Filed Under:Carrier Innovations, Information Security

BPM Helps Carriers Fix Leaky Pipes

While NASA may have popularized "Faster, Better, Cheaper," the philosophy behind this mantra has driven the reengineering efforts of many industries since at least the beginning of the Industrial Age.

The insurance sector is no exception, with its never-ending quest for ways to get business done more efficiently and at lower cost, while still maintaining high quality. Technology has responded: business process management (BPM) has developed into a systematic approach to plan, design, model, execute, and manage processes across the enterprise. Core insurance systems have evolved from basic record-keeping platforms to full-function platforms that incorporate embedded workflow functionality.

Jirgal says CNA's reengineering strategy is to identify a handful of core, end-to-end processes that add value to CNA's producers and policyholders, such as product development, claims processing, and submission processing. Each of those core processes involves subprocesses, such as the underwriting, rating, and issuance components of submission processing. Then, CNA looks for ways to optimize the end-to-end process within each of those, never losing sight of the overarching strategy.

"CNA believes in making process changes in advance of technology," Jirgal says. That strategy is playing out at CNA in several concurrent projects, including a strategic claims initiative to modernize and consolidate its core claims platforms.

"Most claims are paid correctly--at least 99 percent. So if we just replicate the process that people do when they're handling a claim with technology, there's a 99 percent chance we'll be right. However, if we design a new process, there is a higher chance we will get it wrong," he claims. "In other words, if it ain't broke, don't fix it, just make it faster."

BCBS North Carolina's goal was to reduce the number of claim "repairs" that required manual intervention from 20 percent to five percent. Repairs are needed to correct duplicate billing, process coordination of benefits, and handling errors and exceptional situations. "We identified a tremendous potential savings," Dunlap says. "We had 400 people paying claims, and at $50k a person, that is $20 million in salaries alone, not counting overhead. We estimated we could save $15 million by achieving a 95 percent rate of claims automation."

BPM systems and standalone modeling platforms aren't the only tools insurers can use in the decision to change, keep, or eliminate processes. For many insurers, process design involves getting a bunch of smart people in the room together with a whiteboard. "The whiteboard approach is not bad, depending on the complexity of the workflow and the level of improvement you're looking for," Light says.

In process modeling, Travers sees two common mistakes: over-documentation of existing processes, and addressing the symptom, rather than the cause, of business problems.

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