If there has been a theme for 2009 it's been: Efficiency Rules.Insurers have turned to IT departments to find better ways to workwhile reducing expenses in the face of difficult financialconditions. Often, that has been accomplished by extending existingsystems.

|

To tackle this issue, insurers have had to understand andorganize how the business side goes about running the operation andthe daily workflows of the work force. They have turned to businessprocess management to enable that effort.

|

Celent senior analyst Donald Light agrees the financial crisisand recession have increased the industry's attention on BPM. Ofparticular interest to carriers is the ability to wrap and extendstrategies around legacy systems.

|

“If you have a legacy policy administration or claims system andyou are looking to replace it, an alternative is to keep the oldwarhorse but get a better front end to create agility through theuse of a BPM solution,” he says. “We're having more conversationswith insurers on this.”

|

BPM systems are deployed into an environment that is a mix oflegacy and newer systems, according to Light. That meansintegration is a key element. “One of the things that has to bedone correctly and takes up a fair number of resources duringimplementation is getting the BPM to integrate with all thosesystems and databases so they can all function,” he says.

|

IT BENEFICIARIES

|

A BPM solution gives the IT staff a set of tools to integrateprocesses across applications and to respond to changes from thebusiness side.

|

“If you are in an IT shop, your purpose in life is to enablebusiness strategy and operations,” says Light. “If you have a BPMsolution, you have a good deal of facility within IT and you canrespond more thoroughly to what the business wants to do. In thatsense, the IT shop is a big beneficiary of BPM. From the businessside, if [carriers] want to change something or go into a newmarket and if IT says it can do that in three months rather thannine months, the business becomes the beneficiary.”

|

Genworth Financial has made these advances, and the carriercredits Web services capabilities along with IT's knowledge of thedifferent technologies available. “We have agents in the fieldtaking applications via handheld units,” says Shannon McLaughlin,director of fulfillment operations for Genworth. “Five years ago,you were lucky to see an efficient process [for wirelesstechnology].”

|

By implementing more advanced technologies, Genworth now has theability to get the correct data upfront to business users andquickly into the carrier's proprietary system through an automatedunderwriting engine that can make underwriting decisions and helpmake the decision process more efficient.

|

Compared with other kinds of core systems, BPM is more than anIT project because the use of BPM may be fairly invisible to thebusiness users, explains Light. “What the users experience is moreresponsiveness from the IT department on the one hand and maybe amore powerful ability to do the processes cleanly,” he says. “Theway that happens is a bit more behind the IT curtain than is thecase with other applications. In general it will be more of a sellwithin IT to respond to your business partners.”

|

West Bend Mutual Insurance took a look at different technologiesbefore choosing a BPM solution from Lombardi Software. “We did someadvanced integration between different products we were looking forand came away with this suite,” says Eric Hanson, IT manager forcorporate solutions at West Bend. “This wasn't about technology.It's really a coupling of a methodology associated with atechnology, and that's probably why we've had some of oursuccess.”

|

BUSINESS/IT RELATIONSHIP

|

Some of the work between Hanson's IT team and the business usersinvolved trust-me conversations. “There was an element, especiallyearly on, that we had to go slow, we had to stack some wins, but wereally did focus on doing everything together,” he says. “We triedto create shared understanding, shared vocabulary. This is wherethe product came into play because we were able to get the processclear and explicit and we were all talking about the samethings.”

|

When the business side began to see some results, credibilityand a relationship of trust were fostered. “When you build a newBPM team, every person has to add credibility to that group, so wedid go after some of the best folks we could [from within IT],”says Hanson. “We had some of the sharpest people because we knewthe promise of value is not yet realized and IT for a long time hasbeen a bit of a failed business model. [Business users] have heardit all before that this is the magic bullet to fix everything, sowe tried to stay away from that kind of talk. We tried to focus onthe business problems and how we can help them to manage them.Those types of conversations helped with our credibility.”

|

STRATEGIC LOOK

|

Conseco Insurance has different operational areas and found someof the processes weren't consistent, relates Loree Haisley, vicepresident of operations for Conseco. The insurer had variousworkflow applications, but over the last few years, the carrierunderwent a strategic look to understand from both a business and atechnology perspective the specific applications and processes.From there, adds Haisley, the carrier began the job of streamliningthe processes.

|

“We married [the processes] from a technical perspective and abusiness perspective to try to come up with a best practice andmake sure we are meeting the needs of the business; making sure weare meeting customer demands,” says Haisley. “From a technologyperspective, we needed to ensure we are using the application tothe best of our abilities in order to meet the needs of ourbusiness.”

|

Haisley works hand in hand with her partner on the technologyside and believes it's been a learning experience for both from astandpoint of sharing ideas.

|

“We can throw out a process issue [to IT] and say, 'Here are ourthoughts. What do you think?'” says Haisley. “It's taken some timeto get to where we can have those conversations and come up with agreat product. We had to take baby steps to make sure the businessand the IT teams were having that conversation. It's a mindsetchange within big organizations. It's relatively easy to make greatimprovements over the years.”

|

BUSINESS USERS

|

Getting the knowledge from business users was tricky, Haisleyindicates. If the business users were versed in technology andunderstood more about the process, it was easier to have some typeof continuity. For those users who knew the end result and didn'tknow how it happened, trying to get that type of communication anda holistic view was challenging, she reports.

|

“We did design sessions where we pulled both parties in anddiscussed how we get to an end result, which allowed for continuityand open communication,” she says.

|

Conseco is undergoing some reengineering and looking at thebusiness processes. “We need to make sure we have the IT partnersinvolved,” says Haisley. “We need to continue to remind folks theyare our partners, and we have to work hand in hand to push thatdown to the process owners and our front-line associates so theyare continuously thinking about that.”

|

Conseco has been blessed with dedicated IT partners who haveopened themselves up to understand what the business side is doing,Haisley notes. “They know from the technology perspective how tocode the application, but they also have been able to shed light on[the process] and glean some information from the business side,”she says. “It helps both sides in the end to understand the processas a whole and how the two sides marry together.”

|

JUDGING EFFECTIVENESS

|

From a workflow perspective, Conseco has been able to allowmanagers to have more reports available to help make decisions onhow they establish their work and how they reallocate theirresources from a volume perspective, according to Haisley.

|

“They've been able to take that information and look forward todetermine how they can accomplish the work,” she says. “Prior tosome of the business process implementations, it was more, 'Wethink we have this much work and this number of resources,' but wedidn't know what is coming into the hopper. Do we need to offsetthe staff? Reallocate resources? Pull in other resources fromwithin the organization? From a data perspective, we now have thatdata immediately.”

|

Conseco is looking at evaluating some of its current processes.“We believe it's a continuous process to see whether there areimprovements or new technologies,” says Haisley. “In 2010, we'refocused on our customers–meeting their demands and satisfying theirneeds.”

|

By improving efficiencies, Haisley contends, Conseco can improvethe process and reduce human touches to improve quality andturnaround time from a processing perspective.

|

“We'll continue to look for ways to improve a process,” shesays. “As we evolve and our customer base evolves, our customerswant and expect different things, so expectations change, as well.We have to keep the pulse on that to make sure we understandcustomer satisfaction. That drives how we accomplish those goalsthrough operations and assistance with our IT partners.”

|

The BPM solution is driving process metrics for West Bend,according to Hanson, so the carrier needs to get visibility intothe processes. “The things that drive your processes are yourdecisions within the process,” says Hanson. “By coupling a rulesengine with a BPM suite, you get business decision management as abyproduct. You understand how you can manage your processes and thedecisions of the processes broken down into a finite level to makeyour processes better. We've had a lot of success with that anddelivered business intelligence information.”

|

THE PUSH IS ON

|

For West Bend, BPM was a twofold push. “We had set a newdirection out of our enterprise architecture group to go after afew things that were fundamentally different from the way we haddone things before,” says Hanson. “We wanted to focus on some SOAprinciples–repeatable services, composite development, and ROI. Wewanted to focus on increased visibility into our businessoperations.”

|

An important factor for West Bend was improved agility, notesHanson. “We wanted to create more maintainable applications thatreally supported speed to market or rapid change,” he says.

|

At the same time West Bend was undergoing this change, thecarrier launched the biggest project the company has ever takenon–a new product called Smart Business, a small commercialoffering, explains Hanson, who was brought in to West Bend in 2007to start the BPM program.

|

The team Hanson established is known as business agilityservices. “We thought the ultimate result of BPM and businessdecision management implementation would result in tremendousagility for our organization,” he says. “What we've seen is whenyou couple the rules engine and the BPM techniques, the changesthat regularly took us 30 days to 90 days now are taking one tothree days.”

|

What has allowed that is the insurer has embraced the concept ofoffering and consumption, continues Hanson, adding the idea behindthat is to take as many of the changes out of the hands of thedevelopers as possible.

|

“We want a process or rules analyst to make rapidly changes thataren't in code, without going through the full change managementcycles,” he says. “We literally have saved the project on a numberof occasions by taking changes that would have derailed us in thepast and turned them around.”

|

ACCURACY

|

West Bend has delivered solutions to the business that wereahead of schedule, Hanson reports, and supportive of businessrelationships with remarkably few defects. “Our entire rules effortfor our first project was significant, and we had one defect,” hesays. “That's pretty much unheard of.”

|

The reason for such accuracy, indicates Hanson, is a coupling ofmethodology and technology. “We have focused on making sure we havenot just good development people but also the associated analystsworking with [IT] and the business,” he says. “We have embraced acollaborative development model.”

|

Lombardi taught West Bend what Hanson calls a “playbackstrategy,” which is a concept where IT and the business side gettogether regularly and play back the solution as it is beingdeveloped.

|

“You use it to mitigate risk and meet the requirementsproperly,” says Hanson. “Often, the business people driving themeeting create a shared ownership of delivery and really goodresults. The accuracy we've had here has been fairlyunprecedented.”

|

REASONABLE EXPECTATIONS

|

Univita Health's BPM tool from Global360 is an operational toolsupported by IT, according to Paul Kay, Univita's CIO. “We makesure it is properly deployed and tightly integrated with ourback-end administration system,” he says. “The role played byoperations is it has to pay the offshore and onshore resourcesdedicated to case management. Where I'm trying to add value is inlowering the costs.”

|

Univita has a workflow/BPM process that offers a reasonableexpectation of the amount of work it takes to process a particularunit of work, Kay explains. “We are using the product to see wherewe are spending time and measure time for these processes,” hesays. “We set up a reasonable expectation and measure people on it.That helps drive cost out of the operational equation.”

|

Univita traditionally has maintained long-term care coverage asits base but has switched to a different business model–home-basedhealthcare, relates Kay. The company saw the aging of thepopulation and inadequate care available for the elderly. “Welooked at it as something we can do to lower the cost of healthcarefor the elderly because the population is aging,” he says. “Theonly economic model that works is if you allow people to age intheir home. To do that, you have to provide a core set ofcapabilities to engender that, and that's what this is allabout.”

|

That is how Univita is using its BPM tool, notes Kay. “We haveto be more efficient in processing cases,” he says. “The businesseswe are partnering with all have some form of workflow, and we needto take that process, turn it into a proper BPM process, and takeadvantage of the synergy you get when you do that.”

|

OUT OF THE GATE

|

At Genworth, the carrier has leveraged technology and processimprovement to streamline processes so duplication in the supplychain can be eliminated, McLaughlin remarks. Genworth gets theright information the first time out of the gate so as not to putthe client through difficulties, and it has allowed the carrier toopen up new markets.

|

Most Americans have been underserved in the life insurancearena, McLaughlin asserts, with 60 percent of middle-
market households lacking individual life
insurance.

|

“For agents to approach a customer, it has to be profitable forthem, and for distributors to approach middle-market America, ithas to be profitable for them,” she says. “Leveraging technologysuch as an e-application process through iPipeline ensures theagent can touch the client one time and get all the informationupfront.”

|

This process helps the client, the agent, and the distributor,McLaughlin emphasizes. “We have a short application where we havethe agent get the basic demographics and suitability for thecustomer, and then we will have a fulfillment center complete therest of the application,” she says. “We've designed these modelsbased on a 'day in the life' of an agent and asked [agents] how tomake it easier and simpler for them and allow them to focus on thecore work to get the potential insured the right product.”

|

Genworth joined the appropriate process and technology toeliminate non-value-added steps, so [agents] can touch more clientsin a more powerful way. “It enables the distributors to get theright tools and products in the agents' hands,” says McLaughlin.“We want to make sure [agents and distributors] have all theinformation and tools they need. Now that we have bettermeasurements around our processes, we can hone in on theinefficiencies quickly and repair them.”

|

BPM can orchestrate the process flow of what happens when asubmission comes in, points out Light. “If the insurance company ismore responsive and easier to do business with, that can help theflow of business and growth,” he says. “In the background, there isa little BPM engine chugging away.”

|

SIZE MATTERS

|

Integration is something insurers have to pay attention to whenimplementing BPM. “If you leave it as a stand-alone product on anisland, it's not going to be successful,” says Kay. “[The solution]required a little care and feeding for us, but it's certainlywritten with best practices. It looks seamless to someone using thesystem. You can't go in thinking it's a turnkey, shrink-wrap pieceof software because it's not.”

|

BPM's penetration into the insurance industry tends to followthe size of the insurer and the size of the IT group, Lightobserves. “The large and very large companies have BPM systems inplace,” he says. “How much they use it can vary, but they all havesome BPM system kicking around. When you get to the midsizecompanies, [a BPM solution] is rare. If you gauge the outlook forBPM, vendors have to extend their footprint within large insurancecompanies and discover a way to find value quickly in the midsizeor upper end of the midsize.”

|

As long as the industry is facing tough times, Light maintains,IT groups are going to be pressed to do more with what they have inplace. “Extended uses of BPM or the acquisition of a BPM tool areways of accomplishing that,” he says. TD

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.