The relationship between IT and the business within insurance companies is a subject insurance professionals will talk about until the cows come home. How do the two work together? Who are the forward thinkers? How does IT know what the business needs and vice versa? These questions plague both sides. CUNA Mutual Group, Madison, Wis., may have figured it out. In fact, this epiphany helped win the company Insurance Networking News' 2007 INNovator of the Year award for its ability to successfully combine the efforts of IT and the business to create a specialized claims processing solution, Claims Express."We're (business and IT) part of the same team," says Tom Gosnell, CIO at CUNA Mutual. "I think it's that close working relationship that helps best position us to be able to share ideas with the business and vice versa and to be able to come up with the right solution across the board."
Within IT, Gosnell focuses on innovation. "We [IT] actually get to see a lot of things happening across the company and aren't necessarily focused in any one area [of the business]," he says. "So we can bring some good innovative ideas to the marketplace."
One such innovation is a call center credit union members can connect with to obtain information about their credit union and perform transactions.
Innovation is not new to CUNA Mutual, which provides insurance and other financial services to the credit union marketplace. About a year and a half ago, the company was faced with a challenge-a three-year back-office customer transformation effort that included consolidating 50 call centers into three customer contact centers (one in Waverly, Iowa, one in Madison, and one in Fort Worth, Texas) and consolidating policy administration systems, says Gosnell.
About two and a half years before this transformation effort was introduced-with implementation help from MajescoMastek, Mumbai, India-CUNA Mutual set out to improve its claims process and design a claims system for the whole company by creating the Claims Express system, according to Craig Everson, IT manager for the Claims Express product, CUNA Mutual. "We quickly realized that was not going to happen in a timeframe that made sense," he says. So the focus was shifted to its business with the most opportunity-the credit life and disability.
ACCURACY AND SCALABILITY
CUNA Mutual's new goal was to automate the labor-intensive process where a large group (150 processers) had to hand-craft every claim.
The IT team was looking for even more innovation from the Claims Express system-accuracy and scalability. "When we encountered a claims backlog, it created pressure on our staff to pay them quickly rather than take necessary time to research how much should be paid or whether they should be paid at all," says Everson.
Partnering with the business unit, the IT team set out to ensure the system and its processes continued to improve payment accuracy. The team revamped the processes within the claims system, implementing new reporting, new analytics and new integration with third-party medical databases. They also integrated industry best practices within the Claims Express system.
CUNA Mutual automated its data collection process-from automated intake of claims to streamlining parameters between a claims payment and the original contract information. To provide immediate payments for less complex claims, the team developed business rules to automatically pay the credit union member. This new procedural change meant that the company could begin processing 20% of all claims automatically, according to Everson.
By automating the claims workflow area from the initial claims intake, to adjudication of the claim, to payment notification, processors can focus more of their attention on the more complex claims.
"We've changed the skill set of the processor from processing to more medical-focused tasks," says Everson. "The technology enables that by providing a direct interface with medical databases."
The company reduced the processing time from 20 to five days-even better than its service standard. And the system achieved its ROI in six months, and overall payment accuracy by 15%.
"Some of that [success] was [due to] auto adjudication-taking the easy claims and paying them," says Everson.
In fact, CUNA Mutual paid more claims this year than last year, according to Everson, but the company's costs have stayed the same. "We saved our company a lot of money by doing that," he says, "because we paid them for less time and helped the member get back to work sooner."
Scalability was also important. "CUNA Mutual Group was a bit siloed because we were trying to provide a number of solutions for one niche market-the credit union space," says Everson, adding that this can oftentimes lead to a 1% growth in revenue translated to a 1% growth in operations. "So, while we looked at it as an opportunity to become more efficient, the end game is really about trying to grow the company. We're sizing operations to the right level first and then looking to grow."
LESSONS LEARNED
One thing Everson says he's learned through the roll outs of Claims Express-credit disability in July 2004, credit life in July 2005 and other minor products last year-is how important efficient testing is. "When we rolled out the first product, testing took up 40% of the project," he says. "I believe the industry benchmark is 30% or less. The second time, it was 33%, and we went through and automated all of our testing scripts and put in regression testing."
Now CUNA Mutual takes advantage of its testing center of excellence and has drawn the testing measurement down to below 27% with the cost of testing on a project often at 20% or below. "We use to estimate that per product we were spending close to $3 million [on product development]; we're at about $800,000 per product right now," says Everson.
Another challenge the IT team addressed was with the large amount of integration required between the Claims Express system and CUNA Mutual's internal systems. Not only was the large number of systems a challenge, but there was a challenge to ensure agreement and commitment to integration standards for the business units. The IT team developed new SOA practices to "contract first" on what the delivery should be, as well as incorporated industry standard integration templates to the overall SOA agreements.
Integrating Claims Express and other internal systems is just one example of CUNA Mutual's transformation effort. It's not just about reducing business costs, says Everson. "If we were just [focused on reducing costs], we wouldn't be investing $70 million on the technologies," says Everson.
CUNA Mutual aims to have systems that work across product lines so the company can have people in operations perform a process for multiple product lines as opposed to one process for one product line, says Everson. "By consolidating onto these new platforms we're actually able to grow on these new platforms."
