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Carriers of All Sizes Can Reap BPM Benefits

Pat Speer September 2007

Among insurers of all sizes, everything is a process. Evaluating whether a process is efficient and cost-effective is oftentimes painful, because it means that workers need to rethink how they are going to work and, ultimately, change the way they function. Insurers that implement business process management (BPM) face challenges-and certain successes-associated with that change. In June, Boston-based research firm Celent LLC invited representatives from a small, medium and large insurance company to a meeting in Chicago where they shared their implementation stories.

Celent Senior Analyst Donald Light, and insurance practice group Managing Director Matthew Josefowicz led the group in its discussion of what it takes to manage through the numerous challenges associated with continuous improvement and successful BPM implementation.

STRAIGHT FROM THE SOURCE

DL: Use of BPM can spread from one area to another (from distribution, underwriting, issuance, distribution, billing, service and claims) and from one line of business to another. Explain your initial business requirement.

CS: Over the years, our history of acquisitions resulted in a business model that includes a lot of different products and services, and we have legacy systems that serve each.

On the IT side, we have a lot of customized code, yet we have a lot of program business, so we knew we needed reusability. So, our initial driver was to replace some of the manual processes (manual coding, rekeying) taking place throughout an enterprise comprising 19 offices. We knew from the onset that we had a hard business problem to solve because, typically, IT told the business side what we needed, and we knew we would need to bridge those two areas.

KM: As we looked to replace our legacy systems, we found out we would also be responsible for institutional sales-a new branch for us in the distribution network. Because 75-80% of our workforce uses the imaging and workflow system, workflow issues needed to be addressed and resolved. We process up to $2 million in annuity premiums daily, and we had a goal to be able to get applications in and out on the same day. Our CIO wanted to make sure that the system would work, and CSC (already on site as a strategic partner) saw an opportunity to help and approached us, so we went forward with a pilot.

At this point, we've progressed through all annuities, our life department, claims, check processing, our broker/dealer company and are now addressing the reinsurance area.

MM: About four years ago, our new CEO told us to get serious about managing our expenses. One of the major initiatives that went with that mandate was to look at existing processes, i.e. underwriting processing. We are organized along custom segments and needed to organize the processing by line of business. And we have a federated IT model, so each business unit has its own IT area.

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