Options Abound in Claims
Insurance Networking News, March 1, 2009
While the motives for insurers to replace an aging claims system remain relatively universal (minimizing leakage, reducing cycle times, improving claimant experience) the means vary. Insurers can opt to extend the life of a legacy system in a variety of ways, or replace the system altogether. Those choosing the latter, have yet another choice to make.
On one end of the claims system spectrum are inclusive, expensive suites replete with broad functionality and, more often than not, tightly integrated with a vendor's other offerings. On the other end are pared-down, best-of-breed solutions that substitute breadth of functionality for advanced technology and flexibility.
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Yet, this linear spectrum is something of an oversimplification. In his report "Core Claims Systems Vendors 2008," Donald Light, a senior analyst at Boston-based Celent, uses four factors to gauge the offering of 21 system providers in the marketplace: advanced technology, breadth of functionality, customer base and depth of customer service.
Light's report surveys a bustling marketplace, noting that more than 100 core claims systems have sold over the past two years, and that 50 are in the process of implementation. The vendor ecosystem also is churning in the wake of mergers such as MajescoMastek's acquisition of STG and Aon's purchase of Valley Oak, as well as Oracle's avowed push into the insurance vertical.
"It's the same players in different uniforms," says Light of the acquisitions. "Another factor in addition to the [merger] activity is that the vendors have been making significant upgrades and launching major new releases. So from an insurance company point of view, it's a very healthy market." Moreover, functionality once considered advanced, such as inclusion of rules, work-flow and content management, are now becoming standard. While there is no such thing as a typical claims implementation, the examples of two insurers may prove illustrative.
GOING BIG
The transformation of the claims environment at Columbus, Ohio-based Motorists Mutual Insurance Co. has been less a technical endeavor than a reworking of the claims process itself, says Karen Schwartz, the company's VP of claims.
Karen Schwartz
The evolution began in earnest in 2003 when the company purchased a claims system from Siebel and paired it with IBM content manager for imaging (the company uses Siebel analytics for reporting). Now, using Siebel Insurance Claims 8.0, Motorists has steadily added functionality to the system and weathered Siebel's 2005 acquisition by Redwood City, Calif.-based Oracle Corp. "When Oracle bought Siebel, we were kind of concerned because we were on a DB2 database," says Valerie Line, business technologies account manager at Motorists. "But so far, everything is working out fine, and they have stated they are committed to continuing to support the other databases. It's a pretty inclusive solution."
According to Schwartz, one the primary drivers of the initiative to transform the claims process was a desire to have a totally paperless process. "We were very involved on the business side because we had to redo our work flows," she says. "We process things a lot differently now because we have gone to a paperless environment." Yet, this move to excise paper from the claims process did present challenges. Schwartz says imaging problems, especially with remote employees, took some effort to iron out.
A more daunting task was building interfaces to link with the new claims system. This included linkages to all five of the company's policy administration systems, which reside on mainframes. The claims data also needed to wend its way to back-end repositories to meet state reporting requirements and to interface with other internal functions, including SIU, salvage, subrogation and litigation. "We had to develop a mechanism to query for the appropriate policy based on the date of the loss, bring back policy data and import that back into our claims system," Line recalls.
The company also became adept at building external links to myriad entities, including glass vendors, ISO and workers compensation partners. "We heavily customized that," Line says. "Using Siebel services, we built an engine that has a GUI interface that allows us to import or export most data formats."
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