Effectively managing claims has historically proved to be acomplex task, to put it mildly. With so many steps and variationsin each process, it is no wonder that insurers struggle toconsistently improve claims operations. Because total cost ofindemnity represents a significant portion of an insurer's costs,reducing the expense of claims processing is imperative for anyinsurer. However, cost efficiencies cannot come at the expense of apolicyholder's service needs and right to receive a fair andequitable settlement for a valid loss. Given that the claimsexperience is a primary driver of policyholder satisfaction andloyalty, the need to deliver a high-quality experience is equallyas important as cutting costs.

Insurers pursuing opportunities to transform and optimize claimsfunctions frequently consider packaged applications. All too oftenthis technology-driven approach ignores the business outcomes aninsurer is trying to achieve and fails to consider the people,process, and integration components needed to enable holisticimprovement. In addition, packaged applications rarely offer theagility needed to support claims operations and processes thatundergo frequent change, forcing insurers to adapt their businessto the way the systeem works. The result is isolated and brokenprocesses beset with cumbersome manual handoffs and work-aroundsthat only increase costs and can lead to policyholderdissatisfaction.

BPM Benefits

Advanced business process management (BPM) technology has provento be a far more effective solution for enhancing claims operations thaninflexible packaged applications because it delivers the strategiccapabilities insurers need to enable an optimized claims-processingenvironment. Traditional packaged claims solutions are not helpinginsurers achieve their strategic business objectives. Whether thegoal is to lower claims costs, improve service, or both, insurersneed more than inflexible packaged applications if they are tosuccessfully institutionalize and improve the claims practices thatdrive differentiation in their markets.

So how does an insurer strike a cost-effective balance betweenclaims efficiency and policyholder service? Insurers can start by optimizing theirclaims value chain—as in the people, processes and resourcesrequired to achieve the optimal claim outcome—to improve theefficiency and effectiveness of claims operations. A key part ofwhether any given insurer is successful at this will be determinedby how strong a role BPM plays in the equation. With advanced BPM technology, insurers can unlockthe business value of the claims process to substantially improveproductivity, drive brand commitment, minimize risk and lossexposure, and improve the insurer's competitive position. BPMoffers a distinctly different approach to claims optimization as itdelivers the tools insurers need to achieve an optimized claimsprocessing environment that improves efficiency, drivespolicyholder satisfaction, and mitigates regulatory and financialrisks.

There are six key competitive advantages that insurers canleverage with BPM to transform and optimize claims management:

1. Use an intent-driven process to drive the optimalservice experience. With rules and process unified in onesolution, insurers can seamlessly integrate claims handlingpolicies and procedures into dynamic, intent-driven serviceprocesses that automatically match the needs of a claimant with theintent of the business during a claims interaction. The intelligentprocess automatically guides staff through the optimal process asthe interaction unfolds. This means that service staff no longerneed to worry about which system to use or step to take next, andcan instead focus on the high-touch activities that differentiatetheir service experience from the competition. By leveragingintent-led processes, insurers can anticipate what a claimant'sneeds may be and match those needs with the optimal claims orservice process. Imagine the power of being able to anticipate andrespond to a policyholder's needs before they even ask thequestion.

2. Drive outcomes with dynamic case management.Insurers can drive claims toward optimal outcomes using dynamic case management to gain a360-degree perspective that organizes and executes the optimalprocess for each claim. Most claims have multiple processes thatneed to be completed to resolve the overall case. The processes getdata from multiple systems, are carried out acrossdepartments—frequently in parallel or asynchronously—and oneprocess may impact the way another proceeds. Yet all of thiscomplexity must be effectively orchestrated and managed to ensurethe claim is progressing toward the right outcome with consistency,accuracy, and efficiency.

Case management provides insurers with a strategic platform thatorganizes and manages complex pieces of claim work across silos andcore systems. It enables insurers to orchestrate the multipleprocesses of a claim and allow the organization's goals, embodiedby the business rules, to drive the processing of the claim fromthe top level down to the most minor adjudication task. Unifiedpolicies and procedures further this capability by enabling a“channel agnostic” claim intake strategy and seamless handoffs tothe optimal claim resources. Business rules ensure thatadjudication steps, assignments, service level agreements (SLAs),and so forth are processed in the same manner and tracked at boththe claim and sub-task level. With an intelligent system managingthe process steps that need little or no human intervention,insurers can automate low-complexity claims or claim activities tobetter contain costs and achieve gains in efficiency andproductivity.

3. Maximize the impact of the claim valuechain. By combining rules and process with casemanagement, insurers can manage the orchestration of a complexclaims process across multiple systems, analytic tools, data storesor third-party services. This unique capability allows insurers tomarshal the right resource at the right time in pursuit of the bestcase claim outcome. Because BPM provides rules-driven processes,insurers no longer have to rely on adjusters to be the key driversof the claims process. Instead, automated case management can beeasily integrated with back-end systems, accessing and usingappropriate assets in real-time as part of the streamlined process.

4. Convert insight to action. Increasingly,insurers are driving improvements in service or operations resultsby incorporating business intelligence and analytics into theirclaims management processes. However, many insurers are justbeginning to scratch the surface and have yet to realize the fullpotential of this capability. In addition, while the insight thesetools provides is high value, many insurers lack the means to turnthat information into the next best action. Insurers need claimssolutions that can help them gain greater leverage from analyticsby making them actionable. With BPM solutions that embed analyticswithin the claims process, insurers can use business insight inreal time, such as fraud scores, settlement potential, churn risk,and more to drive the next best action in the claims process. Thisallows insurers to invoke the right processes to actively addressany claims issues and remediate potential risks.

5. Create a competitive advantage with strategic reuse. To reducecosts throughout claims operations—and the enterprise—insurers needto share best practices across the entire claims organization. Thisrequires the ability to make changes holistically to all of theprocesses used to manage claims. With a unified BPM solution thatprovides a common repository of claim-specific policies andprocedures, the best claims process is always available and can beinvoked by any adjuster within any area of a claims organization.Leveraging dynamic rules, each core process can be readilyspecialized and extended based on the markets an insurerserves.

The uplift comes from the fact that insurers need to makechanges only to the deltas between the core best practice andunique process requirements via specialized “layers” of instructionto the baseline process. Rather than having to build the processfrom scratch every time, an insurer can focus on the deltas and thedeltas alone, greatly reducing operational expense while ensuringbest practices are embedded in every claims process.

6. Maximize business agility.Insurers also need a business-focused platform that can support theconstant change that besets claims operations. Unlike rigidpackaged offerings, sophisticated BPM solutions take advantage offamiliar, configurable business tools, such as Microsoft Visio orExcel, to enable rapid design and delivery of enhanced claimsfunctionality in a matter of months. Changes can also bedynamically applied across the board to any process where thechange is applicable. By eliminating the need for custom coding and the need tomaintain multiple versions of a single process, insurers gainbusiness agility that facilitates rapid return on investment (ROI)through reduced operational costs and improved time to market. Asinsurers continue to carve out new market opportunities or areconfronted with regulatory changes, business-focused BPM toolsallow them to quickly and easily modify their claims processes andtailor them to match market drivers. Compared to a packagedapplication that requires extensive customization or work-arounds,the dynamic flexibility of a BPM solution offers a significantcompetitive advantage.

True Transformation

As insurers drive their visions for the future, BPM is theenabling technology required to truly transform claims operations.By focusing on opportunities to optimize and reuse intent-driven,best-practice business processes in combination with intelligentcase management, insurers can break the manual or exception claimsprocessing that they have grown accustomed to supporting. By usingBPM, insurers can transform claims operations to accomplish thesegoals:

• Gain a competitive advantage with an agile,strategic platform that can rapidly adjust claims processes to meetregulatory, business, and market changes.
• Reduce costs and risk by leveraging bestpractices via dynamic process automation to ensure that each claimsinteraction is not only consistent but also compliant.
• Increase ROI with intelligent processes thatsupport the business intent of each claims interaction whileoffering outcomes that promote customer satisfaction and brandcommitment.
• Proactively mitigate financial risk byoptimizing existing infrastructure to identify and remediate claimsleakage or fraud potential.

As a result, insurers can spend more time delivering on theircustomer commitments and better managing total indemnityexpenditures. BPM also offers insurers the ability to implementclaims processes that provide real differentiation and enablesubstantial gains in customer satisfaction, retention, market shareand competitive advantage while reducing losses and claimsleakage.