(Kieran Taylor, director of APM marketing for Compuware APM.)
In some ways, insurance companies can be thought of as first responders during times of personal crisis or emergency. Every day, insurers are expected to provide prompt, fair, and hassle-free service in either paying first-party claims covered under policies or paying claims on a third-party loss against customers due to liability.
The claims settlement process is the heart of an insurer's business. First, at the highest level it dictates the insurer's risk exposure and liquidity. Second, claims processing systems allow both insurers and customers to swiftly settle cases that might not otherwise be easily resolved, sometimes due to emotion.
The claims processing experience is a moment of truth—the greatest determining factor in whether customers have a positive or negative experience with their insurers, and whether they'll remain policy-holders. IT must serve as a strategic enabler in the management of both of these crucial functions.
From a competitive perspective, insurers vary among themselves with their efficiency level in handling claims and settlements. Lately, some insurers have made claims processing efficiency their unique selling proposition. It has become imperative for insurers to streamline claims management in order to enhance IT efficiency and business performance.
A Complex Task
Ensuring fast, reliable, integrated claims processing can be difficult due to a complex chain of applications and infrastructure known as the application delivery chain. Claims processing is a complex sequence of interconnected steps instigated by the customer and followed through by the insurer, including: claim initiation; document processing; investigation, litigation, fraud and vendor management; claim settlement and closure.
The applications supporting these processes are often aging, home-grown or acquired through insurance company mergers and acquisitions. They can act as bottlenecks in the inter-operation of the systems and also in bringing the right changes to the systems, i.e., web-enabling an application; adding a new product to the claim processing environment or adjusting to changing regulatory requirements.
As noted earlier, this application delivery chain also involves hardware and data centers, and together with the applications, the whole system must work together without fail. Like the claims processing applications themselves, today's data centers are also growing more complex. The increasing use of multi-tier architectures, virtualization and other new technologies in the data center makes it difficult for IT to ensure optimal application reliability and speed.
Insurance companies also hold vast amounts of data (faxes, images, etc.) in data stores. A database call that is slowed by mere fractions of a second can result in claims processing delays for thousands. Within the claims processing environment, there are so many potential points of failure and so many interdependencies that trying to identify the root cause of an application performance problem can be like trying to find a needle in a haystack.
Add the recent trend toward web-enablement and the complexity multiplies even further. For example, certain applications that are customer- and agent-facing—such as initiation—are now also dependent on a properly functioning web. As one might imagine, the web is riddled with potholes like slow performing ISPs and the recent explosion in mobile web use means constrained wireless networks and devices are added to the list of potential bottlenecks.
Insurance companies are expected to deliver exceptional performance for their claims processing systems, across all this complexity. This means an overall speedy time-to-claim settlement, as well as fast, reliable performance for applications accessed directly by customers and agents in multiple geographies.
The cost of poor performance can be high. Slow, unreliable claims processing systems can hurt a company's claims repudiation ratio (CRR), a key metric potential customers consider when evaluating insurers. Where customer-facing applications are concerned, poor performance can also result in loss of positive brand image.
Industry research shows that an estimated 70 percent of application performance problems are reported by end-users. Furthermore, research shows that slow employee-facing applications can reduce worker productivity by up to 64 percent. Aberdeen Group estimates that poorly-performing applications can reduce annual corporate revenues by nine percent.
Simplifying the Task at Hand
Insurers need a way to get to the heart of this complexity and ensure strong performance for claims processing systems. The key to doing this is proactively managing and monitoring the experience of end-users and combining this information with deep-dive diagnostic information to get to the root cause of problems quickly.
Given the increasing complexity of claims processing environments, it's no longer sufficient to look at one or several components—such as individual applications and servers—and conclude that claims processing is performing well. Rather, IT needs to establish deep and broad transaction performance monitoring for all claims being processed. Ideally, a new generation of application performance management (APM) solutions will enable insurers' IT teams to:
- Ensure production applications work across all end-users, browsers, devices, geographies, networks and application infrastructures;
- Proactively monitor all claims processing services, 24×7, with a real-time view into the end-user experience to detect issues before they impact claims processing and further on, the business;
- Isolate the origin of an incident within the complexity of today's data centers instantaneously, in order to reduce the mean time to resolve problems;
- Understand the business impact of performance problems, so IT can prioritize resolution effectively; and
- Conduct advanced analytics in order to identify performance baselines and trends and continually refine the performance of claims processing applications and systems based in multi-tier, multi-vendor data centers.
Conclusion
Achieving efficient, integrated claims processing depends in large part on the availability and speed of the supporting IT environment—applications and hardware. The sheer volume and variety of applications, data and systems can make achieving a high-performance environment difficult. The reality is that claims processing environments suffer from many of the same performance challenges and bottlenecks that plague other types of distributed applications.
New modern APM approaches are needed to ensure the success of integrated claims processing environments, as measured by increased claim settlements and application usage. By monitoring and optimizing the true end-user perspective, insurers can ultimately pave the way to more satisfied customers, more productive agents with higher morale, and more pay-off on their claims processing system investments.
(Kieran Taylor is director of APM marketing for Compuware APM.)
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