Over the last several years, the approach to process design and improvement for insurance companies has evolved to one that follows this sequence:
• Identify customer requirements
• Design processes that best support those customer requirements
• Break up the processes into the job roles required by the processes
• Align the job roles into an organizational structure that makes sense
• Apply technology to best support the processes—from a speed, efficiency and effectiveness point of view
The theory behind this methodology is that design follows customer requirements. This technique supports a clean-slate approach to process design, without the burden and constraints of the current environment.
The reality is that this approach is most effective when there are time and/or budget constraints, a lack of readily available technology and, in many situations, when most or all process design benefits can be achieved without major technology upgrades.
Recently, some of the assumptions of this approach have been challenged. Technology is now readily available from vendors to support the core functions of underwriting, policy administration, billing and claims. And many of these solutions are comprehensive, flexible and affordable when compared to the cost of developing these capabilities in-house from scratch. When new technologies are proposed, vendors tend to state that their system will accomplish all the requirements of the RFP, either as base functionality, configuration or customization.
While it is true that there is now a broad array of affordable solutions available to insurance companies, all technologies are designed for a core set of requirements that the technology is intended to support. Understanding this “sweet spot” is a critical part of the evaluation and selection process.
Accomplishing this calls for a revised approach to process design. In situations where it is initially understood that new technology will play a part in the redesign, the processes themselves should be developed and evolved with the technology in mind. The following sequence will help companies select the technology that best supports effective processes:
• Conduct vendor research to pre-qualify those appearing to have the products, technology environment and history of successful implementations required
• Develop high-level process designs and business requirements—that is, understand and separate the must-have requirements and functionalities from those less critical to the final implementation
• Prepare and conduct a comprehensive request-for-proposal (RFP) selection and proof-of-concept (POC) effort. In the RFP, include questions to understand the process approach that the technology was initially designed to support. Also, contact other customers of the vendor(s) to help identify (from a process perspective) the typical level of customization required and strengths and weaknesses of the product out of the box.
• Most importantly, during the course of implementation, constantly review and adjust processes as the new system is being configured. This iterative approach is necessary in order to best align the processes to the “sweet spots” of the technology. Often, processes can be modified to better coexist with technology without hurting overall performance or effectiveness.
The benefits of this approach include the implementation of processes that are most efficient and effective, and the selection and use of technology that best supports the processes. Implementation time and cost will also be reduced as a result of lighter requirements for configuration and customization of software packages.
Larry Wood is a senior consultant and P&C practice director for The Robert E. Nolan Co., a management consulting firm specializing in the insurance industry.
The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.
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