To provide customers with an "ideal buying experience" can sometimes mean practicing what you preach.That axiom is being practiced by business and information technology executives at Amica Life Insurance Co., a Lincoln, R.I.-based provider of term and universal life, annuities and structured settlement insurance products. The "Ideal Buying Experience" is Amica Life's recently launched new business selling program which focused on automating the front-end capability of the carrier's business-from electronic applications and new business submission, to paperless underwriting and automatic issue within its core administration system.
Amica executives realized that to provide customers with an ideal buying experience, the carrier had to upgrade its infrastructure. Amica's shopping list included the acquisition of a business process management solution from a reputable third-party technology provider that could be integrated across its operations to enhance new-business processing.
"Three or four years ago, we struggled with one awkward process after another on the front end of our business," explains Duncan Hannah, assistant vice president for Amica Life, an operating unit of Amica Mutual Insurance Co., which itself writes automobile, homeowners, marine and personal excess liability insurance.
"We put our people and our customers through a lot of gyrations to do business with us. It was not a user-friendly experience by any means," Hannah says.
"The irony is, we had always taken pride in our customer service, but we were not being very customer-friendly. We knew we needed to invest in new front-end capabilities."
Improved performance
Best-practices business process management leverages business activity monitoring, which provide business managers with "real-time access to critical business performance indicators to improve the speed and effectiveness of business operations," according to Stamford, Conn.-based research and consulting firm Gartner Inc., which conceived the business activity monitoring (BAM) concept.
BAM extends management's ability to examine business processes, assignments, work-in-progress and data generated by BPM and related software. When this activity is optimized, it can help managers better measure and manage business process performance and engage in better decision-making, Gartner states.
After weighing its options, Amica selected an integrated solution developed by Fiserv Insurance Solutions, a division of Brookfield, Wis.-based Fiserv Inc., which specializes in software and outsourcing solutions for the insurance industry.
Amica Life viewed Fiserv as a trusted partner because of its past experience: As one of the first Fiserv ID3 policy administration system customers, Amica Life became familiar with Fiserv's solution sets and its ability to customize projects based on user needs.
"We looked at eight to 10 proposals and narrowed it to two," says Hannah. "Fiserv's team worked with us in providing answers to how the various components within this project would all tie together. We operated on faith and trust."
Fiserv executives also had a chance to study Amica's corporate tendencies. Over time, the company has placed an emphasis on "improving their operations and customer focus," explains Paul Anderson, senior project manager for Fiserv Insurance Solutions, Cedar Rapids, Iowa.
"Over the years, Amica has made all the necessary investment in back-end systems. So the time was right to automate the front-end aspects of their business across the entire enterprise."
The consensus of both the carrier and its technology partner was that the new-business application process was taking far too long to meet Amica's requirements. "Amica needed to improve its front-end interfaces for customers seeking quotes for new business," adds Dennis Pfiffner, Fiserv's vice president client relationship management. "I think that we understood their sales and new business processes to be able to implement our architecture that in the end enabled Amica to bring these products to market."
Redundant processing
The Amica project was launched in September 2002, with the final of three phases wrapped up in May. Over that period, one of the unique traits about Amica Life-one that ultimately would dictate the direction of the project-was its new-business distribution methodology.
Amica has a network of about 50 internal representatives who communicate with customers exclusively on the telephone. Amica's external reps on the P&C side of the business sell auto and homeowners policies to customers and in turn deliver leads to Amica Life agents as potential leads for life insurance.
Over the years, Amica Life had made significant investments in its back-office infrastructure to provide quality service to its customers. However, the investments surrounding its front-end processes had remained a work in progress.
Customer information necessary for creating a needs analysis had to be entered into one system to develop a policy quote, and then re-entered into another system to generate an illustration. If the customer chose to purchase a policy, all of the same information had to then be rekeyed into the policy application. Finally, the information from the application was entered into the policy administration system.
It proved to often be an exercise in futility. "One problem Amica faced was that since the process was broken into several disparate steps, with no interfaces merging them, the sales force could only develop the needs analysis and the quote," explains Fiserv's Anderson. "The remaining tasks of running the illustration, completing the application and submitting it to underwriting were handled by the new business staff. As a result, the time it took to move a policy from needs analysis to issue was lengthy."
The goal was to identify a solution to replace the multiple, disparate systems and inefficient processes that negatively impacted the business. In a perfect world, Amica sought a solution that would enable an agent or customer to perform a needs analysis, select a product, generate an illustration, complete all applications and forms, pay for the coverage, and generate the contract-all in one transaction.
Phased approach
As the project commenced, Amica executives determined that although meeting certain deadlines was essential, the company was at liberty to extend them for the good of the project. "We pushed hard but we also took extra time to perfect the system," explains Hannah.
The carrier also made it clear to Fiserv that it wanted to separate the project into several individual subsets that could be implemented in phases. The phased approach was key because Amica had limited resources for testing and implementation.
The initial phase of the Ideal Buying Experience project occurred in May 2003 with the development of the Fiserv Life Portraits Enterprise System (LPES).
Life Portraits would support the needs analysis, illustration and online form functionality used by Amica's sales force. This was a high priority, Hannah explains, because over the years internal reps did not have access to a viable illustration system.
"They would speak to customers and then based on the information generated, would send out a life insurance proposal," Hannah adds. "But in the process of speaking with a customer, reps had to use rate sheets and calculate premiums.
"The Life Portraits solution enables the reps to access rating information while on the phone. The system has drill-down features that if a customer answers 'yes' to a question, the system then leads the rep to other applicable questions, and does away with the non-applicable ones," explains Hannah.
"And, they've been able to streamline the application: A new business application once consisted of about six pages, but we've been able to reduce it to two."
ROI fulfillment
The results of the project have not been lost on Amica executives, who because of the increased efficiency have been able to hike the processing of new life policies from about 5,000 to 7,000 a year. The company accepts about 850 new-business applications a month, but not all applications are parlayed into accepted policies.
From an underwriting throughput standpoint, the company has been able to shave seven days off the underwriting acceptance process. It has also been able to reduce staff due to the success of Ideal Buying Experience.
In the future, Pfiffner says Amica is eager to Web-enable the project so that consumers can complete an application from the Web site and then activate an e-signature component for even quicker processing.
"The company needs to determine the presentation and functionality consumers will accept," says Pfiffner. "Future plans include deploying similar capabilities to its customers via the Web using the same technology implemented internally."
One of the factors that Hannah noticed as the project took shape was the cultural changes that occurred at Amica Life.
"We wanted our sales people to change the way they operated," says Hannah. "Sales people used to send out an application and hope it was returned.
Now, they are processing new business on the phone instantaneously. It was a hard transition for some to become accustomed to."
The cultural shift extends to underwriters, who like sales reps have been handed more autonomy within the business process re-engineering project. "We have about eight underwriters, and they all depended on their support staff to have a role in the underwriting process," Hannah explains. "Now the system is more automated and underwriters can perform most of these tasks themselves. There's more accountability on their end, and they can complete an entire file in straight-through fashion."
