Transform your Insurance Processes with BPM and Decision Management

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This is the presentation given by Vincent M Price during Impact 2012 in Mumbai. It's a walk through of how do you transform your insurance processes for greater competitive advantage with BPM and decision management

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  • Distribution-agents and direct 31 and 36% respectively-but brokers 15, banks 8, on line? Product-specialization and expansion-crop/livestock Private market-4%2002 to 41% 2010- Consolidation and new entrants-new competitors example Travelers announce May 28 th JV with Mahandra and Mahandra general insurance auto Swiss Re and L&T into health market May 2012 Profitability-underwriting discipline given sof market, deregulation, heavy discounts to gain market share pressure on results such as private focus on better risks-public ratio 121 versus 106 for private 2010-placing pressure also on expense ratios such as sales and distribution
  • Main Point: To focus on improving processes, organizations must consider their broad business network of customers, partners, and suppliers, and how their processes span across this network. Speaker Notes: For a moment, think about your business network – no not just your IT infrastructure, but the broad network of relationships and interactions that make up your business. Most organizations reflexively think of their business network within the walls of the business, and with good reason. In today’s world these internal networks are changing rapidly. Organizational structures are changing. Traditional hierarchical organizations are becoming matrixed and geographically dispersed. Mergers and acquisitions are accelerating, and lower employee loyalty is driving higher levels of churn in your workforce. Even at a personal level, changes are accelerating. Job roles are more nebulous, and ad-hoc teaming across organizations is growing. Here we can see the business network for an insurance carrier. There is a formal corporate structure with employees organized by lines of business, but the organization is becoming blurred. Complex claims are processed across divisions, and ad-hoc teams are needed to customize insurance offerings for demanding customers. In the meantime, the company must ensure consistency and compliance across all the activities within the business to meet regulatory demands. Each of these external connections is just as important as the ones inside the business, and in fact, may becoming more important. In a recent survey of business executives, 79% said that they expect the number of collaborative relationships they have with 3 rd parties to increase 1, while 87% of CIOs think their organization will be more collborative in the next five years 2 . As more, and more functions move outside the walls of the businesses, the distinction between external and internal members of the business network is disappearing, and companies must look to maximize the value of the interactions throughout their networks. The broad business network also profoundly effects how your organization can improve business processes. In this example we see how three of our insurance company’s processes touch multiple points inside and outside of their business. In order to improve these processes, the touch points and connections between the different entities in the business network must also be considered. This pervasive dynamism throughout the extended enterprise means that not only must the processes that span the network be robust, but also flexible enough to easily accommodate change without disrupting business activities. To effective meet these challenges, organizations need to consider end-to-end process management 1 Economist Intelligence Unit – Companies without borders, Collaborating to Compete 2 IBM Global CIO Study, 2009
  • Pressure Bottom Line-heavy discounts and rising loss ratios Public 90% Pvt 60-70% Combined 121 & 106% 2010 Operational-no silos Demanding Customer-claims service/self service/coverages Regulatory-Compliance reporting Channels-direct/agent-on-line-banks Risk-discipined underwriting and emerging risks such as climate/cat on property, corporate d&o, political and terorism
  • Unfortunately in today’s world the complexity of legacy systems and the multitude of outside requirements like regulation and product requirements etc., can make these goals almost unattainable From a line of business perspective, you have : Siloed business units Differing priorities across Lines of Business Redundant processes – may have different claims processes for similar products across lines of business Manual, high touch processes – although much of the “paper” in the insurance business has been converted to electronic formats, often back office processes are still heavily reliant on human intervention to execute on transactions From an IT perspective: Legacy systems and vendor solution packages that won’t integrate Inflexible, hard coded applications Multiple projects to manage with cross-dependencies Data and information that is difficult to access real-time
  • We have customers who follow a shared-services organization model and realize that BPM can help in a lot of different places. Customers like this go out and advocate BPM to different lines of business so that they can, depending on priorities, drive: ● Customer Value ● Service Effectiveness ● Operational Efficiency ● Service Efficiency Then they gather input from different groups who are interested in using BPM to help their processes and they identify a pipeline of all the different implementable locations within their organization.
  • Main Point: Customer who buy insurance seldom care about what is happening behind the scenes. All they care about is the outcomes. They want to be served quickly and competently. When we think about ‘outcomes’ the industry is striving to shorten cycle times, make it easier to do business, develop competitive edge in service-differentiate yourselves from the competition other than price. Behind the scenes this often brings with it reduced expenses, increased capacity and profitability .
  • 06/07/12 IBM Confidential, Not For External Use The business scenarios our prototypes support, starting with the most recent.
  • Perform ‘what if’ scenarios and impact analysis
  • Travelers http://w3-01.ibm.com/sales/ssi/cgi-bin/ssialias?infotype=CR&subtype=NA&htmlfid=0GLOS-7YTLCG&appname=crmd
  • Travelers http://w3-01.ibm.com/sales/ssi/cgi-bin/ssialias?infotype=CR&subtype=NA&htmlfid=0GLOS-7YTLCG&appname=crmd
  • 06/07/12 IBM Confidential, Not For External Use The business scenarios our prototypes support, starting with the most recent.
  • Full company name: Versicherungskammer Bayern Insurance (VKB)
  • http://www.youtube.com/watch?v=-jk_1Sj-D8I
  • 06/07/12 IBM Confidential, Not For External Use The business scenarios our prototypes support, starting with the most recent.
  • http://w3-01.ibm.com/sales/ssi/cgi-bin/ssialias?infotype=CR&subtype=NA&htmlfid=0CRDD-8EBBT3&appname=crmd Client Business Challenges With hundred branches and several hundred agencies dispersed throughout Russia, its claims management process was disconnected and strained with contradictory data, delayed decision making, and inconsistent levels of customer service. Without a significant change in its process management model and staff performance, the company would not be able to deliver world class customer service and remain competitive. Solution With the solution in place, the company executives were able to remotely monitor and analyze staff performance, capturing the number of new claims against claims processed per day, and the number of deadlines met. They evaluated the quality of work performed per case, amount of time needed and spent, expertise required and provided, and whether a change had to be applied to fulfill the promises made to customers. Furthermore, the solution helped identify bottlenecks, risks against corporate standards and other process improvement areas, allowing the executives to reprioritize tasks and reallocate talent and resources in flight. A large insurance provider in Russia offering over hundreds of individual and corporate insurance products. The company also expanded its sales of insurance products to online. Business need The auto insurance segment in Russia experienced rapid growth after the introduction of the Mandatory Third Party Motor Liability Insurance (OSAGO) in 2003 and continued to be the growth driver in Russia’s insurance industry, with the Comprehensive Car Insurance Policy (KASKO) making up the largest share in the portfolios of the leading insurers. As a result of this growth as well as its expansion of online sales, the company won a lot of business and consequently, experienced a rapid increase in settlement claims. However, its claims systems were too complex to keep up and unable to allow the company to add new features and capabilities that the business required. The company’s claims process was disconnected with contradictory data, slowing down the settlement process and resulting in increase operational cost. To efficiently manage its insurance claims processes, deliver world-class customer service and accommodate future business growth, the company recognized that it needed to automate its claims process. Solution implementation The company engaged IBM and IBM Business Partners BI Telecom and CROC to automate its claims process by implementing IBM WebSphere Lombardi Edition software. The software provided data analysis that the company used to evaluate the quality of work performed on the case, amount of time needed and spent, expertise required and provided, and whether a change had to be applied to fulfill the promises made to customers. Additionally, it captured and integrated data so that the company staff was able to see the number of new claims, claims processed per day and the number of deadlines and corporate standards being met. These capabilities helped the company to forecast necessary expertise and allocation of time and resources for future claims with similar characteristics. It also offered an easy way for the company to provide process coaches to help the staff complete required tasks quickly, accurately and consistently to ensure work is done on time. Real-time dashboards also showed both work-in-progress and historical performance against the company’s goals. Performance metrics were then automatically collected in the client’s performance data warehouse, and its built-in optimizer identified bottlenecks and other process improvement areas. Based on this information, the company was able to reprioritize tasks and reallocate talent as appropriate, saving time and money. Process scoreboards and performance measurements also enabled the company staff to maintain consistent levels of service to customers and gauge customer satisfaction. With the success of the new settlement claims process management, the company hopes to extend the use of WebSphere Lombardi Edition software for other processes in the near future. Benefits The company saved significant time and money by automating its claims process. With improved process efficiency and staff performance, the company was able to deliver world class customer service and increase its customer satisfaction levels. Instrumented The solution captures and integrates both latest and historical case data and applies business rules and analytics to transform it into relevant information that the company can use to forecast required time and resources per claim with similar characteristics. Interconnected Every aspect of claims processing, including the customer call center, is now centralized at the company’s operations center in Voronezh rather than dispersed throughout its 88 individual branches and 383 agencies. Anyone within the company’s 88 branches and 383 agencies who was working on a settlement case gained a 360-degree view of its status and work in progress as well as the ability to take immediate action and collaborate on process instances during process execution Intelligent The solution provided the company with a real-time analysis of insurance case performances, which helped it to actively manage the process and help ensure continued compliance with customer expectations.
  • 06/07/12 IBM Confidential, Not For External Use The business scenarios our prototypes support, starting with the most recent.
  • IBM's vision is to allow customers to create more agile and dynamic processes today, that serve as the foundation for greater innovation in the future. A central piece of this vision is to improve the alignment between business architecture and IT infrastructure, and keep this alignment flexible and continuous to adapt to changing business needs. This in turn enables business agility, and allows processes to be continually improved over time. It is important, though, to understand the unique value that different technologies bring to enable agility, specifically Business Process Management and Business Rules Management. There are real synergies between the two, which is clearly identified in this slide. BPM is here to orchestrate the various tasks / actors / services that comprise the end-to-end business of the organizations whereas the BRMS is here to manage automated decisions at specific points in the process. In most of the cases, BRMS is exposed to BPM through web services that are invoked by the process to make a decision that has direct influence on how the business operates. BRMS is not just a technology to do simple routing rules inside a business process, but is instead used to automate complex, highly-variable decisions that take place at different points in a process, as well as in other systems that may not be involved in orchestrated processes.
  • Main Point: Process problems are inherent in today’s business environment. Typical process problems lead to many issues that only IBM BPM can solve. Speaker Notes: To better understand how business process management can reduce complexity and boost growth we should take a deeper look at the problems that cause process management problems. Yes, you have systems. But they typically only solve part of the process. At the human level, the problem is that work is not well controlled Finally, there is no end to end visibility to the process – that spans humans and systems This leads to replication of efforts and inefficient processes, lack of control over system and business events, incomplete and inaccurate data flow between systems, inconsistent prioritization, unstructured tasks and poor visibility. These issues lead to unstructured tasks, inefficient working environments, inconsistent prioritization, incomplete data flow, lack of control over systems and business events and poor visibility into process performance.
  • Here is a deeper look at the problems that cause process management problems. The key points here: Yes, you have systems. But they typically only solve part of the process. At the human level, the problem is that work is not well controlled Finally, there is no end to end visibility to the process – that spans humans and systems Good problem example: Aflac wants to grow their business at 100%, but their invoice reconciliation process is so manual that it will cost too much. Also, delays in resolving invoice issues affect customer satisfaction Transition: BPM is the solution to these problems So, a good way to think about BPM is that it is a layer that gives you the control and visibility over the processes. Key points: It sits between people and systems and manages the process across those participants Prioritizes your work, but also gives you visibility and control And when the process evolves and changes – you can quickly implement that change and that is immediately Back to Aflac -by deploying BPM, they cut manual processing by 80% (efficiency) while improving how well they work (affectivity) Transition: So now I would like to talk a bit about Lombardi
  • Transform your Insurance Processes with BPM and Decision Management

    1. 1. Transform Your Insurance Processesfor Greater Competitive Advantagewith BPM and Decision ManagementVincent M Price
    2. 2. IBM Software GroupAgenda Business Drivers And Challenges • Life and Non-Life Building Smarter Processes Across The Enterprise • Improve Profitability, Reduce Costs, Improve Agent/Customer Interaction, Up-Sell and Cross Sell IBM WebSphere Solutions For Insurance • Speed, Transparency, Collaboration2 © 2012 IBM Corporation
    3. 3. IBM Software GroupAgenda Business Drivers And Challenges • Life and Non-Life Building Smarter Processes Across The Enterprise • Improve Profitability, Reduce Costs, Improve Agent/Customer Interaction, Up-Sell and Cross Sell IBM WebSphere Solutions For Insurance • Speed, Transparency, Collaboration3 © 2012 IBM Corporation
    4. 4. IBM Software GroupIndustry going through major changes since 2009-10 – productinnovation being the need of current times Emergence of New Bancassurance, direct selling agents, brokers, online distribution, corporate agents such as non-banking Distribution Channels financial companies (NBFCs) and tie-ups of para-banking companies with local corporate agencies ( in remote areas. • Consumers’ need for higher levels of customization has led to product innovation leading to greater Product Innovation operational efficiency • E.g. ULIPS, Pension products etc • In life insurance segment, share of the private sector in total premiums increased from 2 % in 2002–03 Growing Market Share of to 29.1 per cent in 2008–09. Private Player • In non-life insurance segment, share of the private sector in total premiums increased from 9.5 per cent in 2002–03 to 40.9 per cent in 2009–2010 • Entry of many companies in the domestic insurance segment due to its significant potential • Increasing competition in easily accessible urban areas, FDI limit of 26 per cent and the recent Consolidation in Future developments in equity markets have impacted their growth prospects. • Consolidation will lead to fewer but stronger players in the country and also generate healthy competition. Large insurers continue to expand, most focused on cost rationalization and aligning business models to Mounting focus on EV ground level realities to realize reported embedded value (EV) and generate value from future new over profitability business Capital requirements across the sector are likely to increase due to: Rising Capital •Higher sum assured driving sum at risk Requirements •Greater allocation to policyholders’ assets due to lower charges •Back loading resulting in high new business strain, and expense overruns due to low productivity of newly set distribution network © 2012 IBM Corporation4
    5. 5. IBM Software GroupComplexity exists internally within organizations andexternally within the broader business networkCompanies need end-to-end process management To orchestrate human tasks… … to increase visibility… Agents & Partners & Producers Re-insurers Insurance Carrier Internal Employees Con- Auto sumers Commercial LOB Con-sumers LOB Home LOB DMV Out- Financial sourced Service Institutions Providers 3rd Party Services … to manage exceptions and cases… … and for scalable transactions… … everything you need to manage end-to-end business networks © 2012 IBM Corporation
    6. 6. IBM Software GroupInsurers’ Top Business Drivers Across IndustrySegments 8% 7 G o i g h b s es rw te ui s n n 8% 0 Es o di g ae f on 7% 4 b s espo ues ui s( rd cr n ) 4% 0 3% 9 C srd co ote ut n i 7% 0 I rai g n es c n 4% 2 poi a ii y rf b t t l 5% 0 Es o di g ae f on 2% 3 b s espop c ui s( rset n s 4% 0 a d och l r n p l o es iy d ) 3% 5 A ii y gt l 2% 0 Source: Celent Le e l i / ah fH t Po et C sa y rp r /au l y t © 2012 IBM Corporation6
    7. 7. IBM Software GroupInsurance – Growth Factors & Challenges Growth Factors •Increasing awareness and low penetration •Tax savings from purchasing policies •Increased disposable income •The massive rural market •Favorable Government & Regulatory Initiatives •Fast progressing medical technology and increasing demand for better healthcare has resulted in rising demand for health insurance •Innovative products & new distribution channels Challenges •Product distribution complexity •Aggressive pricing post-deregulation of the industry •Heightened competition and the need for product innovation •Lack of regulatory-mandated capital •Reconfiguring operations for an optimal business mix •The need to enhance efficiencies © 2012 IBM Corporation7 Source: ibef
    8. 8. IBM Software GroupKey Challenges that needs to be quickly addressed for furthergrowth of the industry • With the recent de-regulation a price war has emerged with companies Pressure on Bottom-line • This has directly resulted into pressure on bottom-line of the companies • Insurance Business comprises of various processes and is still on multiple legacy systems Disparate operational • With market evolution products also have evolved systems • With complex product there is a need to have robust operational support to service clients • Profitability linked to customer base & their retention Demanding Customer • Great challenge due to price war, absence of a single view of the customer and resultant poor customer servicing due to old operational systems Regulatory requirements • Strict regulatory compliance & complex reporting • With new distribution channels increasing the conflicts is increasing as well in terms of Channel Conflicts commissions and servicing provided to these channels • Insurers have to look into solving the conflicts and optimizing the distribution channel • Profitability of insurance companies depends on quality of risk underwritten Integration of risk • Good underwriting activity requires historical data about risk and claims & getting this data considerations into their is a challenge decision making and strategic execution • Industry is now looking at IT & web enablement to mitigate the pain point and create sustainable value © 2012 IBM Corporation8
    9. 9. IBM Software GroupFactors Impacting Costs and Bottom LineDisjointed, silo’ed No consistency in Lengthy cycle for Lack of transparencyand manual how UW, claims or implementing changes, and audit trails inprocesses corporate guidelines Introducing new light of regulations are enforced across products channels Limited portalMultiple legacysystems in place that Unable to settle claims, capabilities thatlack flexibility, costly to Inaccurate assessment or deliver products and do not supportmaintain and integrate of risk, unable to easily services in a timely and up-sell/cross-sell identify suspicious cost effective manner or guided interactionDecisions claims and reduce loss(business rules) ratios Poor alignmentare hard coded and Unable to do ‘what if’ between ITdecentralized or scenarios objectives andreside in manuals business strategies © 2012 IBM Corporation9
    10. 10. IBM Software GroupInsurance Operations TodayFragmented, Complex, Inflexible and Costly Self Service Underwriting Policy Administration Claims Billing New Business Processing Customers Regulators 3rd Party Agents Service Providers © 2012 IBM Corporation
    11. 11. IBM Software GroupCarrier Focus Areas Distribution Core Operations Focused on third party distribution Core and non-core insurance processes to including agents/producers, brokers, reduce cost and improve service financial advisors Process Process Management ManagementAgent and  Self ServiceDistributors  BPM for new Claims  STP business and post  Claims assignment issue STP  Case ManagementPolicy Servicing  STP policy changes  Compliance  Premium billings  Subrogation  Disputes Legal  ComplianceNew Business  Processing of applications  Case ManagementSubmissions  STP for certain risks  Segmentation Underwriting  Eligibility &  Complex risk and Enrollments resource alignment  Exception  New business processing streamliningBillings  Premium billings  STP for certain risks11 © 2012 IBM Corporation
    12. 12. IBM Software GroupBPM Landscape Operational Processes Customer Facing Processes • Self-Service • Product Sales External • Compliance • Dispute Resolution • STP for certain risks • Agents/Brokers • Eligibility & Enrolments • Claims & Policy Servicing Processes Participants • Underwriting Internal • New Hire On-Boarding • Claims • Workflow and Process • Policy Servicing • Vendor management • Invoice & Billings Core-Back Office Distribution/Customer- Front Office © 2012 IBM Corporation12
    13. 13. IBM Software GroupAgenda Business Drivers And Challenges • Life and Non-Life Building Smarter Processes Across The Enterprise • Improve Profitability, Reduce Costs, Improve Agent/Customer Interaction, Up-Sell and Cross Sell IBM WebSphere Solutions For Insurance • Speed, Transparency, Collaboration © 2012 IBM Corporation
    14. 14. IBM Software GroupIBM is partnering with our clients to create innovative solutions that will allow them to grow their current investment in BPM solutionsFor example, imagine if an insurancecarrier could… • Ensure consistency of business decisions, meet regulatory demands that govern how you do business in a uniform fashion • Automate the underwriting and claims process so new tasks are sent directly to the handler based on availability and skills, decisions are made automatically and manual processes are reduced or eliminated • Perform finer segmentation of new business submissions to provide more competitive pricing based on risk exposures • Improve customer service streamlining policy changes and enrollments Business Outcomes: Detect and respond to events and risks Recognize trends in real-time to meet customer demand © 2012 IBM Corporation
    15. 15. IBM Software GroupBusiness Scenarios • Automated Underwriting and Rating • Smart Claims and Fraud Detection • Commissions • Customer Service © 2012 IBM Corporation
    16. 16. IBM Software GroupSpecialty Lines InsurerIncreases New Business Growth By 30%Business Challenge: Business Solution:• Private client group experiencing • Enabled distribution of all processing functions to rapid growth internal staff and independent agents via web• Accommodate expansion without browser increasing resources. • Streamlined core business processes• Isolated systems to support core • Enabled capabilities including; processing, processes, including billing, automated task management, reporting, tracking, underwriting and claims auditing. processing • BPM and BRMS used to automate underwriting functionsWhy S ma rt In s u r a n c e ?It reduces time for new business quotes by 30%. Improves • IBM WebSphere® Application Serverup-sell capabilities which led to business growth of • IBM WebSphere® JRulesapproximately 30%. Increases speed to market by 50%(implementing rule changes in days versus months) • IBM WebSphere® Process Server • IBM WebSphere® MQ © 2012 IBM Corporation
    17. 17. IBM Software GroupBuilding A Smarter BPM & DM-based UnderwritingProcess © 2012 IBM Corporation
    18. 18. IBM Software GroupRisk Assessment - Based On Scoring and PatternMatching Pattern Matching Scoring © 2012 IBM Corporation
    19. 19. IBM Software GroupScenario: Risk Assessment © 2012 IBM Corporation
    20. 20. IBM Software GroupScenario: Scoring Scorin © 2012 IBM Corporation
    21. 21. IBM Software GroupScenario: Rating © 2012 IBM Corporation
    22. 22. IBM Software GroupScenario: Rating © 2012 IBM Corporation
    23. 23. IBM Software GroupImpact Analysis Monitor business KPIs to predict impact: • Run simulations before live deployment • Simulate on historical data • Measure impact between various alternatives © 2012 IBM Corporation23 Template Documentation 06/07/12
    24. 24. IBM Software GroupComprehensive Audit Trails of Rules and Decisions  Rule History Management © 2012 IBM Corporation24
    25. 25. IBM Software GroupFortune 500 P&C Insurance CompanyUnderwriting (Commercial Lines)Business Challenge: Business Solution:• Rules were hard coded and • Carrier embarked on a legacy modernization decentralized project and built a web-based underwriting• Manual processing system• Carrier was unable to enforce risk • Based on WebSphere infrastructure and underwriting guidelines and BRMS• Build an agile underwriting system that supports growth strategy and speed up requirementsWhy S ma rtIncrease in straightc e ? processing rate from 17 to 76%. I n s u r a n through • IBM WebSphere Application ServerIncreased new business quotes by 40%. Speed to market gains • IBM WebSphere ILOG JRulesof over 50% with rule changes in less than a week vs 5 months. • MQ WorkflowAble to obtain underwriting decisions at multiple points during theprocess and proactively segment unacceptable business © 2012 IBM Corporation
    26. 26. IBM Software GroupFortune 500 P&C Insurance CompanyUnderwriting (Commercial Lines)Additional Metrics• Quotes submitted per month increased from approx 20,000 in 2005 to 60,000 in 2010• Policies in force increased from less than 700,000 in 2005 to over 900,000 in 2010• Quotes by agents up by 25%• Approx 3000 rules in production across SMB commercial lines• 100% of underwriting rules (creation, testing, what if scenarios) done by business users (business analysts, underwriters and actuaries working with analyst) © 2012 IBM Corporation
    27. 27. IBM Software GroupBusiness Scenarios • Automated Underwriting and Rating • Smart Claims and Fraud Detection • Commissions • Customer Service © 2012 IBM Corporation
    28. 28. IBM Software GroupClaims Process-Business Process Automation TI VE A TR Traditional Human Workload Balancing is combined with dynamic Skills-Based Process Routing to ensure the right claim is assigned to the right handler at the right time. Skills criteria is a business-driven design element of a business process execution engine that S allows classification of employee skills and associated skill maturity matched with the requirements of specific claim scenarios and events. LU Application and Systems Integration that is orchestrated with an ESB and within a business process, allows manual tasks to be automated, audited, and monitored. Business process combined with Business Rules Management Engine enables the capture of IL policy coverage information (e.g. Limits, Dates, Vehicles, Locations). The automation of tasks like this reduce the claim workload of individual claims handlers, resulting in shortened call times and claim durations, and helps prevent human errors. Claim documentation requirements can be automatically sent to involved parties via BPM Process orchestration by a process engine. In most cases, all outbound and inbound paper communications can be managed electronically. Outbound forms and paperwork can be embedded with barcodes to allow for automatic electronic recognition and processing on inbound return. For situations requiring phone calls and follow-up work, tasks can be automatically routed to a lower-cost employee to complete. Depending on the Insurer’s Handling Philosophy, this step could be completed by a lower-cost/lesser-skilled Triage Analyst. After gathering incident details, Predictive Modeling, combined with Claim Segmentation, enables the decision to fast-path claims or keep them in the traditional business process. Every time claim data is modified in material fashion (New Witness, New Doctor, or Potential Subrogation against a 3rd Party), the Analytical Engine is running against the Claims Database to identify any new patterns that may result in claim escalation. 1 2 3 4 © 2012 IBM Corporation
    29. 29. IBM Software GroupClaims Process-Business Process Automation After gathering incident details, reviewing claimant information and eliminating fraud possibility with Fraud solution, the Claims Handler is able to apply their professional expertise in conjunction with existing applications to make an initial valuation. Based on Claim VE Segmentation and Small Loss Thresholds using Business Rules, an estimated 20% of Claims could be processed on a Fast-Path to reduce cycle time and prevent the opportunity for the claimant to obtain legal representation or other measures which would prevent TI paying more than necessary. TRA Manual activities, like building tasks lists, can be replaced with Business Rules and Human Business Process Management. The automated checklists are automatically built and updated based on real-time status of the required information. Forms and other US documents managed with and processed via Advanced Case Management solutions are automatically processed-outbound documents are created managed by Business Rules and automatically stored in a Content Management repository. The Claims Handler task LL list will automatically alert them, that this checklist item has been completed. 5 I 6 © 2012 IBM Corporation
    30. 30. IBM Software GroupClaims Process-Business Process Automation Investigation and Determination of Fraud should be happening throughout the lifecycle of the claim to help control the indemnity cost of the claim. For example, when 3 days into the claim lifecycle, a new witness is identified, the Fraud Modeling and Predictive Analytical systems should be triggered to analyze all involved parties from previous claims to see if this witness is actually a known person who is part of a fraud ring. This type of party identity matching should be used whenever new parties (e.g. witnesses, Doctors, attorneys) are added to the claim. When new medical information is updated on the claim that shows the injured party has more substantial injuries, the Predictive Modeling should begin to analyze and predict whether or not this claim is likely to have Severity Deterioration. TI VE T RA US 7 I LL © 2012 IBM Corporation
    31. 31. IBM Software GroupWorksafe Victoria Reduces Claim and FraudReduce Costs from 5% to Less than 0.5%Business Challenge: Business Solution:• Needed a modernized claims and • Modernized claims and fraud detection fraud detection system • Went from claim validation, adjudication,• Manual processes and long settlement payment and settlement to identifying and cycles with greater potential for fraud routing suspicious claims • Delivered agile payment processingWhy S ma rtImproved u r a n c e ? by 300%. Reduced I n s invoice throughputpayment cycle from 30 days to 1 day. Increased STPfrom 40 to over 80% © 2012 IBM Corporation
    32. 32. IBM Software GroupWorksafe Victoria Legacy Systems © 2012 IBM Corporation Analytics
    33. 33. IBM Software GroupWatch The Video © 2012 IBM Corporation
    34. 34. IBM Software GroupBusiness Scenarios • Automated Underwriting and Rating • Smart Claims and Fraud Detection • Commissions • Customer Service © 2012 IBM Corporation
    35. 35. IBM Software GroupMajor Life Insurance CarrierReduces Time to Market for Promotions and Incentives by 70%Business Challenge: Business Solution:• Needed an update payment process • Revamps commission payment process with• Needed more flexibility in WebSphere ILOG BRMS management of commercial terms and • Process supports a homogenous multi-channel conditions strategy. BRMS used for validation, commission calculation and stimulation for and automate regulatory rules W h y S m a r t e r In s u r a n c e ? With the new system, carrier has more flexibility in the management of specific commercial terms andconditions; easily enforce regulatory rules that vary from country to country and support new policy sales, anniversary payments, renewals by agent/broker. © 2012 IBM Corporation
    36. 36. IBM Software GroupWebsphere BRMS Within a Commissioning System Input Interfaces Administration Querying Repositories Websphere BRMS • Rules Calculation • Parameters Publishing • Commissions Simulation • Historical Data Reporting Output Interfaces © 2012 IBM Corporation36
    37. 37. IBM Software GroupBusiness Scenarios • Automated Underwriting and Rating • Smart Claims and Fraud Detection • Commissions • Customer Service © 2012 IBM Corporation
    38. 38. IBM Software Group New York Increases speed to market by 50%Smarter health plan servicesLeading healthcare company in “Providing innovative products and services whilewestern New York state created a improving the availability, quality, and cost ofstreamlined and efficient enrollment healthcare is central to our corporate vision. We chose to partner with IBM as their suite of technologies metand plan change process for members our business and IT objectives at an enterprise-wide level. Websphere Process Server and ILOG JRules have enabled us to automate, optimize and monitor critical business decisions within our core processes such as member enrollment while delivering tangible benefits.” —John Walsh, Chief Enterprise Architect, Results / Ability to Change HealthNow New York Inc.  Speed to market gains of over 50%  Ability to introduce new behaviors into systems in days rather than weeks or months  Reduction in enrollment time and administrative costs  End-to-end visibility in enrollment process for greater clarity, accuracy and consistency  Increased collaboration between business and IT  Productivity gains with fewer people and man hours spent to create, test and deploy rules  Comprehensive audit trail of rules and decisions rendered38 © 2012 IBM Corporation
    39. 39. IBM Software GroupSmarter Enrolment with Intelligent Decision Management Reject www N N Enrolment Eligible? Plan Submission Direct Sales Manual Y Assessment Y Underwriting Bind Broker / Partner © 2012 IBM Corporation
    40. 40. IBM Software GroupSmarter Enrolment with Intelligent Decision Management Operational Decisions… Reject www N N Enrolment Eligible? Plan Submission Direct Sales Manual Y Assessment Y Underwriting Bind Broker / Partner © 2012 IBM Corporation
    41. 41. IBM Software GroupProcess - Before  Decision logic Less Automated, Less Precise/Flexible embedded in Reject the process www model or code N 78% N  Limited Enrolment Eligible? Plan? Submission straight-throughDirect Sales Manual processing Y Assessment Y  Lack of personalization Underwriting Bind andBroker/Partner specialization © 2012 IBM Corporation
    42. 42. IBM Software Group Process - After More Automated, More Precise/Flexible  Decision logic externalized Reject www  Highly N N 0-18% automated Risk Eligible? Eligible?  Context- EvaluationDirect Sales Manual specific Y Assessment Y consistent and granular Underwriting Bind throughoutBroker/Partner  Decision logic Less Automated, Less Precise/Flexible embedded in Reject the process www model or code N 78% N  Limited Enrolment Eligible? Plan? Submission straight-throughDirect Sales Manual processing Y Assessment Y  Lack of personalization Underwriting Bind andBroker/Partner specialization © 2012 IBM Corporation
    43. 43. IBM Software Group Agenda Business Drivers And Challenges • Life and Non-Life Building Smarter Processes Across The Enterprise • Improve Profitability, Reduce Costs, Improve Agent/Customer Interaction, Up-Sell and Cross Sell IBM WebSphere Solutions For Insurance • Speed, Transparency, Collaboration © 2012 IBM Corporation
    44. 44. IBM Software GroupDNA of the Agile Enterprise Process Management Decision Management • Defines and orchestrates the end-to-end • Defines and executes specific decision points in process processes and applications • Combines automation with user interaction • Is focused on automating and improving decisions • Is fundamentally concerned with • Is fundamentally concerned with the operational operational efficiency of the intelligence of the organization organization © 2012 IBM Corporation44
    45. 45. IBM Software Group Typical Process Problems Customer Service Finance Account Administration and Ops 1 Unstructured Tasks and Communication Executive 6 (ex Paper or email) Management 1 3 2 Inefficient Working Environment Spans Systems 3 Inconsistent Invoice Prioritization Reconciliation 4 Teams Incomplete or 2 Inaccurate Data Flow Between Systems 5 Lack of Control Over System and Business 4 Events (Exceptions) 6 Poor Visibility Into 5 Process Performance45 © 2012 IBM Corporation
    46. 46. IBM Software GroupProcess & Decision Management Bring Order to theChaos Finance 1. 1 Automate workflow & and Ops decision making Risk Account Executive 2. 2 Reduce errors and Management Administration Management improve consistency Teams 3. 3 Standardize resolution Customer across geographies Service 4. 4 Leverage existing systems and data Decision 5 5. Monitor for business Management events and initiate actions 6. 6 Real-time visibility and process control Process Customer Benefits: • Huge Reduction in Manual Work, Errors • Faster, More Consistent Issue Resolution • Easier to Manage the Business © 2012 IBM Corporation
    47. 47. IBM Software Group IBM Products for Business Process & Decision Management Blueworks Live Business Process Operational Decision Manager Management Process Center Decision Center Process Server Decision Server Management of all process components Management of business rules & events Business Monitor Work together to deliver effective solutions for business operation improvement © 2012 IBM Corporation47
    48. 48. IBM Software Group IBM Products for Business Process & Decision Management Blueworks Live Business Process Operational Decision Manager Management Process Center Decision Center Process Server Decision Server Management of all process components Management of business rules & events Business Monitor IBM Blueworks Live is a cloud based business process management tool © 2012 IBM Corporation48
    49. 49. IBM Software Group IBM Products for Business Process & Decision Management Blueworks Live Business Process Operational Decision Manager Management Process Center Decision Center Process Server Decision Server Management of all process components Management of business rules & events Business Monitor IBM Business Process Manager v7.5 is a comprehensive and consumable BPM Platform © 2012 IBM Corporation49
    50. 50. IBM Software Group IBM Products for Business Process & Decision Management Blueworks Live Business Process Operational Decision Manager Management Process Center Decision Center Process Server Decision Server Management of all process components Management of business rules & events Business Monitor Websphere Operational Decision Management (BRMS) © 2012 IBM Corporation50
    51. 51. IBM Software Group IBM Products for Business Process & Decision Management Blueworks Live Business Process Operational Decision Manager Management Process Center Decision Center Process Server Decision Server Management of all process components Management of business rules & events Business Monitor IBM Websphere Business Monitor is comprehensive business activity monitoring (BAM) software © 2012 IBM Corporation51
    52. 52. IBM Software GroupIBM WebSphere Ranked #1 In All CategoriesOver $5,000 BPM Customers Business Rules • SOA • BPM • Application Integration Middleware • Connectivity © 2012 IBM Corporation

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