Policy adminstration

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.

In many circles, codependency is frowned upon. But when it comes to IT implementations at insurance companies, codependency may be a good thing.That's the philosophy behind the IT success at Selective Insurance Group Inc., a Branchville, N.J.-based holding company for seven property/casualty insurance companies.

VALUATION SOLUTION REDUCED CLAIMS SETTLEMENT CYCLEPlymouth Rock Assurance Corp., Boston, selected San Diego-based Mitchell International Inc.'s, Total Logic Valuation as the company's total loss valuation solution to deliver a customer-centric loss claims process.

Most companies today understand that customer communications are integral to successful customer relationship management programs. Many of these communications are initiated from field organizations. Letters, proposals, quotations and marketing materials are often created, assembled and delivered to customers from branch offices.Historically, technological limitations have prevented companies from effectively controlling the content and integration of these communications with mainstream fulfillment processes. This has led to higher costs, poorer communications and reduced customer satisfaction.

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 business process management (BPM) 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. The Panelists: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. Kimberly McGregor (KM), director, imaging and process analysis, Ohio National Financial Services, Cincinnati. The company 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; underwriting, policy administration and claims legacy systems. Number of users affected: 500. Vendor of choice: CSC. Chris Spring (CS), senior vice president, Meadowbrook Insurance Group, Southfield, Mich. The company manages in excess of $700M in premiums under management. BPM target area: company-wide rate-book-issue processes. Number of users affected: 650. Vendor of choice: Adeptia. The Celent team posed one last question to the panelists—what is the most important piece of advice you can offer other insurance carriers currently considering a major BPM project? MM: Make sure BPM is positioned correctly within the enterprise. From a technical perspective, make sure BPM is positioned in the right place in the enterprise architecture. Know what BPM is (is it a one-size-fits-all program or one that enables you to pick and choose capabilities as you go? Is it just the human workflow or does it also include SOA and integration, business rules, etc.?) Then set up a centralized support model that includes governance. KM: Get the users involved, right up front, and help them become comfortable with the change. When change comes, it's because they have brought that change to us. They know that when a change is required they need to take ownership of it and we just help them because is makes all of us more efficient. Build momentum in your commitment and make sure business owners have a key role. Build the skill sets. Manage human issues. Be flexible. Get senior and line management buy-in. CS: Realize your power and be ready to make the investment. BPM should be deployed across the organization, not siloed. Look for a cheerleader. Who is on top of the process? Over-communicate if you have to. Do the t-shirt and road shows. For those that have implemented BPM, rethink what you did. Look at the processes already in place. Then reevaluate your strategy and design to ensure maximum usability and efficiency.

Carriers implementing BPM strategies are bridging from the hard-coded world of today to an easily configurable world of tomorrow. And getting out of a legacy environment and into the world of thinking in configurable terms will always be a work in progress. “You need to be able to achieve change when it’s required,” says Donald Light, senior analyst with Boston-based Celent. To successfully address these challenges, Light recommends insurers ask the following four questions: 1) Do you have the staff resources necessary to deepen and extend use of BPM solutions beyond initial deployment?2) Are you in the early days of replacing inflexible core legacy systems or well along in that process?3) Is your primary need to make processes uniform and compliant within and across business units?4) Is there a clear SOA roadmap in place or is the enterprise infrastructure just now being addressed? On the technology solution provider side, says Light, a BPM vendor must also conduct due diligence. Light recommends vendors begin the process by including the following four elements:1) A strong set of functionality and tools that will facilitate carrier implementation of its SOA strategy.2) An emphasis on ease of use. This is especially important for IT developers as they create the code and/or integration processes that their peers on the business side created.3) Strong modeling, analytics, and optimization capabilities.4) Include a set of insurance-specific features.

Westlake Village, Calif. - Policy retention is critical to the financial success of auto insurance carriers, and a customer's experience with their provider is the most important element—outweighing brand image—in generating policy renewals, according to the "J.D. Power and Associates 2007 National Auto Insurance Study."The study measures customer satisfaction with auto insurance carriers across five factors. In order of importance, they are: interaction, policy offerings, billing and payment, price and claims.

Boulder, Colo. — IT risk management is no longer strictly about mitigating the negative threats surrounding IT, a new study finds. The study was published by Boulder, Colo.-based independent IT management research and consulting firm Enterprise Management Associates (EMA).

New York – Two life insurers recently appointed a number of executives. ACE Life Insurance Co., a business of Bermuda-based ACE Ltd., named Jim Gibbs as vice president and chief underwriting officer and Bruce Horton as vice president and chief marketing officer. Gibbs joins ACE from Optimum Reinsurance Co., Dallas, where he was senior vice president, underwriting. His previous experience includes positions at SCOR Life US Re, Dallas, and Munich American Reinsurance, Atlanta. He is a past president of the Southeastern Home Office Underwriters Association, and he has been a speaker at many industry gatherings, addressing both underwriting and actuarial groups on various topics.

Chicago – A new study evaluates the home pages and usability of 14 major auto insurance providers’ Web sites to examine customer expectations and discover where companies succeed or fail in attracting and retaining customers.

Armonk, N.Y. - U.S. consumers want insurance companies to more effectively communicate new products and services available to them, provide customized policies to better meet their needs and bring their customer experience up to par with other industries, according to an IBM study of more than 3,000 P&C insurance policyholders. Yet, despite boasting one of the largest demographics of loyal and satisfied customers of any industry, few insurance companies are looking for new and innovative ways to connect with their customers to enhance their experience and drive organic growth.

Boston – Liberty Mutual Group has made its acquisition of Ohio Casualty Corp. official. Liberty first announced its intention to purchase the Fairfield, Ohio-based carrier for $44 per share in cash in May.

Stamford, Conn. – A rapidly shifting, increasingly consumer-centric insurance market is no safe harbor for health insurers, a new research note from Gartner, Inc. contends.

Stamford, Conn. – Nearly 90% of CFOs believe that the cost of compliance with Sarbanes-Oxley (SOX) outweighs the benefits, according to the latest survey from the Tillinghast business of Towers Perrin.

Novato, Calif. and Armonk, N.Y. – Allianz of America (AZOA), parent company of Allianz Life Insurance Company of North America, has signed a $330 million-, 7-1/2-year outsourcing agreement with IBM to handle information technology (IT) operations of the life insurer.

Pearl River, N.Y. – ACORD has released the first three of its standardized producer appointment forms.

Washington—Eight more insurance companies have signed on as sponsors of the National Association of Professional Insurance Agents’ (PIA) agent branding program, Local Agents Serving Main Street America.

Silver Spring, Md. — Insurers are recognizing the savings associated with installing distributed scanning and capture technologies, according to a July 2007 survey by AIIM, who specializes in disseminating information about enterprise content management.

New York - A subsidiary of New York-based American International Group, Inc. (AIG) has entered into an agreement to acquire Wurttembergische und Badische Versicherungs-AG (Wuba), its major subsidiary DARAG Deutsche Versicherungs- und Ruckversicherungs-AG (DARAG) and other minor subsidiaries from entities associated with J.C. Flowers & Co. LLC. Subject to regulatory approval from insurance and cartel authorities, the transaction is expected to close later this year. Terms of the agreement have not been disclosed. "We are pleased to have reached an agreement to acquire Wuba and its subsidiaries," said AIG President and Chief Executive Officer Martin J. Sullivan. "The transaction both reaffirms AIG's commitment to growing in the German marketplace and greatly enhances our insurance offerings to small and medium sized companies." Based in Heilbronn, Germany, Wuba offers property and casualty, marine, personal lines, and accident & health insurance through its 2,500 broker relationships across the country. "Wuba is an experienced and highly respected German insurer with a strong brand," said Nicholas C. Walsh, Executive Vice President of Foreign General Insurance for AIG. "We plan to continue their commitment to superior customer service, broker focus, distribution management and technology." AIG serves commercial, institutional and individual customers with insurance products, with operations in more than 130 countries and jurisdictions. Source: AIG

Worchester, Mass. - The Hanover Insurance Group Inc., a regional property/casualty company based in Worchester, Mass., is offering Employee Retirement Income Security Act (ERISA) bonds through the company’s online point-of-sale system, BONDirect. The federal government’s ERISA bonds protect employee benefit plans against losses caused by fraud and dishonesty committed by employee trustees.