Webify Those Claim Systems – How BPM, SOA, Rules Helps Shape The New Wave Of Insurance Automation

Let’s look at a scenario that involves Mr. Rodney, an insurance customer and Mr. Stick is an insurance claims manager and Mr. Knowitall is the CTO.

For a few years, Mr. Rodney lived in the USA and purchased a home near the Florida coast. He bought a brand-new BMW for himself and an SUV for his wife. He got all his assets insured through a well-known insurance company “At Best Cover” inc. Unfortunately, hurricanes this year played a significant role and he discovers his roof was blown off and cars on the neighbor’s balcony. He panicked and called his insurance company. The real story begins.

He dials ABC’s call centre, which routes him to India. Since his claims relate to different product lines, he ends speaking with multiple representatives about each asset. At the insurer, things are worse. These claims are being processed by the insurer on legacy claim systems, which can include multiple claim systems within one department. The claim of Mr. Rodney is now entered into multiple systems. This extrapolation involves a lot of manual and paper-based activities in order to process the claims. These are the results

1) Customer dissatisfaction: Rodney has had enough of talking to different people over the phone for different claims. It also seems that the customer relations management system is inconsistent, which means that he hears different stories every time. Rodney is frustrated by the slow back office processing of claims. This is compounded by feeling unprofessional and delays. Mr. Rodney already contemplates a move from ABC to someone more flexible to meet his needs.

2) Turnaround time to process claims: It is a well-known fact that claim processing can take anywhere from 80-90% of total administrative expenses in most insurance companies. ABC currently has more than 25 claim systems. It takes a lot of effort to solve Mr. Rodney’s problems with many of the others. Stick’s time is being wasted on manual reporting, registration, etc. Instead of focusing on the processing of claims,

3) Operational bottlenecks ABC faces a challenge in making the claims process easy for both its customers and employees.

4) CRM? 4) CRM? ABC also has very limited visibility into trends and patterns that relate to Mr. Rodney. A well-oiled CRM system should be able to identify Mr. Rodney’s dissatisfaction and should also be able to stop it from happening to some degree.

5) These systems make it difficult for ABC to meet various compliance requirements. This is making it increasingly difficult for ABC not to meet the requirements.

The situation is not good for ABC, and they are clearly suffering from employee turnover and customer dissatisfaction. They need to take a fresh look at the claims system.

To understand and correct the problems, they will need a Process Magnifying Lens. Now!

In a nutshell, this is what they need:

1) They must bring customers closer by offering a rich user experience.

2) They must have robust claims processes and systems in place to speed up turnaround times

3) Provide claim systems that automate tedious tasks and give smart employees such as Mr. Keep a job you love.

4) They must be able to adapt their processes in order to comply with insurance regulations.

Mr. Knowitall (CTO), decided to move their existing claims landscape online using a web-based environment. ABC will be able to achieve the following:

1) A flexible, feature-rich claims platform: ABC is moving forward with a combination of existing claims systems that have built-in business process management capability and prebuilt facilities for processes/functions such as First Notice of Loss, Litigation Management etc.

2) Integration Architecture: The new system will offer an open framework to integrate existing systems into the system. This will be the common layer that brings together customers, agents, partners, and insurers. From defining business process services to integration with different underlying systems, Mr. Knowitall believes that SOA will be their design philosophy.

3) A Rules-Driven Approach: Insurance products have traditionally been driven by multiple rules and decision points that work for each product. These policies are often hardcoded in existing claims systems. This makes it difficult and time-consuming to make changes. It is time to move these policies and rules from application to a central repository that can be modified by claims business analysts when necessary. For example. If the maximum time for claims turnaround must be modified, the business user can do this via a Business Rules Engine instead of going to the code every time.

ABC has broken down this project into phases. The first phase is to bring the auto line of products online. Next, ABC will move on to your home and your life. Mr. Rodney’s problems and Mr. By sticking to managing complexity, Mr. Knowitall was able to select a route that will bring maximum benefits to everyone. To implement the system, Mr. Knowitall chose a set BPMS (specializing on insurance), a specialized Business Rules Engine, and an Enterprise Service Bus. This roadmap will provide ABC with the following key benefits:

1) Greater Process Control and Visibility: Mr. Rodney Mr. Stick can see exactly where each claim is within the process cycle, which gives him greater control and confidence

2) Cost Efficiency: ABC’s claims processing speed and greater automation have allowed them to avoid unnecessary litigations. Usually, higher delays lead to more court cases.

3) Straightforward and Simple: Mr. Rodney now has the ability to apply for and track his claims online. This increases his confidence in the insurer. The insurer, on the other hand, knows exactly what layers it is dealing with Mr. Rodney. They also avoid any delays in payment values or time. Both Mr. Rodney as well as ABC win.

This scenario should make all insurers look good, but it’s not the truth. Although many organizations understand the importance of this approach, it is not always easy. To keep the business running, it requires significant organizational change and extensive program management planning.

If you are an insurer looking for new ways to automate claims, such as the BPM/SOA route, then the following should be considered:

1) Get management sponsorship and establish a well-defined governance structure. Once funds have been approved, the governance structure and team alignment are necessary to kick start such programs. It is worth considering forming a programme officer and defining a detailed plan for project implementation. This document should outline the plan of how and what is being achieved. A team that includes both business and technical personnel is also possible.

2) Product Selection: Always consider the functional requirements of the product you are choosing. Fineos claims systems, such as Fineos, provide complete functionality and minimal customization. If not you can opt for a combination of process management and soa system and consider integration. Each option has its merits, so choose wisely. Similar principles should be followed when choosing a rules engine.

3) Business requirements: Clearly define the To-Be process maps and expected functional needs. Next, consider your choice of tools. You should choose an architecture that allows minimal customization. However, SOA requires some flexibility.

4) Outsourcing: If you have a major program to outsource, outsourcing the development parts would allow for greater business benefits.

5) SOA roadmap. Ensure that this SOA roadmap is in line with the overall EA. It is a good idea to involve the EA teams. You may also want to consider hiring a third-party consulting company that is a specialist in SOA. This will help you create and maintain optimum ROI.

If ABC can revive itself internally and offer services to Rodney keeping his interests in mind, I believe he would be a happier customer. In return, he will give his loyalty to ABC. Although I cannot say they lived happily everafter, I am certain they will continue to be loyal even if ABC moves in this direction.