Description
It gives a sample by applying BPM in claims process in insurance industry. It also includes the critical components of implementing BPM.
BPM in Insurance
Agenda
? Need for BPM in Insurance Industry
? Areas Where BPM Helps
? BPM Implementation
? Case Studies
2
Need for BPM in Insurance Industry
3
Insurance Overview
MARKETING Market Research, Conceptualizing New Products
CLAIMS Registration, Verification & Payment of Claims
ACTUARIES Pricing of Products, Rate Setup
INSURANCE OPERATIONS
Arranging Reinsurance For Risk Sharing REINSURANCE Assessing Risk, Issuing & Servicing Policy UNDERWRITING
Generate reports, manage Internal system & Processes
MIS
Manage the cash flows, reserves for the claims & investments
ACCOUNTING
4
Insurance Overview
Online Quote Processing Policy services Office / Branch office Agent/Broker/Intermediary Externa l Parties
NEW BUSINESS SYSTEM
Rate Engine ? ? ? Underwriter evaluates the quote Underwriter accepts the proposal Issue the policy
Customer
Requests
Quote Processing System for Quote Accep t Quote ?
Convert
to policy Policy Processing System
Claim Notification Agency / Compensation System Claims Verification
Policy Billing Billing System
Print Schedule, Attach Forms Document Application Processor
Yes
Valid Claim
No Reject Claim
Claims Payment
DISPATCH POLICY
CLAIMS SYSTEM
LEGEND LEGACY SYSTEMS ONLINE SYSTEMS 5
Industry Overview
Legacy / Core System
? Redundant core systems (eg: multiple variations of policy systems) ? Lacking capability of cross-system transactions & data consolidation ? Legacy systems - unable to send/receive real-time information or transactions ? Business process rules that are embedded into each core systems that are in conflict or overlap ? Prevalence of paper oriented manual processes (Document & Image management) ? Independent channels, including alternative sales channels such as banks, that distribute their products ? Multiple iterations of new business (including rating, underwriting & policy) and service (including claims) applications ? Competitive scenario - Need to innovate new products & market in least amount of time Insurance industry executes millions of transactions daily between various actors & systems, a lot of which can be & needs to be automated
Improvisation on channel management & market new products
Market Reach
Need to incorporate the regulatory changes quickly & with minimum efforts
Regulations
? Frequent changes in government regulations & mandates directly impacting insurance processes / operations ? Regulations enforcing need to generate & reports about business processes (eg: SoX)
6
Industry Trends
? Increase in IT budget incrementally year-overyear to improve core business operations, including legacy system enhancements & strategic initiatives ? The largest percentage of IT spending goes toward support, maintenance & improvements in policy administration & claims systems ? Web services/service-oriented architecture (SOA), business process management (BPM) solutions, & document management are the top three enterprise IT investment priorities ? Primary focus on projects that reduce IT costs for running business, such as system replacement or application integration
Investment in Enterprise IT Initiatives Among P&C Insurers
? Need for ensuring systems are able to support current & future business requirements (such as accelerating time to market for new products & maintaining or updating business rules for business users ? Invest in enterprise IT projects, such as BPM and SOA, to enable interoperability of systems and improved workflow
7
Why BPM in Insurance
Agent Various Backend Systems CSR
BPM orchestrates the overall transactions
Third Parties Carrier Offices
? BPM orchestrates millions of transactions flowing through various systems, people, company & third parties ? BPM provides a near real-time view of process activities through advanced monitoring & reporting capabilities ? BPM components provide quick ability to reconfigure business processes
BPM can provide truly valuable functionality to: ? Automate manual tasks and coordinate data capture from loosely structured sources
? Help enhance interoperability between traditional applications by providing human and systems task management across multiple systems
? Provide near real-time metrics on end-to-end process performance
Complementary, Not Redundant
8
Areas Where BPM Helps
9
Target Business Processes
NB Acquisition & Underwriting
? Automated routing of proposal ? Underwriting decision rules engine ? BAM to track staff efficiency & SLA’s
Channel Management
? Automated workflow management ? Monitor channel performance ? BAM reports generation
Policy Servicing & Administration
? Workflow, Rules, EAI & BAM for policy servicing & customer desired changes ? Integration with Billing System ? Periodic statement generation
Claims Processing
? Automated workflow ? Document Management
Product Development
? Templates & tools (configurator) ? Reduce development & implementation time
Reinsurance
? Automate & Monitor voluminous processes (Rules Engine & BAM)
10
Target Functional Processes
Business Process Automation ? Reduce/automate repetitive business processes ? Ensure proper documentation for manual processes & business rules (people’s heads) ? Automate processes involving several manual tasks (such as verification of completion, validation of information, reconciliation)
Connect Back-end Applications ? Seamless integration & data flows between systems (policy management systems, rating packages, claims applications & accounting) ? Effective expansion into new markets & transition to new products ? Integration of branch office operations & ability to predict & control IT costs
External Interface
? Enable effective & efficient communication between external entities & insurance company ? Uploads (External Parties to Carrier) ? Downloads (Carrier to External Parties)
11
New Business: Before BPM Implementation
Customer
Mail Room Filing Dept. Data entry operator Access 3rd party system for medical history, ALH, PLH info
Support Clerk
Filing Dept.
Data Entry Operator Jr. Underwriter
Alternate flow
Additional information request or rejection letter sent to customer Support Clerk Sr. Underwriter
Support Clerk
END
POI, Policy documents etc sent to customer
Policy Issue Clerk
Billing Dept.
12
New Business: After BPM Implementation
Customer
Mail Room Image /Scanning Solution Rules engine validates information for accuracy and completeness Is info accurat e and complet e Yes Access 3rd party system for medical history, ALH, PLH info
Rules engine runs the underwriting rules
Alternate flow
Reject Legend Key
BPM Automated Workflow
No
Additional information request or rejection letter sent to customer through an automated email. U/W Review
Underwriting decision?
Rules Engine
Accept
Reject
EAI
Sr Underwriter Accept
Business Activity Monitoring (BAM)
END
POI, Policy documents etc sent to customer through postal and automated eMail
Payment Status?
Approved
Billing System 13
Claims Processing: Before BPM Implementation
Customer
Mail Room Filing Dept. Data entry operator
Access 3rd party System for Auto loss history (ALH) Claims Clerk
Filing Dept.
Data entry operator Claims Handler Field Inspector
Alternate flow
Additional information request or rejection letter sent to customer
Claims Clerk
Claims Reviewer
Jr. Claims Adjuster
END
Payment dispatched to customer
Payment Clerk
Billing Dept.
Sr. Claims Adjuster 14
Claims Processing: After BPM Implementation
Customer
Mail Room Image/Scanning solution Rules engine validates information for accuracy and completeness Is info accurat e and comple te Field inspector
Yes
No
Call center enters information into BPM workflow
Alternate flow
Additional information request or rejection letter sent to customer through an automated email.
BPM accesses 3rd party system for ALH
Rules engine runs complex logic to determine the claims amount payable
Legend Key
BPM Automated Workflow
No
Rules Engine
Is claim approved ?
EAI
END
Business Activity Monitoring (BAM)
Payment dispatched to customer Sr. Claims Adjuster 15
Yes
Billing System
BPM Implementation
1 6
BPM Implementation Trends
Existing deployment
New Implementation
Reduction in elapsed time Higher productivity per person Improved quality/reduced errors Reduced number of steps Higher employee satisfaction Fewer people needed Improved coordination Automation of admin. tasks
Improve productivity
5%
5%
Extended enterprise
15%
35%
Reduced cost per transaction Enabling external users
Improved regulatory compliance
25%
40%
Streamline processes
Flex. in processes/bus. agility Data/process integ. Reduced risk
45%
20%
Eliminate paper
Red. waste
55%
70%
85%
75% of all new BPM projects will be centred around improving productivity and streamlining processes
Source: Gartner research, 2003
17
Critical Components of Implementing BPM
From a Business Perspective PROCESS CONSULTING ? Understand operations strategy, plan and objectives ? Do a detailed mapping of the As-Is process and analyze the same w.r.t ? ? ? ? ? Process Stakeholders Process Efficiency and capability Process Cycle Time Level of Process Automation Non-value added items within the process ? Bottlenecks, delay points ? Use proven process methodologies such as Six Sigma to design a “To-Be” process which will help in: ? Defect Reduction ? Cycle Time Reduction ? Process efficiency and capability improvement From a Technological Perspective BUILD ? Complete customized Solution ? High Lead Time ? No licensing issues BUY ? Low lead time ? Low maintenance overheads ? Easy upgrades FRAMEWORK ? Reuse existing investments in BPM – Workflow engine, rules engine, reporting tools ? “Plug and Play” framework components can be used instead of “buying” an entire suite of products or “building” the same grounds up
18
Sample Rules Flow
19
Thank You
Thank You
20
doc_461646281.pptx
It gives a sample by applying BPM in claims process in insurance industry. It also includes the critical components of implementing BPM.
BPM in Insurance
Agenda
? Need for BPM in Insurance Industry
? Areas Where BPM Helps
? BPM Implementation
? Case Studies
2
Need for BPM in Insurance Industry
3
Insurance Overview
MARKETING Market Research, Conceptualizing New Products
CLAIMS Registration, Verification & Payment of Claims
ACTUARIES Pricing of Products, Rate Setup
INSURANCE OPERATIONS
Arranging Reinsurance For Risk Sharing REINSURANCE Assessing Risk, Issuing & Servicing Policy UNDERWRITING
Generate reports, manage Internal system & Processes
MIS
Manage the cash flows, reserves for the claims & investments
ACCOUNTING
4
Insurance Overview
Online Quote Processing Policy services Office / Branch office Agent/Broker/Intermediary Externa l Parties
NEW BUSINESS SYSTEM
Rate Engine ? ? ? Underwriter evaluates the quote Underwriter accepts the proposal Issue the policy
Customer
Requests
Quote Processing System for Quote Accep t Quote ?
Convert
to policy Policy Processing System
Claim Notification Agency / Compensation System Claims Verification
Policy Billing Billing System
Print Schedule, Attach Forms Document Application Processor
Yes
Valid Claim
No Reject Claim
Claims Payment
DISPATCH POLICY
CLAIMS SYSTEM
LEGEND LEGACY SYSTEMS ONLINE SYSTEMS 5
Industry Overview
Legacy / Core System
? Redundant core systems (eg: multiple variations of policy systems) ? Lacking capability of cross-system transactions & data consolidation ? Legacy systems - unable to send/receive real-time information or transactions ? Business process rules that are embedded into each core systems that are in conflict or overlap ? Prevalence of paper oriented manual processes (Document & Image management) ? Independent channels, including alternative sales channels such as banks, that distribute their products ? Multiple iterations of new business (including rating, underwriting & policy) and service (including claims) applications ? Competitive scenario - Need to innovate new products & market in least amount of time Insurance industry executes millions of transactions daily between various actors & systems, a lot of which can be & needs to be automated
Improvisation on channel management & market new products
Market Reach
Need to incorporate the regulatory changes quickly & with minimum efforts
Regulations
? Frequent changes in government regulations & mandates directly impacting insurance processes / operations ? Regulations enforcing need to generate & reports about business processes (eg: SoX)
6
Industry Trends
? Increase in IT budget incrementally year-overyear to improve core business operations, including legacy system enhancements & strategic initiatives ? The largest percentage of IT spending goes toward support, maintenance & improvements in policy administration & claims systems ? Web services/service-oriented architecture (SOA), business process management (BPM) solutions, & document management are the top three enterprise IT investment priorities ? Primary focus on projects that reduce IT costs for running business, such as system replacement or application integration
Investment in Enterprise IT Initiatives Among P&C Insurers
? Need for ensuring systems are able to support current & future business requirements (such as accelerating time to market for new products & maintaining or updating business rules for business users ? Invest in enterprise IT projects, such as BPM and SOA, to enable interoperability of systems and improved workflow
7
Why BPM in Insurance
Agent Various Backend Systems CSR
BPM orchestrates the overall transactions
Third Parties Carrier Offices
? BPM orchestrates millions of transactions flowing through various systems, people, company & third parties ? BPM provides a near real-time view of process activities through advanced monitoring & reporting capabilities ? BPM components provide quick ability to reconfigure business processes
BPM can provide truly valuable functionality to: ? Automate manual tasks and coordinate data capture from loosely structured sources
? Help enhance interoperability between traditional applications by providing human and systems task management across multiple systems
? Provide near real-time metrics on end-to-end process performance
Complementary, Not Redundant
8
Areas Where BPM Helps
9
Target Business Processes
NB Acquisition & Underwriting
? Automated routing of proposal ? Underwriting decision rules engine ? BAM to track staff efficiency & SLA’s
Channel Management
? Automated workflow management ? Monitor channel performance ? BAM reports generation
Policy Servicing & Administration
? Workflow, Rules, EAI & BAM for policy servicing & customer desired changes ? Integration with Billing System ? Periodic statement generation
Claims Processing
? Automated workflow ? Document Management
Product Development
? Templates & tools (configurator) ? Reduce development & implementation time
Reinsurance
? Automate & Monitor voluminous processes (Rules Engine & BAM)
10
Target Functional Processes
Business Process Automation ? Reduce/automate repetitive business processes ? Ensure proper documentation for manual processes & business rules (people’s heads) ? Automate processes involving several manual tasks (such as verification of completion, validation of information, reconciliation)
Connect Back-end Applications ? Seamless integration & data flows between systems (policy management systems, rating packages, claims applications & accounting) ? Effective expansion into new markets & transition to new products ? Integration of branch office operations & ability to predict & control IT costs
External Interface
? Enable effective & efficient communication between external entities & insurance company ? Uploads (External Parties to Carrier) ? Downloads (Carrier to External Parties)
11
New Business: Before BPM Implementation
Customer
Mail Room Filing Dept. Data entry operator Access 3rd party system for medical history, ALH, PLH info
Support Clerk
Filing Dept.
Data Entry Operator Jr. Underwriter
Alternate flow
Additional information request or rejection letter sent to customer Support Clerk Sr. Underwriter
Support Clerk
END
POI, Policy documents etc sent to customer
Policy Issue Clerk
Billing Dept.
12
New Business: After BPM Implementation
Customer
Mail Room Image /Scanning Solution Rules engine validates information for accuracy and completeness Is info accurat e and complet e Yes Access 3rd party system for medical history, ALH, PLH info
Rules engine runs the underwriting rules
Alternate flow
Reject Legend Key
BPM Automated Workflow
No
Additional information request or rejection letter sent to customer through an automated email. U/W Review
Underwriting decision?
Rules Engine
Accept
Reject
EAI
Sr Underwriter Accept
Business Activity Monitoring (BAM)
END
POI, Policy documents etc sent to customer through postal and automated eMail
Payment Status?
Approved
Billing System 13
Claims Processing: Before BPM Implementation
Customer
Mail Room Filing Dept. Data entry operator
Access 3rd party System for Auto loss history (ALH) Claims Clerk
Filing Dept.
Data entry operator Claims Handler Field Inspector
Alternate flow
Additional information request or rejection letter sent to customer
Claims Clerk
Claims Reviewer
Jr. Claims Adjuster
END
Payment dispatched to customer
Payment Clerk
Billing Dept.
Sr. Claims Adjuster 14
Claims Processing: After BPM Implementation
Customer
Mail Room Image/Scanning solution Rules engine validates information for accuracy and completeness Is info accurat e and comple te Field inspector
Yes
No
Call center enters information into BPM workflow
Alternate flow
Additional information request or rejection letter sent to customer through an automated email.
BPM accesses 3rd party system for ALH
Rules engine runs complex logic to determine the claims amount payable
Legend Key
BPM Automated Workflow
No
Rules Engine
Is claim approved ?
EAI
END
Business Activity Monitoring (BAM)
Payment dispatched to customer Sr. Claims Adjuster 15
Yes
Billing System
BPM Implementation
1 6
BPM Implementation Trends
Existing deployment
New Implementation
Reduction in elapsed time Higher productivity per person Improved quality/reduced errors Reduced number of steps Higher employee satisfaction Fewer people needed Improved coordination Automation of admin. tasks
Improve productivity
5%
5%
Extended enterprise
15%
35%
Reduced cost per transaction Enabling external users
Improved regulatory compliance
25%
40%
Streamline processes
Flex. in processes/bus. agility Data/process integ. Reduced risk
45%
20%
Eliminate paper
Red. waste
55%
70%
85%
75% of all new BPM projects will be centred around improving productivity and streamlining processes
Source: Gartner research, 2003
17
Critical Components of Implementing BPM
From a Business Perspective PROCESS CONSULTING ? Understand operations strategy, plan and objectives ? Do a detailed mapping of the As-Is process and analyze the same w.r.t ? ? ? ? ? Process Stakeholders Process Efficiency and capability Process Cycle Time Level of Process Automation Non-value added items within the process ? Bottlenecks, delay points ? Use proven process methodologies such as Six Sigma to design a “To-Be” process which will help in: ? Defect Reduction ? Cycle Time Reduction ? Process efficiency and capability improvement From a Technological Perspective BUILD ? Complete customized Solution ? High Lead Time ? No licensing issues BUY ? Low lead time ? Low maintenance overheads ? Easy upgrades FRAMEWORK ? Reuse existing investments in BPM – Workflow engine, rules engine, reporting tools ? “Plug and Play” framework components can be used instead of “buying” an entire suite of products or “building” the same grounds up
18
Sample Rules Flow
19
Thank You
Thank You
20
doc_461646281.pptx