What specific areas do you see the most weaknesses amonginsurance carriers where new technology could offer the mosthelp?

Gary Kirkham, principal, insurance industry solutions,Pegasystems: The efficiency and effectiveness of aninsurer’s claims experience can be a competitive differentiator ora competitive liability. A difficult or negative claimsexperience can be detrimental to an insurer’s bottom line andbrand—often to the direct benefit of the insurer’scompetition.

(To read what other vendors have to say on these issues, checkout Part 1 of the series, Part 2, Part3 or Part 4.)

In the ultracompetitive insurance marketplace, insurers thatservice customers effectively—expediting claims processes to reachan equitable settlement quickly—reap the benefits of a loyal andgrowing customer base.

In insurance and many other industries alike, it’s always easierto grow by retaining satisfied customers. On the other hand,as many insurers will attest, it’s much more expensive (and takeslonger) to acquire a new customer.

New technology spawns deeper benefits than attacking obstaclespurely with point solutions. The challenge for most insurersis to maintain an exceptional claimant experience while deliveringoptimal claims outcomes with minimal impact to the bottomline. This is no small feat for organizations that must remainever vigilant to mitigate leakage, reduce fraudulent activity andmaintain regulatory compliance.

Paul McLaughlin, president, APP Technologies:The lack of true systems integration is still a major issue forcarriers. Front-office systems and customer-facing systems don’tcommunicate well with back-office systems and, even in the backoffice, there are often possible synergies between informationsystems (e.g. claims into underwriting, customer relations toclaims, underwriting to billing) that are not taken advantageof.

Technology vendors are well aware of these problems and havegiven considerable thought to how systems can be integrated.Well-built systems are built from the core out to leveragetechnology standards and have the capability to integrate withother systems a carrier might already have in place.

We hear about systems that “can’t talk” with others all thetime. This kind of restriction is probably one of the mostcompelling reasons to invest in new technology. The more acarrier can grease the rails of communication between theirsystems, the better their operation will perform overall.

Are insurance carriers making theright steps in the area of project management to ensure they aretaking the right steps from selection to implementation ofsoftware? What do they need to do better?

McLaughlin: Relationship is everything, and amutual understanding of needs and limitations is critical to theselection and implementation process. The team or individualdesignated by a carrier to “solve the problem” often keeps vendorsat arm’s length, even after vendors have filled out detailedrequirement sheets and have completed demonstrations ordiscussions. The missing piece of the equation is most often thedevelopment of a close relationship with the vendors.

Vendors want to make an honest assessment together with theirprospective customers, whether they are carriers, TPAs, orself-insured companies. This process can be facilitatedtremendously if potential customers help vendors to understand somekey aspects of their operation: What is their unique selling pointto their customers? What processes and technology are already inplace? Where are they confused or unsure?

If a vendor can learn more about the carrier’s culture, mission,and goals then the vendor doesn’t have to guess and the carrier canbe confident that they’re talking to a vendor that understandstheir business, not just their industry.

Having the vendor send knowledgeable staff on-site to meet thekey decision-makers but, most importantly, the end users is anotherimportant step in the process. Not in spite of, but preciselybecause of today’s high tech environment, understanding theconcerns of all the stakeholders is a key to success.

Kirkham: Project management techniques havehelped carriers deal more effectively with their large portfoliosof development and maintenance work. Project management hasalso facilitated better overall corporate governance.

While these concepts represent progress, continued traditionalthinking about applications and point solutions tends tosub-optimize current and future technology investments.

Newer technologies that allow applications to be rapidlyconfigured, rather than hard-coded, lead to more agilebusiness-oriented solutions. Insurance organizations thatdeploy these types of solutions tend to dominate their markets withcompetitive solutions that aren’t available “out of thebox.”

This results in solutions that are brought to market faster andhave a faster time to value, because the quicker an implementationgets off the ground, the quicker a project can start transformingthe business line that owns it.

These solutions support re-use of processes across regions andlines of business. They also allow carriers to wrap and renewlegacy investments, extending their life and lowering their totalcost of ownership. Finally, these configurable solutions areflexible and adaptable—ideal for changing markets and evolvingregulatory environments.

Do most insurance carriers look at youas a partner in the solution process or as a vendor?

Kirkham: We have become a trusted solutionprovider across the insurance domain, thanks to our ability toprovide more agility, empower business users, and drive new streamsof revenue so insurers can transform their business. Theseorganizations include several units of Farmers, Nationwide, andMass Mutual. Also, beyond the U.S., AEGON, ING and WesfarmersGeneral Insurance have seen success. In all cases, Pega hasworked closely with these organizations to create new value throughour Build for Change technology. Projects have been quicklyimplemented (90 days or less), paving the way to significantROI. In one instance, a new business process has beenstreamlined so significantly that what used to take 14 days is nowcompleted in 14 minutes.

Pega’s solutions have enabled several insurers to reach newmilestones in operational performance. One has achieved a 90percent reduction in the time required for training of new customerservice representatives (CSRs). In addition, one carrier hasattained a six percent increase in CSR quality assurance scores.Finally, in another case, average handling time for callers hasbeen reduced by 20 percent. This is the equivalent of adding 20percent capacity for zero cost.

McLaughlin: Whether or not we ultimately aresuccessful in doing business with a customer is a result of howwell our relationship is nurtured. Because our systems become anintegral part of our customers’ operations, we are keenly aware ofhow important a successful solution is.

Software demonstrations are important for showcasingcapabilities, but there is a great deal more to consider about theparticular needs of each customer. We take the time to learn abouteach prospective customer. We ask a lot of questions, try not tomake any assumptions, and listen carefully to their concerns. Wedon’t want to simply pave over dirt roads, if those roads are notheaded in the right direction, and we welcome the opportunity touse our knowledge and experience to develop a comprehensivesolution, in which our systems are the key component. That beingsaid, some customers prefer a vendor to stay a vendor.

We view each and every prospective customer as a possiblelifetime partner so we’re very conscientious about what we say andhow we say it. By bringing honesty, curiosity, and effort to thediscussion, we are able to develop the partnership. This process isalways faster when those efforts are reciprocated.