When purchasing a new home, you want to ensure that the builderis executing your vision and delivering the highest value. Giventhat a home purchase is one of the larger investments you'll make,selecting a builder who has a reputation for quality and customersatisfaction is key.

Finding such a builder can be a challenge. “Model homes” offer aglimpse into a builder's vision and capabilities, serving astangible examples of what you might expect. However, glossyexteriors, upgraded features, and carefully selected furnishingsdistract attention from structural and foundational elements thatare crucial to the home's long-term durability. Models offer littleinsight into the quality of plumbing or wiring, the strength of thefoundation, or the durability of the roof. Recommendations fromfriends who have experience with the builder are invaluable, but athorough assessment might also include an inspection by a qualifiedthird party to provide an unbiased and informed view. You couldalso speak with others who have purchased from this builder andhave been living in their homes for some time. Finally, considerthe builder's sub-contractors, including their reputation andcommitment 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 yourneeds not only today but also for years to come. As withhomebuilders and homes, selecting the right vendor and solution canbe 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 andtechniques. The same is true for your claims system. However, justas a model home is focused on cosmetic details, vendor softwaredemos may provide valuable information about usability and keyfeatures but do not typically delve into architectural design. Touncover this detail, look beyond the software demo, and insteadfocus on aspects critical to ensuring that your investment meetstoday's needs as well as tomorrow's.

There are a number of factors that should beconsidered before investing in a claims system:

Technology foundation. Even if the vendoreffectively leverages advances in technology and modernarchitecture design concepts, are there elements of legacytechnology still underpinning the system? If so, then you may beconsidering a system that could quickly become legacy technology.

Flexibility. While modern claims systemsprovide core claim lifecycle processing capabilities, the “best inclass” solutions enable responsiveness to a company's specificcurrent and changing requirements, policies, and philosophy. Theclaims system should be “purpose-built” for property and casualty(P&C) insurance and designed with a flexible rules-drivenworkflow to reduce manual effort, focus staff on high-value tasks,and build operational best practices.

Unfortunately, the need for flexibility (for example, adding newscreens) often exceeds the limited configurability of some modernsystems. To determine whether a system has been designed to supportchanging needs, ask how much autonomy you will have when makingsignificant system changes. You don't want to have to go back tothe “builder” and wait in line for critical changes. Ensure thatyour vendor has architected the claims system to offer theflexibility 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 ofoperational changes and manage rule changes?
• Is the full range of configuration feasible without changingthe source code?
• How difficult is the process of tailoring the system? Whatskills are required, and are they readily available within theorganization or marketplace?

Ease of integration, collaboration, and access.Just as wiring for electricity, Internet, cable, and phone iscrucial in a home, the ability to readily connect to internal andexternal systems, customers, and other third parties via portals iscritical to a claims organization. These needs change over time—newvendors and systems, increased “self-service” via portals, and soon. Adapting to changing needs requires a vendor whounderstands the complexities of integrating with a variety ofsystems, and who has a track record doing so. Determine if thevendor has the ability to adapt to your needs with a few simplequestions:

• Can third-party solutions be readily integrated within theclaims process and replaced as newer options becomeavailable?
• Can you add new integrations or amend existing ones afterimplementation?
• How is external user access supported and what types of accessare feasible?
• Does the system support real-time interactions?
• What portion of the application's data model is accessible forintegration?
  

Upgradability. Lack of upgradability has been afairly common and significant problem for insurers. Claimstechnology vendors typically deliver platform upgrades over time.However if you have configured the system, then can it still beupgraded? This knowledge is vital to protecting your investment andavoiding boxing yourself into a corner.

• Have there been platform updates and new releases?
• What is the track record for enabling upgrades when the basesystem has been configured?
• Have customers successfully upgraded the system without vendorsupport?
• Are your configurations segregated or do some affect baseproduct resources or sourcecode?

Actionable information. A claims system shouldbe designed to provide real-time, actionable information thatsupports timely decision-making and targeted managementintervention where appropriate.

• How does the system support the logic and automation thatallows embedding the best practices of your most experienced claimshandlers?
• How does the system allow you to leverage operationalinformation in real-time to support business performance, both at aclaim level and across the claims department?
• How does the platform empower adjusters with information on howa claim is progressing relative to key metrics?

Vendor track record. Whether you are building ahouse or buying enterprise software, you customarily obtain a quotebefore signing the contract. That quote can contain significant“wiggle room” for changes made to the project scope. Assessing thevendor's track record of adhering to pricing and implementationtime frames is a necessary step in ensuring the right decision foryour organization.

Unfortunately, in the insurance software industry there are morefailed projects than vendors care to admit. Determine if thevendor's customer base is growing or declining, and if customersare happy with both the system and vendor. Ask to see a customerlist and pick those you'd like to talk to rather than thosehand-picked by the vendor. Attend a user conference and have“hallway” conversations with customers.

Engage industry analysts much like you would engage a buildinginspector for an impartial opinion. Analysts can provide insightinto the vendor's credibility and integrity, and the strength ofthe claim system. Determine which of sub-contractors—or in claimsystem terms, which of the major systems integrators—have partneredwith the vendor, or have a practice dedicated to that vendor'ssolution. Start by asking a few questions that might give you abetter picture of the vendor's reputation:

• What is the vendor's track record for final pricing versusproposed?
• Where pricing came in higher, what were the reasons for thediscrepancy?
• What is the vendor's reputation and credibility in the industry(for instance, in meeting deliverables, implementation success, andso 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 aroundthe system?

Just like buying a home, investing in a claims system is a majorfinancial decision. Making the right choice requires looking beyondthe showy bells and whistles, and digging deep into capabilities.Asking tough questions is a vital step to ensuring that you choosea vendor partner and a claims solution architected to scale withyour business and to keep pace with changing needs.