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.


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.

This model is successful for us, but limits us with some of the sharing across business units. We are changing that; we are in transition, and we are building good alignment with the business. So we identified where we saw repeatable activities, such as underwriting processing, and we moved and/or reassigned customer service representatives from our 60 local branches into three processing centers. Our move to BPM was business-driven.

DL: The typical BPM lifecycle (evaluate, design, use, analyze, redesign), when applied properly, extends insurance value from the onset. How is BPM's value proposition (creating agility throughout the lifecycle, making processes efficient, effective, consistent once the process is established, and making the process side of change easier so companies can respond) working in your organization?

CS: We are still in the very early stages of our implementation, but we wanted to get something in place so we could get buy-in across business units. Our first pilot project was launched about three months ago to four agents with 54 more to go.

Today, however, we already have real-time and retrospective process information, which allows us to look at how the agents are doing. Adeptia allowed us to do some custom coding, making the tool easier to use. Other business owners are coming to us and asking for this.

KM: We were lucky to have our (CSC) consultants on site and they were here for the entire time, so they were dedicated 100% to this effort. It was a new area, small and very controlled environment, so we had a pilot implemented within five weeks. Our vendor helped us with knowledge transfer so we were able to continue the implementation of imaging and workflow throughout the company. Now that we have completed our annuities and life projects, our accounting and reinsurance business areas are seeing how BPM has streamlined operation, especially going paperless. They want to have this, too.

MM: The underwriters and their associates remain in the branches because they need to be close to our agents, brokers and customers. Consolidation has enabled us to have specialization because we have the volume ... so one person doesn't need to know all the rating systems. The processing is organized into units specialized in one line of business.

Our Metastorm BPM tool is a customized solution that helps create throughput and management reports and identifies inconsistencies, and a reconnaissance feature reports back. It's created a positive competitive environment for us.

We have a lot at stake (our CEO and board insist on a three-year return that applies to process efficiencies and staff), so we're making sure the branches are using it correctly.

MJ: Depending on how your organization functions, the workflow evolution that occurs as a result of a BPM implementation is oftentimes quite complex. It could focus on person-to-person, person-to-system processes (interaction with a system or application) or system-to-system interactions. What were some of your biggest challenges, how did you address/resolve them and what would you do differently?

CS: Getting the company to understand what might happen during the course of a project like this is very difficult. We are dealing with 19 different offices, each with different management styles. In the past, IT was the driver and took the fall if things didn't go well, but this presented some growing pains in terms of ownership - the business side owned it.

Adding to that shift in thinking was the changes required in how the agent processes information and meets the needs of their customers. For example, management of electronic file requests required different skill sets, so IT needed to explain to the business side and users why they needed this particular BPM tool.

Looking back, I would have educated the user community more on the power of the tool, and conducted more user simulations. We came in through the back door having the tool first, so initially we had a couple of hiccups and users said they wanted to go back to the old way. To generate enthusiasm, we created a road show. We set up business liaisons and broke them down based on core processing systems. We coupled that with a lot of front-end educating, herding and training.

KM: We took our lashes because we didn't involve as many users up front as we could have. I would have incorporated the users from the start on the design. That's what we do now and it works amazingly well.

We managed through making sure we had the staff resources necessary to deepen and extend use of BPM solutions beyond initial deployment and, from my area, I have the appropriate staffing, but we did go through a time period at the beginning that it was going so fast that we didn't have enough staff. My staff does shared coding and deployment. We all share responsibilities, and the upside is that everyone gains experience each time.

MM: Our biggest barrier was culture. The project meant changes in duties, responsibilities of staff, etc. We discovered that certain processes needed analytical skills, which meant changes in duties. Our underwriters offered the most resistance because they were used to business processed a certain way. But executive sponsorship fostered change.

We were able to define each role and sequence of necessary processes. (Metastorm's watch list enabled us to track all this.) Once the underwriters realized they had to give up control to actually gain more control over where their information was, the problem resolved itself. And because we had a two-year roll out to the branches, by the time we got to the resistors, we had success stories that helped convince them to go along with this. We were time-driven, so looking back, process design and implementation skills were most important, but we spent too much time designing the process and designing for exceptions. We did not appreciate how easy it would be to fix it later. This project helped us learn a lot about system development ... it's difficult.

MJ: Get 20 people in a room and first thing they do is define the process for that first time. This isn't unlike the Hawthorne Effect: When you start paying attention to something, it gets better. Describe what went well and the resultant benefits to the organization.

CS: We realized our power to implement real change and we were ready to make that investment. We also benefit from having this deployment take place across the organization (not siloed). We've made our processes more efficient and consistent. And we benefited from over-communicating. It helped us tremendously to rethink what we initially did. By re-looking at our strategy, design and usability, we stayed on track.

KM: On the business side, we asked for the super users—dedicated to the project from start to finish. We identify them as key users. To redesign new processes, we get the super users and management in a room. We document and map the "as is" process, as well as the "to be" processes identified. Then all stakeholders understand the same language. The ownership shifts to them (on the business side). Today, accounting and reinsurance are seeing the other areas streamlining, using BPM and going paperless. They want to have this, too.

We have a newsletter - users can log on and see what's happening. IT also publishes "success stories" and asks for input. We are now more involved in the insurance business details. A few users have taken a broader view instead of just their area, "if we change it here, how does it affect where the work goes after me." Our group is growing in insurance knowledge as a result of this project.

MM: This is the first time throughput reports are available to us. We are able to identify inconsistencies and provide feedback to branches, and compare branches to each other and to some business units. This has created a culture of healthy competition within the company.

People are seeing the great things we are doing with BPM tools, as well as integration tools and business rules engines. We identify the expertise each business unit has developed with these tools and then investigate ways to move them across to other areas. In fact, three to four BPM projects are now under way in different parts of the company.


Monique McKeon (MM), assistant vice president, Chubb Commercial Insurance - CPSS, Warren, N.J. Chubb's net written premiums increased 1% in Q2 2007 to $1.3 billion. BPM target area: commercial underwriting. Number of initial users affected: 150; two years into the project: 900. Vendor of choice: Metastorm, Baltimore. McKeon was the project lead.

Kimberly McGregor (KM), director, imaging and process analysis, Ohio National Financial Services, Cincinnati. The company, which markets individual life, disability, annuities and pension, and retirement products and services through its affiliated carriers in 47 states, has total assets under management of $22.5 billion. BPM target area: As part of a larger legacy replacement strategy, the company focused on individual annuities; life underwriting, life and annuity policy administration, reinsurance administration and claims processing. Number of users affected: 500. Vendor of choice: CSC, El Segundo, Calif.

Chris Spring (CS), senior vice president, business operations-CIO, Meadowbrook Insurance Group, Southfield, Mich. Since its inception in 1955 as an insurance agency, Meadowbrook has grown through acquisitions to operate as a full-service risk management organization focusing on niche or specialty program business and risk management solutions for agents, brokers, professional and trade associations, as well as small- to medium-sized insurers. Today, the company manages in excess of $700 million in premiums under management. BPM target area: company-wide rate-book-issue processes. Number of users affected: 650. Vendor of choice: Adeptia, Chicago.

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