insurance industry processes

White

Automate aInsurance

Proc

This whitepaper focuses onsolution that can help the

operative costs and improvcarriers, brokers, reinsurers

avail opportunitie

Adeptia, Inc. 20 North Wacker Drive, Suite 2000 Chicago, IL 60606 Phone: (312) 442-4420

Paper nd Optimize Industry

esses “Adeptia BPM for Insurance” insurance industry reduce e profit margins by enabling

to meet major challenges and s that remain latent

White Paper

Automate and Optimize Insurance Industry Processes 2

Copyright © 2005 Adeptia, Inc. All rights reserved. Trademarks The Adeptia logo and Manage, Automate and Optimize Business Processes are trademarks of Adeptia, Inc. Statement of Conditions Adeptia, Inc. provides this publication "as is" without warranty of any kind, either express or implied. In no event shall Adeptia be liable for any loss of profits, loss of business, loss of use or data, interruption of business, or for indirect, special, punitive, incidental, or consequential damages of any kind. No part of this work covered by copyright herein may be reproduced in any form or by any means—graphic, electronic or mechanical—including photocopying, recording, taping, or storage in an information retrieval system, without prior written permission of the copyright owner. Adeptia, Inc. may revise this publication from time to time without any notice.

White Paper


Table of Contents

Overview 4

Challenges and Opportunities 4

Adeptia BPM for Insurance Solution 5 Book of Business Transfer 6

Solution Highlights 7 Process Flow Template 8

Agency - Carrier Interface 9 Solution Highlights 9

Claims Management 10 Solution Highlights 10 Process Flow Template 11

Benefits to the Insurance Industry 12

Adeptia BPM for Insurance Architecture Illustration 13

Adeptia Features and Functionality 14

Summary 15

About Adeptia, Inc. 16

White Paper


Overview Before change could come completely to this heavily regulated and most paper- and process-bound industry, there are challenges to be addressed and opportunities to be availed. 9/11 has posed the biggest challenge to the core business of insurance industry therefore existing strategies, offerings and processes are being reviewed carefully. As a result of terrorism and fraudulent activities, industry has been imposed with many federal regulations. Irrespective of the fact that these regulations would benefit both insurers and customers, industry is going through tough time in implementing them. Commoditization of insurance is another disguised opportunity for insurers; however it challenges their efficiency and agility to think innovatively and take proactive actions to provide customers with need based and easy to buy solutions.

On one hand is a need to minimize exposure to risk, save claims, underwriting and other administrative costs. On the other hand is the constant push to provide better service and customized offerings. (Although claims recovery is the ultimate truth that validates the dependability of insurers, claims are yet far away from being the single point of judgment.)

The industry needs tools that could help save cost yet improve quality of offerings and service. Insurers need to strike a balance while implementing the cost saving and quality service strategies to make best use of the dual faced situation.

Challenges and Opportunities The following are most dreaded factors for the insurance industry. State and federal regulations Some state and federal regulations present a competitive disadvantage for insurance carriers competing with other financial service institutions. For example, compliance with regulations like Financial Modernization Act of 1999 (Gramm-Leach-Bliley) and Health Insurance Portability and Accountability Act of 1996 (HIPAA), USA Patriot Act of 2001, Terrorism Risk Insurance Act of 2002 and Sarbanes-Oxley Act of 2002 have all added to the costs of doing business. Commoditization of insurance Policies are becoming more packagable, particularly in the low value, high volume sector. As a consequence of this commoditization, reducing costs of managing policies and claims has risen as a key issue. Keeping expense ratios in control is all important for maintaining profitability. Compete with non-insurance verticals The industry is experiencing increased competition from other industry verticals like banking and manufacturing. Now many banks leverage their

The insurance industry is looking for solutions that

convert challenges into opportunities and provide them with a competitive

advantage

As there are no physical goods to deliver, customer

service and product offerings remain the key differentiator for

customers to evaluate their

insurers

White Paper


client base to sell packages of various financial products, including insurance products. Mergers and acquisitions As a result of mergers and acquisitions in 1990’s many companies have more than one system for any given function such as claims processing systems, multiple billing systems, and multiple user interfaces. These systems are not compatible; therefore require dedicated human staff to manage information exchange, data consistency and integrity. Expanded scope of risk management Risk management after 9/11 has increased its scope. Now it also includes operational risk in addition to investment risk. It is important that companies balance their risk portfolio to withstand political mishaps, terrorism etc. Downfall in equity market Volatility in the equity market has risked insurers’ reliance on the returns from their investment portfolios, because the low interest earning is no more sufficient to balance underwriting losses.

Adeptia BPM for Insurance Solution To achieve business success by improving operational efficiencies, insurers need to tighten up and streamline both channel partner relationships and back office operations. The brokers and channel partners are the interface between the insurance companies and customers. They play a vital role in helping insurers sustain existing customers as well as attract new customers through better and diverse services. So it is imperative that insurers are well connected with brokers / channels partners as well as meet their needs. Improvement in back office operations can happen if policy production and billing are automated; overall claims expenses are reduced, and claims settlement is made faster. To be successful at doing this, insurers need to nurture both parts of the solution equation, that is, creation of solution-oriented strategy and deployment of solution-based scalable technology that enables meeting of strategic goals laid out as part of their enterprise strategy. In the current scenario however many insurers either rely on either manual methods or custom coded solutions that lack strategic approach to address their business needs. Manual execution of their crucial operations leads to many errors that occur in documents passed from insurers to brokers or ceding companies to reinsurers, which results in lengthy settlement cycles. While custom coded interfaces are developed to meet a certain set of needs only. They are not scalable so cannot meet changing needs and require recurring IT investment to keep them in use. Adeptia BPM for Insurance solution has been developed to offer strategic value to insurance companies through systematic design and deployment of BPM and integration technologies. Adeptia BPM for Insurance can

In this era of

technology-driven businesses, success of a business also

depends on its enterprise IT

strategies

White Paper

address volatile situations, and it is a scalable and reusable solution. It helps insurers meet the challenge of operational costs saving while enabling them to exploit business expansion opportunities. Adeptia BPM for Insurance includes solutions for the following business processes:

• Book of Business Transfer • Agency – Carrier Interface • Claims Management

Book of Business Transfer Due to volume and diversity of policies records, the process to roll out a book of business is very time consuming and costly. It usually involves extensive re-keying of records, which is error prone therefore compromises data integrity. Furthermore, carriers, agents and brokers deal with external data in different formats that do not have the same data elements as required by their internal systems. Adeptia’s book of business transfer solution standardizes the data such that it can be reused across multiple systems and departments. The data is directly integrated into the insurance carrier, agent or broker's back-end systems. The Adeptia solution manages exceptions that occur while

cd

Adeptia solution reduces the

administration ost by 50% while ecreasing time toroll a book of business by as much as 75%


processing policies records. It also automates regular updates of those records. The solution has the ability to transfer and repair the data in real-time.

Book of Business transfer: Records

are replicated from multiple carrier

systems and transferred to

external systems (e.g. reinsurers’)

based on business rules

White Paper


Solution Highlights

• Helps carriers transfer millions of policies records in a matter of days

• Provides a single and complete view of customer to better meet

her requirements and identify new business opportunities

• Helps carriers and reinsurers diversify their businesses


Process Flow Template

Note: This is a generic process template that will be customized to meet specific requirements of each customer situation.

Receipt of Records Validation of Records and Format, and Notification

Conversion of Records Upload of Records, and Notification

- Receive policy data from external source

- Verify the data format - Notify source to take corrective action - Check policy information to meet business rules - Notify users to take corrective action

- Apply mapping to convert data into target format

- Send properly formatted data in to target application - Notify users to take corrective action - Send acknowledgements to source - Send failure notification to source, if applicable


Agency - Carrier Interface Insurance companies that manage independent agent and partner channels face growing competition for mind share with the market. Adeptia BPM for Insurance allows insurance carriers the agility to take data flows and quickly give agents the information for approvals and add on sales. This solution from Adeptia functions as an interface between independent agents and insurers. It ensures that carriers and agents quickly roll out real-time transactions. These transactions include inquiry, first notice of loss and request for quote, which can be provided seamlessly to agency systems. With Agency - Carrier Interface, front desk can track and manage insurance brokers / agents. Insurers can adopt new channels that help them package various insurance options and reach to more customers. Using Adeptia, they can optimize relationships with brokers, channel partners and provides flexibility to set channel specific rules for effective broker management, hence streamline and speed up key agency processes.

Integrated insurance supply chain: customers, agents / partners and insurers

Solution Highlights • Helps engage new brokers and introduce new channels

• Ensures that partners and channels view the insurer as a preferred solutions provider

• Empowers brokers and channel partners to perform better

• Helps brokers/ channel partners enhance operational efficiency

• Helps defines KPIs and regular evaluation parameters

• Helps monitor performance across channel hierarchies, geographic regions and divisions

Adeptia Carrier Interface solution makes it easy for

brokers to do business with

their carrier and so can increase

revenue by up to 10%


Claims Management

Claims processing is perceived as an effective tool for achieving customer satisfaction because claim recovery is the ultimate criterion for customers to evaluate the reliability of their insurers. Adeptia solution supports interaction and collaboration among all participants of the claims value chain across the entire life span of a claim i.e. from first notice of loss to settlement. It has a multi-line claims tracking and management system that helps control losses, facilitates effective risk management and actuarial analysis by capturing extensive information for all claims functions.

Solution Highlights • Business managers can define several processing rules depending on

the availability of resources, skill-sets, a particular claims process, different product types, and different service level to mention a few scenarios

• A complete customer view is provided through assimilating all related documents/files in a structured format

• Automatic distribution, allocation and prioritization of work for each user

• Robustly integrated policy administration, finance, expert and bureau systems

Adeptia Claims Management

solution significantly

reduces cost of automating

claims processes


Process Flow Template

Note: This is a generic process template that will be customized to meet specific requirements of each customer situation.

Notification Process Validation Process Negotiation Process Settlement Process

-Allows first notification through a variety of access devices like fax, email and phone -Collects and compiles customer details from disparate customer information systems -Validates the information, generates lists of documents required and acknowledgement on the documents received

-Verifies and validates the claim against business rules; no scope for human errors. Therefore easy to identify claims submitted against policies that have expired, claims submitted before the due date etc -The process engine maintains a complete audit trail of every activity related to a policy

-Manages exceptions e.g. if a claim application is rejected, a letter of denial is also automatically issued -If a claim recovery case is not clear, the system sends notification to authorities for manual adjudication of the claim, and allocates a ‘task’ to the adjudicator group -An audit trail of all activities is recorded

-Sends alerts to the finance system to release payments as per the payment schedule generated during the negotiation process -Generates letter on “Explanation of Benefits” along with each payment. When the last claim installment is made, the system automatically closes the claim


Benefits to the Insurance Industry Benefits of Adeptia solution start from operational efficiency and extend to profitability of an insurance organization. While these benefits are common across all BPM based solutions, Adeptia provides more measurable value over custom coded solutions that require recurring IT investment.

Efficiency and Productivity

• Operational efficiency and agility: Adeptia solution

helps reduce dependency on humans for time bound tasks. It ensures that tasks are executed rapidly with more accuracy, and errors leading to duplication of efforts are eliminated.

• Better human resource management: Key day-to-

day functions are automated; therefore, human resources can be allocated other crucial tasks. Organizations do not need to hire new resources to manage ad-hoc or seasonal tasks.

• Effective cost management: Since tasks are executed

quickly; without errors, person hours and other operations overheads are reduced significantly. The saved cost can be invested in managing other priority tasks that take a back seat due to financial constraints.

Business Expansion • Easy to manage commoditized insurance: Integrated

organizations, channel partners, brokers can create customized offerings with much ease, and reach to their customers much early. Since all the required data can be accessed with a single click, need for personal meeting is reduced to minimum.

• Better capacity to manage diverse insurance

offerings: It becomes easy for insurers to tie up with third parties and expand the insurance packages by incorporating policies that help cover a variety of risks for customers. Automated operations can handle voluminous data with much ease as opposed to manual processing that has capacity constraint.

Deploy portfolio faster

Improve productivity of IT staff and reduce costs

Well connected groups: carrier,

brokers, partners and customers


Customer Satisfaction and Profitability

• Better customer service: Customer can apply for services through web; she can check her records online; request changes online. Customer receives responses quickly and has the flexibility to buy services that suit her needs completely.

• Improved profit margins: Improved operations save

cost. Diverse and agile business helps sustain existing customers and attract new customers easily. Together these factors enhance profitability of insurers.

Adeptia BPM for Insurance Architecture Illustration Three layers of Adeptia BPM for Insurance architecture enable collaboration among users, their business objective and the tools that help meet the objective. The top most layer shows that users interact through a graphical user interface to create and run business process flows. The second layer includes a configuration of the process flows. The third layer, with the help of most suitable technologies embedded in the solution, makes the processes live.

Improve profit margins


Adeptia Features and Functionality

Functionality Business Process Management Process Designer Allows designing of graphical processes using BPM notations. These processes include both vertical and horizontal processes that are required for automated implementation of book of business transfer, agency – carrier interface and claims processing. Process Designer’s ease of use allows business users to create complex designs without any help from IT department.

Workflow Manager Workflow Manager allows IT department to quickly create and attach ‘activities’ to process designs or business rules in order to align them with integration logic. The Workflow Manager handles exceptions automatically, and sends notification to decision makers for further actions. Tasks are not considered ‘complete’ until the Workflow Manager is ‘updated’ on the execution of activities and their respective statuses.

Process Engine Process Engine is a robust state machine that executes workflow tasks. Its support for decision nodes, sub-processes, exception handling, forks and joins, loops and long-running transactions allows execution of process flows of almost any complexity. It also supports failure recovery and clustering for reliability and high performance.

Business Resources Integration Web Services Comprehensive support for Web Services includes ability to utilize any Web Service as a task in a process flow. This includes support for introspection of UDDI/WSDL and both RPC and message-style invocation. Process flows can be triggered by and even exposed as Web Services by using the Publish-WS capability of the product. Includes support for WS-Security. Data Transformation Powerful data integration capability includes support for complex data formats and transformation. Data transformation engine allows any-to-any mapping between different data formats. Complex data processing functions are included such as string, math, and conditional operations as well as DB and XML file look-up. Data can be aggregated from multiple sources. Content can also be distributed to multiple destinations automatically. Supported data formats: • XML-DTD, XSD, Hierarchical, attributes, enumerated values • ASCII Text/Flat, Fixed-length, EDI, AL3, Excel files • SQL compliant relational databases such as Oracle, Sybase,

DB2, Informix, MySQL etc. Data Transport Rich, secure, two-way data transport capability gives flexibility to specify different source and destination systems. Supported transport protocols: • HTTP/S, FTP, SMTP/POP3, JMS,JCA, ODBC/JDBC, SOAP • Adapters: Legacy data stores, SAP, JDE and Peoplesoft etc.

Features • Complete process

automation eliminates the need for manual activities and human dependency

• Horizontal and vertical

workflow capabilities engage multiple delivery mechanisms like print, email, electronic archival and retrieval to execute macro as well as micro business tasks

• EAI, ETL and Web Services

based integration of resources connects enterprise systems, data and human resources for better and agile communication

• Globally acknowledged

templates are used for documentation based on ACORD industry standard forms

• ACORD XML/EDI-AL3 based

standards are used for standardizing enterprise wide data interchange

• Web services enable the

insurance carrier to seamlessly collect information from disparate internal and external sources and allow customers to communicate with various departments through a few clicks

• Carriers and customers can

track claims status through Web or email/mobile phone alerts


Summary Adeptia BPM for Insurance solution has been developed to address the most challenging and common needs of carriers, brokers, channel partners, and reinsurers. Adeptia helps streamline and automate front office as well as back office processes that transform organizations at every level, thereby bringing about operational efficiency, customer satisfaction and profitability. The BPM for Insurance solution has been designed in a way that it can be deployed quickly and put to use after customer specific customizations. The compartmentalized architecture of the solution allows for rapid creation and addition of new business process templates to the business layer. For instance, underwriting process template can be quickly created using the User Interaction layer and configured to the business layer, and finally executed through the technology layer.


About Adeptia, Inc. Adeptia, an enterprise software company headquartered in Chicago, Illinois, provides business process integration technology to easily and quickly automate business processes across supply chains using industry-specific standards. Adeptia’s unique product combines business process management with business-to-business integration. Adeptia’s reusable and highly scalable technology has been deployed by Fortune 1000 companies. For more information, visit http://www.adeptia.com.

Adeptia Headquarters 20 North Wacker Drive, Suite 2000 Chicago, IL 60606 Phone: (312) 442-4420 Email: [email protected] Adeptia India R&D Centre A-757, Sector 19 Noida, U.P., 201 301 India Phone: +91 120 2548295 Email: [email protected]

http://www.adeptia.com/

insurance industry processes

Documents