AetinSH e l p i n g t o I n s u r e

BPM sets you apartJuly 2012By : Jitin Girdhar

In recent years, BPM (Business Process Management) has become one of the top most priority for company’s IT management and the process improvement has become their major focus area. Better processes leads to lower cost, higher revenues, motivated employees and ultimately happier customers. BPM has emerged as a proven technology that helps insurers meet these business objectives and gain competitive advantage. In this article, we focus on some of the key issues and process challenges faced by the Insurance companies and also the benefits delivered by BPM for insurance companies.

OverviewOverview

All insurance companies, regardless of the market segment they serve, share common processes, including business and market development, product development and maintenance, product promotion, and distribution.

The priority assigned to improvement efforts may be based on transaction volume, complexity of work, error rates or overall client pain. Examples of business processes that are prime candidates for business process improvement, by market segment, include:

Application submission, underwriting, policy issuance (new business), inquiry management, call center services, internet services (customer services), contract maintenance, policy loans (maintain contracts), billing, payment processing (collect premium), agent commission management (create/maintain distribution system) – prioritized by individual and group products (respectively)

Life Insurance

First notice of loss, analyze coverage, conclude claims (adjudicate claims), submit application, underwriting, policy issuance (issue contracts), endorse policies

Non-Life Insurance

Manual receipt processing, claims data entry, claims manual adjudication, payment or denial, auto-adjudication, claim manage-ment, recovery of overpayment, claim adjustments/refunds/voids, subrogation (claim adjustment), group processing, membership processing, premium billings, billing/payment reconciliation (membership), claim status, verification of coverage, verification of benefits (customer services) – prioritized by group, managed care (HMO), individual, indemnity and dental products (respectively)

Health Insurance

Insurance Process ChallengesInsurance Process Challenges

Being competitive in a price driven market

Maintaining compliance with changing statutory, federal and international regulations

Creating a consistent customer experience that promotes customer acquisition and retention

Promoting “ease of use” across varied lines of business and distribution channels

Effectively mitigating and managing regulatory reviews, fines and penalties

Managing product development and life cycle components effectively

Increasing growth with decreasing levels of support resources

Increasing work automation, process efficiency and continuous improvement opportunities

Building consistent processes that can be extended across products or lines of business

Optimizing legacy and mainframe system environments

Insurance Business ChallengesInsurance Business Challenges

Management processes

Core processes

Supporting processesProcessSolvencyCapital

Requirement

Processbank file

payments

Optimizeinvestment

portfolio

ManageHR

ManageFinance

Makeinsurance

offer

Makeinsurance

policy

Collectinsurancepayment

Handleinsurance

claim

Manageenterprise

risks

Managecompliancy

Manageaudits

Managegovernance

Providefinancialreports

The processes that would benefit most from BPM, however, vary by segment and according to product types offered by the company.

As defined by Gartner, "BPM is a management practice that provides for governance of a business's process environment toward the goal of improving agility and operational performance. BPM is a structured approach employing methods, policies, metrics, management practices and software tools to manage and continuously optimize an organization's activities and processes."In simple terms, BPM can be understood as the discipline of modeling, automating, managing, monitoring, and optimizing business processes to increase profitability

A key difference between workflow software and BPM software is that the BPM software goes beyond merely automating tasks to helping people make repeated process improvements. It is best to consider the 5 steps of business process management as part of a continuous cycle. Once potential process changes are identified, the cycle begins again and the best suggestions are eventually implemented. In this way, we are able to make continual and incre-mental improvements to the process.

ModelAutomate

Manage

Monitor

Optimize

What is BPM ?What is BPM ?

5 5 Steps of Business Process

Management

BPM SoftwareBPM Software

Business Process Management (BPM) software is used to automate and deploy business processes, in part or in total, so that documents, information, or tasks are passed from one participant to another, according to assigned roles and a predetermined set of procedures. BPM software can be used to improve a wide range of corporate processes. It is a particularly effective tool in process and document intensive industries such as Insurance, Financial Services, Manufac-turing, and Government Organizations. Using BPM systems, companies can streamline operations, control information more effectively, ensure consistency and compliance in corporate processes, and eliminate the “silo mentality” that plagues so many operations in today’s business world.

Almost overnight firms are able to reduce inefficiencies and costs using a BPM

software system.

Business Process Management provides the greatest ROI opportunity of any IT initiative - Gartner

Improve profitability & lower expense ratios Process automation leads to significant cost savings due to reduction in manual effort, elimination of unnecessary tasks, hence an overall increase in operational efficiencies can be achiveable. BPM deployed on an enterprise-wide scale helps companies increase profits and improve their business performance, thus making them potential candidates for better financial ratings.

Improve customer service and agent managementBPM allows insurance companies to automate flow of information, notifications, and alerts with agents and customers, thus allowing better and more up-to-date access to information. BPM speeds up processes, reduces lag time, and ensures that tasks do not fall through the cracks.

Deliver superior underwriting resultsBPM makes it possible for insurance companies to standardize on a common underwriting process. Each division can use different rules but access the common process, thus allowing for better control and monitoring. Underwriting personnel can concentrate on knowledge-based functions of their roles and return better results.

Increase productivityBPM enables seamless integration of workflow tasks with back-end systems, thus removing the need for mundane tasks such as manual reconciliation, visual data verification, and typing-based data entry. Process automation and integration also improves the agents’ productivity, giving them another reason to align with a carrier besides price or increased commissions.

System and process flexibility and agility BPM allows companies to respond quickly to changes in business demand, new opportunities, and regulatory requirements.

Create process transparency and integrity BPM starts with the documentation and formalization of business tasks and rules, thus reducing dependence on a few, key employees. Key business rules or decisions can be made consistent and repetitive by specifying them in the processes, thus enforcing policies and procedures.

Enable continuous process improvement BPM allows processes and rules to be optimized because they can be monitored and refined, thus leading to improvement in competitive advantage. This is not possible when processes are manual.

Align IT execution with business strategy BPM helps create a partnership between business and IT. Business users, analysts, and IT staff can work collaboratively to define requirements and implement processes that are critical to the business success. IT becomes more responsive to business needs by deploying and changing processes very rapidly, while facilitating a Service Oriented Architecture (SOA) approach to enterprise IT.

Benefits of BPM Benefits of BPM

To summarize, it won’t be wrong to say that in a mature market like insurance, no process is off limits when evaluating the improvements that can be introduced by a BPM suite. Improvements that increase the efficiency, effectiveness and agility of existing processes enable insurance providers to outperform their competitors in both the cost to provide products and services and by offering outstanding service to both agents and customers. BPM is the best investment a company can make in establishing a platform for continuous improvement.

SummarySummary

http://it.toolbox.com/blogs/bpm-blog/bpm-series-gartner-redefines-bpm-6553http://en.wikipedia.org/wiki/Business_process_management

References:

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We offer a single end-to-end Insurance Solution that covers all lines of business: Individual Life, Group Life, Investment Linked and General. It spans across functions like illustration, quotation, new business, policy servicing, claims, agency management, commission and benefits, accounting and services. Our business is to help Insurance Companies to strategise and operate by leveraging on Information Technology, a key enabler to achieve transformational growth through Operational Excellence and Innovation.

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