Every company has its core competencies and most likely if you are an insurance company, your expertise has something to do with insurance and not necessarily data processing. Having said that, many organizations will consider performing Death Master Processing for a variety of reasons including: Controlling the process, Data Security Concerns, Perceived Budgetary Constraints, etc. When evaluating what is right for your organization, consider the following 5 things:
- Subject Matter Expertise: SSA DMF regulations are both in flux and ambiguous. Within less than one year, there have been dozens of audits, a confusing letter from Minnesota, legislation from New York, Kentucky, Alabama and Maryland, a model act from NCOIL and boatloads of opinions and interpretations from experts on both sides of the fence. Are you committed to hiring or retaining dedicated resources to help navigate these issues in-house or does it make more sense to augment your knowledgebase by leveraging subject matter expertise from an outsourced provider? How many in-house guru’s do you need and with what skills? With the right external partner, expertise and guidance are usually a natural extension of core services.
- Technological Resources: Technology is less of a barrier than it was in prior years. Today, it is relatively inexpensive to acquire the computer resources to maintain the SSA DMF despite the fact that it is approaching 100 million records. Having said this, the larger burden will become the resources required to rapidly update the DMF each week as well as program and apply the extremely complex and CPU-intensive fuzzy matching algorithms. Additionally, because of the likely poor condition of your books and records data that often exists in multiple disparate systems, a significant effort is required to parse and reformat each file for optimal matching. In weighing all of these factors, it is important to acknowledge your existing corporate culture as it relates to prioritization of IT resources. The tech team must be nimble, with a commitment to on-going fast turnarounds. In addition, they must be able to apply customizations in a high quality and often real time manner in order to handle unforeseen data issues and evolving regulations. If you have a reliable, efficient technology department with available bandwidth, it may make sense to pursue an in-house solution. If not, a reliable outsourced partner will make life a lot easier.
- Ongoing Compliance: As regulations continue to evolve, it is important to stay current with the latest mandates and adjust processing to ensure on-going compliance. The legal or compliance department can stay abreast of new requirements through organizations such as the ACLI or a variety of other avenues. The importance of staying current is greater for those who are performing matches internally because the buck stops with you. With the right outsourced partner, an insurer can rest easier knowing that they have another set of eyes on new and pending requirements as well as a plan to make any necessary R&D investments to ensure their systems will continue to remain in compliance. Finding the right outsourced partner is key to having that confidence.
- Budget: Cost is always a major factor in any business decision. For this type of processing, the SSA DMF file must be licensed directly and that expense does not include the costs associated with developing and testing the algorithms, performing file updates, doing the periodic matching, ensuring compliance and generating all of the associated input/output files and reports. Unless you have idle resources it is not unreasonable to forecast a 6-figure budget to manage the entire process internally, sometimes considerably more. For a mid-size insurer it is possible to outsource this entire process at a cost savings. For a smaller insurer with simple requirements, it is even possible to satisfy the DMF matching obligations for less than just the cost of licensing the SSA DMF by itself, without even factoring in all of the other soft costs. While the expense may be greater for a larger insurer, it is important to maintain perspective by looking at it as a percentage of a broader budget. Importantly, it is also possible to meet a variety of price points – both internally and externally – by making subtle adjustments to the project scope while still exceeding the requirements defined in the various regulations. Your prospective partner can guide you through these options.
- Accountability: It is no secret that the audit activity is on the rise. Individual states have also begun to outline their requirements and compliance deadlines. There is a significant advantage to selecting a business partner that has substantial experience performing SSA DMF matching at a level that not just meets, but exceeds all of the standards established in the various Global Resolution Agreements (GRA) and Regulatory Settlement Agreements (RSA), as well those defined in the state-specific regulations. Using a system that has provided results that have been accepted by the States and that will provide you with strong documented evidence of your compliance has definite benefits and provides 3rd party verification.
These factors are meant to assist you in starting an internal dialogue knowing that there are certainly other factors that will impact your final decision. Knowing who will be performing the processing is a critical step that has to be determined early on so that resources are in place when you need them.