Business is changing and insurers must respond. Industrychanges–such as new regulations targeted at risk management,commissions, and reporting; the demand for process transparencyamong regulators and customers; the extended expansion of theecosystems, including new relationships for outsourcing; and acontinual shift to using the Internet to sell to and servicepolicyholders–is driving the creation of new strategies amongproperty/casualty (P&C) and life insurers. These strategiesthat are targeted at compliance and differentiation arechallenging, however, due to internal organizational stressors,including aging employees and knowledge management needs; aging andinflexible legacy systems; decentralized business rules, content,and data; and manual and paper-based processes.

Insurers must overcome these challenges to remain competitive inthe next five to 10 years. Improved management of core processes,data, and content will be a critical success factor among leadinginsurers by 2012.

Rising Interest for ECM As Part of a BPM

Business process management (BPM) has been gaining attentionamong P&C and life insurers alike during the past two to threeyears. Gartner defines BPM as a structured approach employingmethods, policies, metrics, and management practices. BPM is amethodology and discipline that is being adopted by Tier I and IIinsurers to help them optimize their business processes through acombination of enhanced workflow, automated processes, rulesmanagement, imaging, and document and content management.

It is crucial companies use new tools and technologies toimprove, automate, enable, streamline, and measure their corebusiness processes–such as new business and policy issuance, claimshandling, billing and payment processing, and underwriting. Throughthe use of BPM solutions, insurers can support activities such asskills-based routing in the call center, exception-basedunderwriting, claims processing, online event triggers to helpavoid channel conflict and inform agents of changes their customersmake online, and generation of billing and paymentnotifications.

While many companies think "workflow and imaging" when theythink BPM, enterprise content management (ECM) is an importantcomponent of a BPM foundation. The ability to store, manage,archive, and retrieve content is an essential part of running anoperationally sound business.

The Role and Need for ECM in Insurance

One of the hurdles of the insurance industry is the ongoingreliance on paper-based communication and documentation. Companiescontinue to generate paper for policy issuance and receive paperfrom external partners and distributors they need to image andarchive. While it will be difficult to push partners to new andelectronic forms of transaction to reduce inbound paper, it isimperative insurers craft new strategies to reduce the amount ofinternal paper used and retained. Benefits achievable are reducedpaper distribution costs, empowering of customers and distributors,reduced paper storage costs, faster information retrieval, andgreater management reporting and tracking capability. Continuedreliance on paper-based processing and storage also will putinsurers at risk of being labeled as environmentally unfriendly andseen as going against global policies to protect the environment.Brands could be injured and customers lost as a result.

The problem, however, goes beyond insufficient management ofpaper and documents. Insurers must tackle new forms of content andhave effective strategies targeted at ECM to be able to meet newbusiness objectives. Content management ultimately has three mainroles in the insurance industry:

o Supporting the "smart" enterprise where insurers can deliverappropriate and timely content to the enterprise in real time thatis consistent and accurate. This will enable effective and accurate"decisioning" in areas such as claims processing, customer service,and underwriting.

o Supporting marketing and product sales where insurers candeliver marketing collateral to customers and distributorsconsistently and manage all corporate marketing and salesinformation centrally. This will enable increased revenuegeneration, improved customer satisfaction, enhanced distributorloyalty, reduced marketing costs, and improved marketing returnrates.

o Supporting policy and claims functions where all customercorrespondence, customer service, and claims and regulatoryreporting documents and content are centrally managed andaccessible. This will enable improved customer satisfaction, claimsprocessing accuracy and outcomes, faster customer serviceprocesses, organizational efficiency, regulatory compliance, andoperational cost reduction.

The ability to have easily accessible content as needed willhelp companies support today's and tomorrow's business objectives.As a result, insurers already are starting to adopt ECM. Forexample, a Gartner study conducted in 2006 with U.S.-based P&Cinsurers found 53 percent of P&C companies to be investing inECM in 2007. While adoption is projected to be less among lifeinsurers, companies in both lines of business are expected toincrease their investment in ECM in the next year.

ECM has numerous application areas in which it can be deployed,such as:

o Claims handling, including access to all electronic content(such as voice files from call centers, digital photos of pastdamage, and e-mails coming in from Web sites).

o Customer correspondence.

o Underwriting for personal and commercial lines.

o Web site and portal use for delivering information and sharingcontent with users, including distributors and policyholders.

o Regulatory reporting and auditability.

o Marketing initiatives and campaign management.

o Fraud detection and support of fraud investigation.

o Product development, including competitive intelligence suchas feedback from sales on lost prospects and customersatisfaction.

o Product approval processes and regulatory reporting for newproducts.

ECM is a powerful tool to be used among P&C and lifeinsurers. The value across the enterprise is obvious; however,companies often are challenged by line-of-business buying decisionsand IT procurement. It is highly possible large insurers alreadyhave invested in content management within their organization;however, it is siloed and not enterprisewide. Just as with other ITsystems, redundancy in content management systems drivesinefficient processing, duplicate IT costs, and increasedintegration costs. While we are starting to see some insurers buildbusiness cases on consolidating their content management systems,redundancy still is expected among most companies in the next fewyears.

ECM in Action: Role in Multichannel Integration

One strategy that is becoming popular among leading insurers inboth P&C and life insurance lines of business is multichannelintegration (MCI). It is based on improving customer experienceacross all channels to provide consistent interactions that matchcustomer needs. To do this, insurers must have heightened customerintelligence to determine transactional needs and content to bedelivered to each channel; an integrated channel platform wherecustomer information, content, and documents are centralized forall channels; and the use of a BPM solution to manage cross-channelworkflow, processes, and rules. ECM is an important element offulfilling MCI.

Today's channel architecture is problematic for insurers, andthis problem will only escalate as more channels are added.Companies are finding today's channel architecture is unable tosupport cross-channel needs. The problems caused by single-channelarchitectures include siloed channel structure; high costs due totechnology duplication, process inconsistencies, customerdissatisfaction due to bad experiences and inconsistent process andcontent; and an inability to support emerging businessstrategies.

Each channel has been built out independently and has its ownstrategy, process, metrics for performance, and organizationalstructure, with the business manager typically measured based onthat channel's profitability, sales revenue, or utilization.

Channel boundaries must be broken. Insurers must have morecollaborative channels that work toward the common goal of customerexperience improvements and are measured on their role in a largerstrategy rather than an independent entity. The new enterprisechannel management structure will enable shared information andsystems along with standardized processes across all channels.

Insurers must start making the investment today to build anintegrated channel architecture. The lack of channel integrationwill be detrimental to insurers, leading to agent dissatisfaction,customer attrition, and brand injury. It is imperative insurersstart to address this issue and develop a new approach to sales andservice delivery.

To support MCI, new investments are being made to establish acommon transactional process, centralize all content and documentsacross the channels, and build a new channel architecture andinfrastructure. This will create a new mid-office platform toleverage past IT investments and support channel requirements. ECMwill be positioned in the mid-office to enable businesstransformation, reduce processing costs, improve knowledge acrossthe organization, improve customers' experiences regardless ofchannel, and control IT costs.

Next Steps

ECM will play a strong role in market evolution and is becomingan important tool among insurers. Managing enterprise content forall functional areas and lines of business helps companies supportstrategies of efficiency and differentiation. Benefits arenumerous, including reducing regulatory risks, improving decisionaccuracy, and assisting in revenue generation. Therefore, insurersmust stop investing in channel-centric strategies and focus onintegrating all the channels into a common architecture and under acommon strategy targeted at improving customer experiences.

For success in insurance, it is imperative to have control,flexibility, agility, and be customer-centric. New processes andthe use of technology are needed to support these requirements,including BPM and ECM. Choose targeted objectives for the ECMprogram, and map out ways in which individual and team productivitycan be tied to the overall organizational goals.

It is imperative insurers start to:

o Identify the risks of ineffective and siloed document andcontent management.

o Understand and document the content needs of core businessprocesses, and ensure content is available to employees for theirjob roles.

o Consolidate all content management systems to eliminateredundancy, reduce IT costs, and leverage content across theenterprise.

o Consider enterprise content management requirements to ensureline-of-business or departmental projects integrate or will supportenterprise requirements of the future.

o Understand how ECM empowers BPM projects.

Effective use of ECM will be a critical success factor amongP&C and life insurers. ECM increasingly will become a componentof the mid-office foundation and an enabler of business projectssuch as exception-based underwriting, improved claims processing,and improved compliance. Investment in ECM projects, including newsolution acquisition and solution consolidation, will increasestarting in 2008 among Tier I and II insurers as a result.

Kimberly Harris-Ferrante is a research vice president atGartner, Inc., where she is responsible for monitoring the businessand technology trends within the global property/casualty and lifeinsurance industries. She can be reached [email protected].

The content of "Inside Track" is the responsibility of eachcolumn's author. The views and opinions are those of the author anddo not necessarily represent those of Tech Decisions.