When purchasing a new home, you want to ensure that the builder is executing your vision and delivering the highest value. Given that a home purchase is one of the larger investments you’ll make, selecting a builder who has a reputation for quality and customer satisfaction is key.
Finding such a builder can be a challenge. "Model homes" offer a glimpse into a builder’s vision and capabilities, serving as tangible examples of what you might expect. However, glossy exteriors, upgraded features, and carefully selected furnishings distract attention from structural and foundational elements that are crucial to the home’s long-term durability. Models offer little insight into the quality of plumbing or wiring, the strength of the foundation, or the durability of the roof. Recommendations from friends who have experience with the builder are invaluable, but a thorough assessment might also include an inspection by a qualified third party to provide an unbiased and informed view. You could also speak with others who have purchased from this builder and have been living in their homes for some time. Finally, consider the builder’s sub-contractors, including their reputation and commitment to this builder.
Replace this “build a home” scenario with “buy a claim system” and the concerns still hold true. In both cases, you’re making an investment critical to meeting your needs not only today but also for years to come. As with homebuilders and homes, selecting the right vendor and solution can be challenging.
Beyond the Façade
You expect your home to be constructed on a solid foundation, using a well-conceived design and the best in modern materials and techniques. The same is true for your claims system. However, just as a model home is focused on cosmetic details, vendor software demos may provide valuable information about usability and key features but do not typically delve into architectural design. To uncover this detail, look beyond the software demo, and instead focus on aspects critical to ensuring that your investment meets today’s needs as well as tomorrow’s.
There are a number of factors that should be considered before investing in a claims system:
Technology foundation. Even if the vendor effectively leverages advances in technology and modern architecture design concepts, are there elements of legacy technology still underpinning the system? If so, then you may be considering a system that could quickly become legacy technology.
Flexibility. While modern claims systems provide core claim lifecycle processing capabilities, the "best in class" solutions enable responsiveness to a company’s specific current and changing requirements, policies, and philosophy. The claims system should be "purpose-built" for property and casualty (P&C) insurance and designed with a flexible rules-driven workflow to reduce manual effort, focus staff on high-value tasks, and build operational best practices.
Unfortunately, the need for flexibility (for example, adding new screens) often exceeds the limited configurability of some modern systems. To determine whether a system has been designed to support changing needs, ask how much autonomy you will have when making significant system changes. You don’t want to have to go back to the "builder" and wait in line for critical changes. Ensure that your vendor has architected the claims system to offer the flexibility and autonomy needed to execute your own system changes. Some questions to ponder might be:
- Can screens be modified or added?
- Can you independently create new financial calculations?
- How would a whole new line of business be accommodated?
- Can business administrators easily address the range of operational changes and manage rule changes?
- Is the full range of configuration feasible without changing the source code?
- How difficult is the process of tailoring the system? What skills are required, and are they readily available within the organization or marketplace?
Ease of integration, collaboration, and access. Just as wiring for electricity, Internet, cable, and phone is crucial in a home, the ability to readily connect to internal and external systems, customers, and other third parties via portals is critical to a claims organization. These needs change over time—new vendors and systems, increased "self-service" via portals, and so on. Adapting to changing needs requires a vendor who understands the complexities of integrating with a variety of systems, and who has a track record doing so. Determine if the vendor has the ability to adapt to your needs with a few simple questions:
- Can third-party solutions be readily integrated within the claims process and replaced as newer options become available?
- Can you add new integrations or amend existing ones after implementation?
- How is external user access supported and what types of access are feasible?
- Does the system support real-time interactions?
- What portion of the application’s data model is accessible for integration?
Upgradability. Lack of upgradability has been a fairly common and significant problem for insurers. Claims technology vendors typically deliver platform upgrades over time. However if you have configured the system, then can it still be upgraded? This knowledge is vital to protecting your investment and avoiding boxing yourself into a corner.
- Have there been platform updates and new releases?
- What is the track record for enabling upgrades when the base system has been configured?
- Have customers successfully upgraded the system without vendor support?
- Are your configurations segregated or do some affect base product resources or source code?
Actionable information. A claims system should be designed to provide real-time, actionable information that supports timely decision-making and targeted management intervention where appropriate.
- How does the system support the logic and automation that allows embedding the best practices of your most experienced claims handlers?
- How does the system allow you to leverage operational information in real-time to support business performance, both at a claim level and across the claims department?
- How does the platform empower adjusters with information on how a claim is progressing relative to key metrics?
Vendor track record. Whether you are building a house or buying enterprise software, you customarily obtain a quote before signing the contract. That quote can contain significant “wiggle room” for changes made to the project scope. Assessing the vendor’s track record of adhering to pricing and implementation time frames is a necessary step in ensuring the right decision for your organization.
Unfortunately, in the insurance software industry there are more failed projects than vendors care to admit. Determine if the vendor’s customer base is growing or declining, and if customers are happy with both the system and vendor. Ask to see a customer list and pick those you’d like to talk to rather than those hand-picked by the vendor. Attend a user conference and have “hallway” conversations with customers.
Engage industry analysts much like you would engage a building inspector for an impartial opinion. Analysts can provide insight into the vendor’s credibility and integrity, and the strength of the claim system. Determine which of sub-contractors—or in claim system terms, which of the major systems integrators—have partnered with the vendor, or have a practice dedicated to that vendor’s solution. Start by asking a few questions that might give you a better picture of the vendor’s reputation:
- What is the vendor’s track record for final pricing versus proposed?
- Where pricing came in higher, what were the reasons for the discrepancy?
- What is the vendor’s reputation and credibility in the industry (for instance, in meeting deliverables, implementation success, and so on)?
- Is the vendor’s customer base growing or shrinking?
- How many customers have left the vendor? Why?
- How active is the user group?
- Have system integrators created centers of excellence around the system?
Just like buying a home, investing in a claims system is a major financial decision. Making the right choice requires looking beyond the showy bells and whistles, and digging deep into capabilities. Asking tough questions is a vital step to ensuring that you choose a vendor partner and a claims solution architected to scale with your business and to keep pace with changing needs.