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The Digital Transformation in Insurance

TIBCO:

Insurance is one of those customer-facing industries that should increase focus on providing great customer experience. According to a McKinsey and Company study, “Companies that offer best-in-class customer experiences grow faster and more profitably.” In fact, satisfied customers with insurance are 80 percent more likely to renew their policies than unsatisfied customers.

Delighting customers is also one of the major things that set digital leaders apart from digital laggards. Leading digital companies to achieve 5X higher revenue growth, 8X higher operating profit, and 2X higher return on shareholder value than digital laggards. But if you’re an insurance company, how and where do you start?

The answer: digital process automation via Business Process Management (BPM). A good BPM can help insurers transform their customer experiences in many ways. Let’s look at some real-world examples.

Resource management and optimization

First, a good BPM platform can help handle sudden surges in workload. It can dynamically spread the workload to take stress off the staff. For instance, when hurricane Harvey happened, the BPM platform would redistribute the work to regions of the country where insurance agents are not so busy, so the agents in Texas aren’t working 18 hours a day while those in Missouri are sitting around with spare capacity. Also, if a lot of Spanish claims came in, those could be automatically routed to where the most Spanish speaking employees are. Skill-based routing, independent of a department, the line of business, or location can take resource optimization to the next level, Let’s look at this with some numbers to make business process management’s impact a bit clearer.

According to news reports, half a million cars were trashed during hurricane Harvey (catastrophic event). And, let’s assume that one insurer in the area has a 5.3 percent share of the market. That would mean that this insurance company alone would have to process about 55,000 extra insurance claims just for cars just for the Houston area. Say, for example, that this insurance company processes around 50,000 claims a month. So, suddenly, this insurer would be faced with 100% more workload in a very short period of time.

This is where TIBCO BPM and its fine-grained resource management capabilities can really come in handy. TIBCO BPM would automatically re-route work to the area of the country or staff within the company with the lowest workload. And, it will continue to dynamically move work around to match skillset required and spread the workload, preventing that insurance company from getting a bad reputation for late claims and help them get the best use of their resources.

Event management

Resource management is not the only thing TIBCO BPM is good at. It can also allow a process to be event-driven and moved along based on incoming events and data. Let’s say an insurance agent needs a customer to send in a receipt for an item they’ve replaced that’s been stolen. That receipt would have to be mailed or faxed to the insurance company’s mailroom who would then scan it, index it, and put it into a document management system. With TIBCO BPM, you can program the document management system to send the receipt directly to the BPM system, who can then release the process to the next stage automatically. This results in fewer human errors and major productivity savings.

I would like to use an example of something that happened to me a few months back when my car was broken into. My insurance claims adjuster was very fast at getting the claim processed, however, the claim was held up for weeks waiting for a police report. The claims adjuster literally had to log back in every day to a vendor system that captured the police reports to see if the report came back from the police. Since that one agent is probably working on 50 claims at a time and 25 of them require a police report, that one agent probably makes dozens of lookups a day to the report system. That comes down to about an hour of time a day, that’s about 12% productivity loss. Multiply that by the number of agents and that is how much time is getting lost on waiting and checking for reports. And, that’s just one step of what can be a very long insurance claims process.

But, if the insurance company had a better, more efficient system such as TIBCO BPM, the claims adjuster could be automatically notified that a police report is available and it could be automatically inserted into the process. This would save an enormous amount of time.

Business process management also creates more accuracy by linking all the documentation. With many insurance claims, there are a lot of documents—police reports, witness statements, inventory of stolen goods, receipts to back up claim, affidavits, medical bills, repair bills—managing and linking all those documents is very involved and time intensive. This is the perfect use case for BPM. Anything that makes document organizing and gathering easier is going to save. And, the bigger the company, the bigger the savings. Having all of these processes automated also saves time, which makes the claims process go much faster, which improves customer satisfaction.

Case management

TIBCO BPM supports full case management.

TIBCO’s case management uses a data-centric approach to represent the business problem to solve. Let’s say you are processing a claim. Claim milestones (FNOL, adjusting, reserving, medical claims) are represented as process states (stages) where you design smaller process fragments to advance the case from state to state until it’s resolved. This has multiple advantages:

  • You don’t need to model big end-to-end processes. Instead, you define high level milestones and then break up the process into smaller logical pieces.
  • You don’t have to wait for the entire process to be completed before you roll it out. In other words, you can go to market faster and adjust quickly to changing needs.
  • You can add additional tasks and milestones to existing insurance business processes without redesigning or redeploying the whole system.
  • Easy collaboration among teams. Multiple participants can add comments to and ask questions in any process.
  • You can track the case more easily and in a business friendly way, and expose the current case status to customers using a dashboard.
  • You can  link cases to each other, delivering 360° view of your customer cases.
  • You can expose your case management process data to external parties using API gateways.

Case management examples

Property and casualty

Car insurance claims processing would work along those lines: when a claim first comes in, the claims adjuster will look at the First Notice of Loss (FNOL) and see if it’s a fender bender or something more serious. Let’s say the incident involved a 2013 BMW where a fender and some lights have to be replaced. Estimated cost of about $2,000. The claims adjuster then sets that amount aside in the reserving pool. They have to set that aside by law to cover payouts on all claims in that region. But then let’s say another claim comes in where two cars are badly damaged and two people were sent to the hospital. The adjuster realizes that $50K has to be set aside to cover losses for that one because the conditions of the claim were much more severe. Then, later in the process, the medical bills come in and they are much higher than originally thought and $50K isn’t enough. The adjuster has to go back to change the reserve from $50K to say $150K. If the insurance company has TIBCO BPM, that means the claims adjustor can go back to the reserving step and just readjust the reserve for the claim without disrupting the entire process. This results in great productivity gains, makes the system easier to use, and results in fewer human errors.

Health insurance

A mutual health insurance carrier uses TIBCO BPM and case management solution accelerator to provide group and individual health insurance coverage to enterprises. They use TIBCO case management to manage all their health insurance processes. They also use TIBCO API management solutions to expose health insurance case data to their customers. This allows human resource reps at those companies to use their own self-service portal technologies to access the case data maintained by the insurance carrier. This way, they can create cases, view case status, make contributions and report at the group or individual level. This results in a flexible approach for enterprise customers to interact with TIBCO BPM and case management without the insurance carrier having to maintain portal access for each and every customer.

Digital transformation and insurance

In the early days of BPM, it was all about back office automation. But in the age of digital transformation, you have to rethink your processes and put the customer (interactions, journey, channels) first. If insurance companies want to get ahead of the competition and create compelling customer experiences, then business process management is the first step they should take.

Customers who have a bad process claims experience are 83 percent more likely to change insurance carriers at renewal (Accenture, The Digital Insurer, 2015).

BPM is a crucial part of digital transformation in terms of improving the customer experience while retaining the benefits BPM was always known for which is cost reduction, productivity, and efficiency gains. When you use a powerful tool like BPM it means, less errors, better productivity, and a smoother, faster, and more orchestrated business process.

The bottom line

In essence, insurance operations (quoting, binding, onboarding, claims, customer service) is just a collection of business processes and that isn’t going to change. What is going to change is how employees, agents, customers, third party administrators, and vendors interact with those processes. The search for efficiency and productivity is not going to stop in the age of digital transformation. Therefore, the insurance companies who achieve the best digital transformation results are those who learn to adapt their technology stack to accommodate BPM, API, mobile, and data assets.

TIBCO Connected Intelligence provides the pervasive integration capability that ties all these platforms together and enables real-time analytics to empower your company to achieve true digital transformation.

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