some information available for electronic viewing. Bill amounts,
commission amounts, and basic policy information are examples. Over time, simply viewing information did not fulfill the
needs of consumers and distributors. So, the need to actually
accomplish a task quickly became the requirement.
For many insurers, the rush to have digital task support
caused them to purchase applications (for example, stand-alone
credit card acceptance for bill payments) that were not connected to back-end processes. In the behind-the-scenes scenario,
the on-line credit card transaction information is printed out
and manually entered into the billing system, with a three- to
five-day posting delay—clearly not the ideal or expected experience. Bottom-line: It is important to remember that inquiry is
not one step away from process automation, additional steps are
Process in the Digital Age Requires New Thinking
While the above process problems may seem like reasons to
curtail digital initiatives, the tipping point for that type of thinking is long gone. Today, digital capabilities are mandatory. To
deliver on a superior digital experience, insurers have to think
differently about process in the digital world. The end-to-end
process is the experience goal. The problem is, it is not end-to-end in the claims department, or even in the billing area. It is
the beginning of the process, and the actual completion of the
process could be in back-office operations.
On the journey toward creating the digital Next-Gen Insurer, the following are guiding principles that will allow transformation initiatives to take a process view.
Data Initiatives Are a Foundation for Process Review. SMA
research shows that 82 percent of insurers are focusing on some
level of data initiative. Insurers are at different stages, but taking a
full enterprise view of data can actually assist insurers in revealing
processes. Enterprise data initiatives involve the whole organization. As data requirements are defined, the related processes
surface. Insurers should expand their data initiatives to include a
mapping of processes so that the processes are taken into consideration as new technology is brought into the organization.
Core Systems Cannot Fix All Process Problems. Modern core systems can do a lot in terms of improving insurer
operations. SMA research shows that 74 percent of insurers are
involved in core administration initiatives. Core systems clearly
allow insurers to bring business rules to bear on processes and
create efficiencies and outcome standardizations, but the fact of
the matter is that most insurers buy core systems in siloes. The
claims department buys core claims admin systems. Finance
buys billing systems. Operations buys policy admin technology.
Not every insurer buys exactly like this, but the point is that
generally, one department or segment head makes core buying
decisions. Because of this, the processes that will be addressed
are those under the control of those business leaders. A change
in thinking should include allowing the tangential departments
to be part of the process decisions. Claims and billing have pro-
cesses that start and end with policy admin and vice versa. Keep
in mind the spaghetti bowl comparison and start untangling
processes when core system initiatives are started.
Re-engineer Processes; Do Not Automate Old Processes.
Debates rage about whether it is better to automate existing processes or go through the sometimes painful task of re-engineering processes when starting a core system initiative. The proponents of the former say it is easier to gain acceptance of the new
technology if processes look familiar. However, thinking like the
latter shows a commitment to embracing digital and becoming
a Next-Gen Insurer. Insurers have many requirements—both
internal and external—and thinking in terms of those requirements is almost part of insurer’s DNA, but processes cannot
remain as they always have been. It is hard to look at processes
from the outside in. But some insurers have had great success
including consumers and distributors in their transformation
initiatives for the very reason of bringing in those process views
that are not immediately intuitive to the institution.
Business Process Management (BPM) is Regaining Importance—At Just the Right Time. Over the last several years,
SMA’s technology spending surveys have shown that BPM
is not a top priority for insurers, although it was not entirely
forgotten. SMA core systems deals research showed that BPM
and workflow tools were wrapped into more than half the suite
and claims deals, and approximately 25 percent of policy admin
deals. While these actions have value, they put process management into siloes. However, SMA has recently noted a resurgence
of BPM platform successes. Given the complexity of insurance
processes and the evolution of that complexity over time, BPM
technology is imperative, especially tools that span the whole
organization for full process management. The rapid escalation
of consumer and distributor demands for transparency and
service means that processes must continuously evolve, and
technology to manage process change is critical.
A final piece of advice is that insurers should not jump
ahead of their process evolution by adopting technology before
they can deliver full value along a process chain. This article was
written at the Insure Tech conference, where the lure of new,
innovative technology was positively palpable.
It is easy to gravitate to the next bright and shiny piece of
technology, not just because it’s cool, but because value is there.
However, when advancing digital strategies, taking a moment to
look at related processes through the eyes of the customer and
distributor is critical. While there can be a dark side to digital,
insurers can be in control of how customers and distributors see
processes. And the result won’t be a bad knock-knock joke. It
will be customer and distributor satisfaction. ITA
Karen Pauli, SMA principal, has comprehensive knowledge about how technology can drive improved results,
innovation, and transformation within insurance operations. She can be reached at 774-462-7820 or kpauli@