurance companies need to make sure that every step they take in claim settlement is right both in terms of internal policies and regulatory settings.

SOPs for insurance claim settlement help ensure that this process is planned and defined in tune with the internal policies and the law of the land. Because SOPs can pinpoint operational specifications to high detailing, it becomes a suitable tool to manage and execute sensitive processes like claim settlement. It also becomes easier to trace the accountability of the stakeholders. For example, if customers/representatives do not submit the required documents for processing a claim even after repeated reminders, the insurance company has a right to keep such claims on hold under fair, just, and reasonable circumstances.

Robotic Process Automation

Robotic Process Automation (RPA) is helping the insurance industry in executing numerous manual processes like the collection of customer information, data extraction from various sources, sharing data for analytics, etc. RPA can perform simple but massive operations like transferring data between applications, processing emails and data contained therein, reading from physical documents and converting them into digital format, supporting fully-automated processes, etc. RPA has also been instrumental in streamlining legacy systems and helping insurance companies adopt advanced applications. These functionalities of RPA are of high utility for almost every business process. This includes the claim settlement process, underwriting, customer support, customer onboarding, KYC, policy administration, product development, and more.

To implement RPA solutions, the processes must stand well-defined first. Then it is easier to identify what sections of the workflow could be executed using RPA. For instance, if the KYC process is defined using SOPs, it becomes easier to design the RPA solution in terms of data source identification and database entry. SOP serves as a facilitator for the development of better RPA solutions and their implementation.

Audit and Control

Like in banking, audit and control is a vital function in insurance. A flaw in policy design or operational planning could end up in huge losses to an insurance company. It is through periodical audit and control measures that such flaws are detected and corrective alternations are made. The purpose of an audit is also to gain insights for improvisations in product design, service delivery, and operational efficiency.

The complexity of an audit process depends on the size and scale of the business as well as the scope of the audit. It is difficult to confine audits to any universal format. But being process-oriented helps in the execution of audit exercises. When SOPs are present, it is easier for the audit team to work with an unspoken consensus regarding the sequence and standards of investigation to be maintained.

Audit-and-Control-SOPs for Insurance Industry

 By pinpointing accountabilities, any deviation by any team member could be easily spotted. How the audit team should conclude the audit could be also defined in the SOPs. This is an important activity to not leave employees with bitter feelings of ‘being investigated upon’.


We are a team of process management consultants with 10+ years of experience. We offer process solutions and SOP writing services to businesses from all over the world. Our services and solutions have benefitted 500+ clients from over 20+ verticals.

As a budding international brand, BPX strives to deliver world-class solutions with hybrid functionalities in service design and delivery. We prefer to work in close synchronisation with our clients for better services. Our robust feedback and reporting mechanism plays a big role here.

Our agile working systems enable us to access the services of professionals from all over the world as per the project requirements. We engage qualified and experienced business process consultants and SOP writing consultants with rich project exposure.

In the insurance industry, BPX offers process management solutions and SOP writing services to businesses of all sizes and scales. Our services and solutions are aimed at helping our clients operate their businesses via flawless processes and achieve operational excellence.

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