White Paper Automating Insurance Processes With BPM

8/14/2019 White Paper Automating Insurance Processes With BPM

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White Paper

Automating InsuranceProcesses with BPM

This whitepaper focuses on Adeptia BPM forInsurance solution that helps insurance companiesreduce operational costs and improve profit margins

by streamlining and automating their businessprocesses.

Adeptia, Inc.20 North Wacker Drive,

Suite 2000Chicago, IL 60606Phone: (312) 442-4420


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White Paper

Automating Insurance Processes with BPM 2

Copyright

2005 Adeptia, Inc. All rights reserved.

Trademarks

The Adeptia logo and Manage, Automate and Optimize BusinessProcesses are trademarks of Adeptia, Inc.

Statement of Conditions

Adeptia, Inc. provides this publication "as is" withoutwarranty of any kind, either express or implied. In no eventshall Adeptia be liable for any loss of profits, loss ofbusiness, loss of use or data, interruption of business, or forindirect, special, punitive, incidental, or consequentialdamages of any kind.

No part of this work covered by copyright herein may be

reproduced in any form or by any meansgraphic,electronic or mechanicalincluding photocopying, recording,taping, or storage in an information retrieval system,without prior written permission of the copyright owner.

Adeptia, Inc. may revise this publication from time to timewithout any notice.


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White Paper


Table of Contents

Overview 4

Challenges and Opportunities 4

Adeptia BPM for Insurance Solution 5

Book of Business Transfer 6Solution Highlights 6Process Flow Template 7

Agency - Carrier Interface 8Solution Highlights 8

Claims Management 9Solution Highlights 9Process Flow Template 10

Benefits to the Insurance Industry 11

Adeptia BPM for Insurance Architecture Illustration 12

Adeptia Features and Functionality 13

Summary 14

About Adeptia, Inc. 15


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White Paper


Overview

Before change could come completely to this heavily regulated andmost paper- and process-bound industry, there are challenges to beaddressed and opportunities to be availed. 9/11 has posed the biggestchallenge to the core business of insurance industry therefore existing

strategies, offerings and processes are being reviewed carefully. As aresult of terrorism and fraudulent activities, industry has been imposedwith many federal regulations. Irrespective of the fact that theseregulations would benefit both insurers and customers, industry isgoing through tough time in implementing them. Commoditization ofinsurance is another disguised opportunity for insurers; however itchallenges their efficiency and agility to think innovatively and takeproactive actions to provide customers with need based and easy tobuy solutions.

On one hand is a need to minimize exposure to risk, save claims,underwriting and other administrative costs. On the other hand is theconstant push to provide better service and customized offerings.(Although claims recovery is the ultimate truth that validates thedependability of insurers, claims are yet far away from being the singlepoint of judgment.)

The industry needs tools that could help save cost yet improve qualityof offerings and service. Insurers need to strike a balance whileimplementing the cost saving and quality service strategies to makebest use of the dual faced situation.

Challenges and Opportunities

The following are most dreaded factors for the insurance industry.

State and federal regulationsSome state and federal regulations present a competitive disadvantagefor insurance carriers competing with other financial serviceinstitutions. For example, compliance with regulations like FinancialModernization Act of 1999 (Gramm-Leach-Bliley) and Health InsurancePortability and Accountability Act of 1996 (HIPAA), USA Patriot Act of2001, Terrorism Risk Insurance Act of 2002 and Sarbanes-Oxley Act of2002 have all added to the costs of doing business.

Commoditization of insurancePolicies are becoming more packagable, particularly in the low value,high volume sector. As a consequence of this commoditization,reducing costs of managing policies and claims has risen as a keyissue. Keeping expense ratios in control is all important for maintaining

profitability.

Compete with non-insurance verticalsThe industry is experiencing increased competition from other industryverticals like banking and manufacturing. Now many banks leveragetheir client base to sell packages of various financial products,including insurance products.

The insuranceindustry is

looking forsolutions that

convertchallenges into

opportunities andprovide them

with acompetitiveadvantage

As there areno physicalgoods to

deliver,customer

service andproductofferings

remain thekey

differentiatorfor

customers toevaluate their

insurers


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Mergers and acquisitionsAs a result of mergers and acquisitions in 1990s many companieshave more than one system for any given function such as claimsprocessing systems, multiple billing systems, and multiple userinterfaces. These systems are not compatible; therefore requirededicated human staff to manage information exchange, dataconsistency and integrity.

Expanded scope of risk managementRisk management after 9/11 has increased its scope. Now it alsoincludes operational risk in addition to investment risk. It is importantthat companies balance their risk portfolio to withstand politicalmishaps, terrorism etc.

Downfall in equity marketVolatility in the equity market has risked insurers reliance on thereturns from their investment portfolios, because the low interestearning is no more sufficient to balance underwriting losses.

Adeptia BPM for Insurance Solution

To achieve business success by improving operational efficiencies,insurers need to tighten up and streamline both channel partnerrelationships and back office operations. The brokers and channelpartners are the interface between the insurance companies andcustomers. They play a vital role in helping insurers sustain existingcustomers as well as attract new customers through better and diverseservices. So it is imperative that insurers are well connected withbrokers / channels partners as well as meet their needs. Improvementin back office operations can happen if policy production and billing areautomated; overall claims expenses are reduced, and claimssettlement is made faster.

To be successful at doing this, insurers need to nurture both parts ofthe solution equation, that is, creation of solution-oriented strategyand deployment of solution-based scalable technology that enablesmeeting of strategic goals laid out as part of their enterprise strategy.In the current scenario however many insurers either rely on eithermanual methods or custom coded solutions that lack strategicapproach to address their business needs. Manual execution of theircrucial operations leads to many errors that occur in documentspassed from insurers to brokers or ceding companies to reinsurers,which results in lengthy settlement cycles. While custom codedinterfaces are developed to meet a certain set of needs only. They arenot scalable so cannot meet changing needs and require recurring ITinvestment to keep them in use.

Adeptia BPM for Insurance solution has been developed to offerstrategic value to insurance companies through systematic design anddeployment of BPM and integration technologies. Adeptia BPM forInsurance can address volatile situations, and it is a scalable andreusable solution. It helps insurers meet the challenge of operationalcosts saving while enabling them to exploit business expansionopportunities. Adeptia BPM for Insurance includes solutions for thefollowing business processes:

Book of Business Transfer

In this era oftechnology-

drivenbusinesses,success of abusiness also

depends on itsenterprise IT

strategies


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Agency Carrier Interface Claims Management

Book of Business Transfer

Due to volume and diversity of policies records, the process to roll out a

book of business is very time consuming and costly. It usually involvesextensive re-keying of records, which is error prone thereforecompromises data integrity. Furthermore, carriers, agents and brokersdeal with external data in different formats that do not have the samedata elements as required by their internal systems.

Adeptias book of business transfer solution standardizes the data suchthat it can be reused across multiple systems and departments. The

data is directly integrated into the insurance carrier, agent orbroker's back-end systems. The Adeptia solution managesexceptions that occur while processing policies records. It alsoautomates regular updates of those records. The solution hasthe ability to transfer and repair the data in real-time.

Book of Businesstransfer: Records

are replicatedfrom multiple

carrier systemsand transferred toexternal systems(e.g. reinsurers)based on business

rules

Solution Highlights

Helps carriers transfer millions of policies records in a matterof days

Provides a single and complete view of customer to bettermeet her requirements and identify new business opportunities

Helps carriers and reinsurers diversify their businesses

Adeptiasolution

reduces theadministratio

n cost by50% whiledecreasing

time to roll abook of

business byas much as

75%


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AutomatingInsuranceProcesse

swithBPM

7

ProcessFlowT

emplate

Note:Thisisagenericproc

esstemplatethatwillbecustomizedtomeetspecificrequirementsofeach

customersituation.

ReceiptofRecords

ValidationofRecordsandFormat,

andNotification

ConversionofRecords

UploadofRecords,andNo

tification

-Receivepolicydatafrom

externalsource

-Verifythedataformat

-Notifysourcetotakecorrective

action

-Checkpolicyinformationtom

eet

businessrules

-Notifyuserstotakecorrectiveaction

-Applymappingtoconvert

data

intotargetformat

-Sendproperlyformattedd

ataintotarget

application

-Notifyuserstotakecorrec

tiveaction

-Sendacknowledgementst

osource

-Sendfailurenotificationto

source,

if

applicable


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Agency - Carrier Interface

Insurance companies that manage independent agent and partnerchannels face growing competition for mind share with the market.Adeptia BPM for Insurance allows insurance carriers the agility totake data flows and quickly give agents the information for approvals

and add on sales.

This solution from Adeptia functions as an interface betweenindependent agents and insurers. It ensures that carriers and agentsquickly roll out real-time transactions. These transactions includeinquiry, first notice of loss and request for quote, which can beprovided seamlessly to agency systems.

With Agency - Carrier Interface, front desk can track and manageinsurance brokers / agents. Insurers can adopt new channels thathelp them package various insurance options and reach to morecustomers. Using Adeptia, they can optimize relationships withbrokers, channel partners and provides flexibility to set channelspecific rules for effective broker management, hence streamline and

speed up key agency processes.

Integrated insurancesupply chain:customers, agents /partners and insurers

Solution Highlights

Helps engage new brokers and introduce new channels

Ensures that partners and channels view the insurer as apreferred solutions provider

Empowers brokers and channel partners to perform better

Helps brokers/ channel partners enhance operationalefficiency

Helps defines KPIs and regular evaluation parameters

Helps monitor performance across channel hierarchies,geographic regions and divisions

AdeptiaCarrier

Interface

solutionmakes it easyfor brokers todo businesswith their

carrier and socan increaserevenue by

up to 10%


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Claims Management

Claims processing is perceived as an effective tool for achievingcustomer satisfaction because claim recovery is the ultimate criterionfor customers to evaluate the reliability of their insurers. Adeptiasolution supports interaction and collaboration among all participants

of the claims value chain across the entire life span of a claim i.e. fromfirst notice of loss to settlement. It has a multi-line claims tracking andmanagement system that helps control losses, facilitates effective riskmanagement and actuarial analysis by capturing extensive informationfor all claims functions.

Solution Highlights

Business managers can define several processing rulesdepending on the availability of resources, skill-sets, aparticular claims process, different product types, and differentservice level to mention a few scenarios

A complete customer view is provided through assimilating all

related documents/files in a structured format Automatic distribution, allocation and prioritization of work for

each user

Robustly integrated policy administration, finance, expert andbureau systems

AdeptiaClaims

Management

solutionsignificantlyreduces cost

ofautomating

claims

processes


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AutomatingInsuranceProcesse

swithBPM

10

ProcessFlowT

emplate

Note:Thisisagenericproc

esstemplatethatwillbecustomizedtomeetspecificrequirementsofeach

customersituation.

NotificationProcess

ValidationProcess

NegotiationProcess

SettlementProcess

-Allowsfirstnotificationthrougha

varietyofaccessdeviceslik

efax,

emailandphone

-Collectsandcompilescustomer

detailsfromd

isparatecusto

mer

informationsystems

-Validatestheinformation,generates

listsofdocumentsrequired

and

acknowledgementonthedocuments

received

-Verifiesandvalidatesthe

claim

againstbusinessrules;no

scope

forhumanerrors.

Therefo

reeasy

toidentifyclaimssubmitted

againstpoliciesthathave

expired,claimssubmitted

before

theduedateetc

-Theprocessenginemain

tainsa

completeaudittrailofevery

activityrelatedtoapolicy

-Managesexceptionse.g.

ifa

claima

pplicationisrejected,a

letterofdenialisalso

automaticallyissued

-Ifaclaimr

ecoverycaseisnot

clear,thesystems

ends

notificationtoauthorities

for

manualadjudicationoftheclaim,

andallocatesatasktoth

e

adjudicatorgroup

-Anaudittrailofallactivitiesis

recorded

-Sendsalertstothefinanc

esystem

toreleasepaymentsaspe

rthe

paymentschedulegeneratedduring

thenegotiationprocess

-GeneratesletteronExplanationof

Benefitsalongwitheachpayment.

Whenthelastclaimi

nstallmentis

made,

thesystema

utoma

ticallycloses

theclaim


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Benefits to the Insurance Industry

Benefits of Adeptia solution start from operational efficiency andextend to profitability of an insurance organization. While thesebenefits are common across all BPM based solutions, Adeptia providesmore measurable value over custom coded solutions that require

recurring IT investment.

Efficiency and Productivity

Operational efficiency and agility: Adeptia solution helpsreduce dependency on humans for time bound tasks. Itensures that tasks are executed rapidly with more accuracy,and errors leading to duplication of efforts are eliminated.

Better human resource management: Key day-to-dayfunctions are automated; therefore, human resources can beallocated other crucial tasks. Organizations do not need to hirenew resources to manage ad-hoc or seasonal tasks.

Effective cost management: Since tasks are executedquickly; without errors, person hours and other operationsoverheads are reduced significantly. The saved cost can beinvested in managing other priority tasks that take a back seatdue to financial constraints.

Business Expansion

Easy to manage commoditized insurance: Integratedorganizations, channel partners, brokers can createcustomized offerings with much ease, and reach to theircustomers much early. Since all the required data can be

accessed with a single click, need for personal meeting isreduced to minimum.

Better capacity to manage diverse insurance offerings:It becomes easy for insurers to tie up with third parties andexpand the insurance packages by incorporating policies thathelp cover a variety of risks for customers. Automatedoperations can handle voluminous data with much ease asopposed to manual processing that has capacity constraint.

Customer Satisfaction and Profitability

Better customer service: Customer can apply for services

through web; she can check her records online; requestchanges online. Customer receives responses quickly and hasthe flexibility to buy services that suit her needs completely.

Improved profit margins: Improved operations save cost.Diverse and agile business helps sustain existing customersand attract new customers easily. Together these factorsenhance profitability of insurers.

Deployportfoliofaster

Improve

productivityof IT staffand reduce

costs

Improve profitmargins

Well

connected

groups:carrier,brokers,

partners andcustomers


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Adeptia BPM for Insurance ArchitectureIllustration

Three layers of Adeptia BPM for Insurance architecture enablecollaboration among users, their business objective and the tools that

help meet the objective. The top most layer shows that users interactthrough a graphical user interface to create and run business processflows. The second layer includes a configuration of the process flows.The third layer, with the help of most suitable technologies embeddedin the solution, makes the processes live.


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Adeptia Features and Functionality

Functionality

Business Process ManagementProcess Designer Allows designing of graphical

processes using BPM notations. These processes includboth vertical and horizontal processes that are require

for automated implementation of book of businesstransfer, agency carrier interface and claims

processing. Process Designers ease of use allowsbusiness users to create complex designs without any

help from IT department.

Workflow Manager Workflow Manager allows ITdepartment to quickly create and attach activities to

process designs or business rules in order to align thewith integration logic. The Workflow Manager handles

exceptions automatically, and sends notification todecision makers for further actions. Tasks are not

considered complete until the Workflow Manager isupdated on the execution of activities and their

respective statuses.

Process Engine Process Engine is a robust statemachine that executes workflow tasks. Its support for

decision nodes, sub-processes, exception handling, forand joins, loops and long-running transactions allows

execution of process flows of almost any complexity. also supports failure recovery and clustering for

reliability and high performance.

Business Resources IntegrationWeb Services Comprehensive support for Web Servicincludes ability to utilize any Web Service as a task in

process flow. This includes support for introspection oUDDI/WSDL and both RPC and message-style

invocation. Process flows can be triggered by and eveexposed as Web Services by using the Publish-WS

capability of the product. Includes support for WS-Security.

Data Transformation Powerful data integration

capability includes support for complex data formats atransformation. Data transformation engine allows an

to-any mapping between different data formats.Complex data processing functions are included such a

string, math, and conditional operations as well as DBand XML file look-up. Data can be aggregated from

multiple sources. Content can also be distributed tomultiple destinations automatically.

Supported data formats: XML-DTD, XSD, Hierarchical, attributes, enumerat

values ASCII Text/Flat, Fixed-length, EDI, AL3, Excel file

SQL compliant relational databases such as OracleSybase, DB2, Informix, MySQL etc.

Data Transport Rich, secure, two-way data transport

capability gives flexibility to specify different source andestination systems. Supported transport protocols:

HTTP/S, FTP, SMTP/POP3, JMS,JCA, ODBC/JDBC,SOAP

Adapters: Legacy data stores, SAP, JDE andPeoplesoft etc.

Features Complete process

automation eliminates

the need for manualactivities and humandependency

Horizontal and verticalworkflow capabilitiesengage multiple deliverymechanisms like print,email, electronicarchival and retrieval toexecute macro as wellas micro business tasks

EAI, ETL and Web

Services basedintegration of resourcesconnects enterprisesystems, data andhuman resources forbetter and agilecommunication

Globally acknowledgedtemplates are used fordocumentation based onACORD industrystandard forms

ACORD XML/EDI-AL3based standards areused for standardizingenterprise wide datainterchange

Web services enable theinsurance carrier toseamlessly collectinformation fromdisparate internal andexternal sources andallow customers tocommunicate with

various departmentsthrough a few clicks

Carriers and customerscan track claims statusthrough Web oremail/mobile phonealerts


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Summary

Adeptia BPM for Insurance solution has been developed to address themost challenging and common needs of carriers, brokers, channelpartners, and reinsurers. Adeptia helps streamline and automate front

office as well as back office processes that transform organizations atevery level, thereby bringing about operational efficiency, customersatisfaction and profitability.

The BPM for Insurance solution has been designed in a way that it canbe deployed quickly and put to use after customer specificcustomizations. The compartmentalized architecture of the solutionallows for rapid creation and addition of new business processtemplates to the business layer. For instance, underwriting processtemplate can be quickly created using the User Interaction layer andconfigured to the business layer, and finally executed through thetechnology layer.


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About Adeptia, Inc.

Adeptia, an enterprise software company headquartered in Chicago,Illinois, provides business process integration technology to easily andquickly automate business processes across supply chains using

industry-specific standards. Adeptias unique product combinesbusiness process management with business-to-business integration.Adeptias reusable and highly scalable technology has been deployedby Fortune 1000 companies. For more information, visithttp://www.adeptia.com.

Adeptia Headquarters20 North Wacker Drive, Suite 2000Chicago, IL 60606

Phone: (312) 442-4420Email: [email protected]

Adeptia India R&D CentreD-4, Ist Floor, Sector 10,

Noida, U.P., 201 301IndiaPhone: +91-120-3052137

Email: [email protected]

White Paper Automating Insurance Processes With BPM

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