Webify those Claim Systems - How BPM,SOA, Rules helps shape the new wave of insurance automation. -
Let’s discuss a scenario involving Mr. Rodney an insurance customer, Mr. Stick a claims manager with insurance company and Mr. Knowitall the CTO of the insurance company.
Mr. Rodney moved from UK to US for a couple of years and bought a house near Florida beach side. He also bought himself a brand new BMW and a SUV for his wife. Now like everything he got his assets insured by a well know insurance firm “At Best Cover (ABC) inc.” unfortunately this year hurricanes played a major role and one fine morning he finds his roof blown over and cars parked on his neighbor’s balcony. Panicking he calls his insurance company and the real story starts.
He calls up ABC’s call center which routes his call to India, as his claims are for different product lines he ends up speaking to multiple representatives about each of his assets. The story is much worse at the insurer’s end. The insurer is currently processing these claims on legacy claim systems which can mean multiple claim systems within a department. So Mr. Rodney’s claim is entered into multiple systems and the situation is extrapolated with loads of paper based and manual activities to process these claims. The results:
1) Customer Dissatisfaction: Mr. Rodney is already fed up of speaking to multiple people on phones for different claims, it also seems that the customer relationship management system is not consistent hence he hears different stories each time. The back office processing of claims is slow and this is further frustrating Mr. Rodney due to delays and feeling of un-professionalism. Mr. Rodney is already considering a shift from ABC to someone more agile to respond to his needs.
2) Turnaround time for claims processing: It’s been a known fact that claim processing in most insurance companies can take more than 80-90% of total administrative costs. ABC is currently having more than 25 different claim systems and its taking a lot of time to resolve Mr. Rodney’s problem with most of Mr. Stick’s time is getting wasted in manual reporting, registering etc. instead of focusing on processing of claims.
3) Operational bottlenecks: With such complex and pain staking procedures the insurance companies face an issue of inefficient staff performance, increased staff turnovers and obviously very high cost to process claims. ABC is facing touch challenge in making the claim process smooth for its customer and employees.
4) CRM? : With so many different systems, there is bound to be data inconsistencies and redundancy. This also results in ABC having very low visibility on trends, patterns related to customers like Mr. Rodney. A well oiled CRM system should have been able to pinpoint Mr. Rodney’s dissatisfaction by now or better should have been able to prevent it to some extent.
5) These systems also place a huge challenge on ABC to confirm to various compliance requirements. These are increasingly making it difficult for ABC to rise up to the requirements.
This scenario looks grim for ABC and without doubt they are suffering from both customer dissatisfaction and employee turnover. What they need is a fresh look at their claims ecosystem.
They need a Process Magnifying Glass to understand the gaps and take corrective actions. Now!
This is what they need in a nutshell:
1) They need to bring their customers closer and give them a rich user experience
2) They need robust claims processes and systems to reduce turnaround times
3) They need to provide claim systems which automate mundane tasks and paperwork and allow smart employees like Mr. Stick a fulfilling job.
4) They need flexibility to change their processes to keep in alignment with the insurance regulations.
Mr. Knowitall (CTO) decided to work on moving their existing claims landscape online in a web based environment. The new claim system will allow ABC to achieve:
1) A flexible feature rich claims platform: In this case ABC is going forward with a combination of known claims systems which have inbuilt business process management capability with pre-built facilities for known processes/functions like First Notice of Loss, Litigation management etc.
2) Integration Architecture: the new system will provide an open framework for integrating existing systems into the new system. This will also be the common layer to bring customers, partners/agents, and insurer together. Mr. Knowitall is convinced that SOA would be their design philosophy right from defining the business process services to integration services with various underlying systems.
3) Rules Driven Approach: traditionally insurance products are driven by multiple rules and decision points working for each insurance product. Typically these policies are hardcode in existing claims systems, hence makes the system difficult and time consuming when a change occurs. Mr. Knowitall knows that its time for moving these rules and policies from application to a central repository which is modifiable by the claims business analysts as need occurs. For e.g. if maximum duration for claim turnaround needs to be modified the same can be done by a business user on a Business Rules Engine rather than going to the code each time.
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[The Process Way ]
