Bookies vs. Doctors: Who Makes Better Business Decisions& Why, & What Does It Have to Do with ACORDImplementations? is the intriguing title of a session at thisyear's ACORD LOMA Insurance Systems Forum.

Phebe Arouni, e-business program manager at PartnerRe, willprovide an overview of how the introduction of Business ProcessManagement (BPM) enabled a reinsurer to implement eAccounting inapproximately half the time it would have taken using traditionaldevelopment methods.

Arouni explains that the content of her presentation draws froman anecdote she heard while participating in the ACORD metricsinitiative. To measure the value that BPM brings to a business, shesays one way to think about it is how a doctor makes estimates,compared to a bookmaker.

“A doctor relies on prestige and status to make estimates,whereas a bookmaker is usually pretty accurate,” she says. “Forexample, a bookmaker who says that he is 90 percent confident thatthe weight of a pretzel is between two to three grams is correctalmost 90 percent of the time, whereas a doctor who says they are90 percent confident that weight of a pretzel is between two tothree grams is less likely to be correct 90 percent of thetime.”

The point of the story? It is important to calibrate estimationsto give yourself the same level of accuracy as the bookmaker.

“Bookies learn from their mistakes. They document every singledecision. That's what BPM allows you to do. It helps you to refineas you go,” she notes.

Prior to using BPM, PartnerRe was using a claims systemwith different technology that was inefficient to maintain.So about a year ago, PartnerRe started to introduce BPM. Accordingto Arouni, some of the key advantages of BPM are that it helps thecarrier to streamline the business process and it also offers muchgreater flexibility and a lower implementation cost.

“Aside from the technology, BPM also provides us with a moreflexible digital platform because it is not all hard coded. It's aplatform that's more point and click. We sat down with the businessand mapped out their business process using that tool,” shesays.

BPM also gives PartnerRe the metrics to evaluate the processingof a particular account.

“We can see where the bottlenecks are so we can actually refinethe business process much better. If we see a lot of the work isbeing held up with a particular group or individual, then we knowwe need to look at how work is being assigned or route it moreefficiently.”

As far as cost savings, Arouni estimates thatBPM is about half the cost of the old system and ongoingmaintenance costs also have been reduced by half because there'sless coding involved when changes have to be made.

Another advantage of BPM is the ability to implement workflow.Workflow helps to automate the business process instead of relyingon email and paper exchanges.

Arouni explains: “Workflow makes it more of a bulletin boardapproach. If a task is on your to-do list it shows up in yourpersonalized view and it's on your manager's watch-list. It's allin the open, rather than buried in email. This makes the processmore transparent and easier to keep track of.”

BPM also allows PartnerRe's accounting department to be morecollaborative because the required auditing process is nowautomated, which means all information is shared and built into thesystem. “We automatically validate information now. You're notreliant on these fortresses of knowledge. There's no longer onlyone person who knows how to do a certain type of account.”

As of now, PartnerRe has introduced BPM in theU.S.only, but itis evaluating its use in other parts of the business. In additionto accounting, the carrier would also like to apply BPM in thesettlement area which brings the claim and accounting piecetogether and performs the actual payment.

As to whether this digital business platform will take off inthe wider reinsurance industry, Arouni says time will tell.“Traditionally a lot of reinsurance business activity ispaper-bound. If you just rely on paper you have no idea how muchwork is on someone's desk or what is way overdue. E-business ingeneral provides much greater visibility, allowing you to see wherethe work actually is.

PartnerRe is currently working with just two partners who areable to provide digital information, but it is hopeful that numberwill grow. “We're trying to engage with other brokers who are notdigitized,” she says. “It's in our interests to get everyone movingahead.