TUCON: BPM Health Insurance Case Study

Both Patrick Stamm (CTO) and Kevin Maloney (CIO) of Golden Rule Insurance were on hand to discuss their experiences in building a BPM infrastructure. They started out looking at BPM because of the multiple redundant systems and applications that they have, which is endemic in insurance: multiple ratings engines, multiple policy systems and multiple claims systems due to acquisitions and leapfrogging technologies. They needed to be more responsive and agile to changing business requirements, and increase end-to-end process visibility and management.

As they started looking at enterprise-wide BPM, they had a number of objectives:

  • Improving scalability
  • Improving cycle time and quality of process
  • Facilitating self-service on the web
  • Harvest rules from custom legacy systems
  • Reduce reliance on paper

This presentation focused on their new business process, from application submission through underwriting to issuance of the policy. Not surprisingly, adding BPM to underwriting was one of their significant challenges here; underwriting is often perceived as being as much of an art as a science, and I’ve seen a lot of resistance to introducing BPM into underwriting in many organizations that I’ve worked with.

They wanted to be strategic about how they implemented BPM, and established governance for the entire BPM program early on in the process. This allowed them take a big-picture approach, and led them to change how they do development by incorporating offshore development for the first time. The architecture of the TIBCO toolset allows them to get a lot of reusability across the different business silos (which still stay separate above the common platform), and the scalability helped them with both business continuity and business growth.

They have a 5-layer logical architecture:

  • UI layer, including General Interface, VB and other UI platforms
  • Services layer, strangely shown above the BPM layer, although it is called directly from the UI layer in some cases as well as from the BPM layer
  • BPM layer, which seems to actually show their queues rather than their business processes, which makes me wonder what the processes actually look like beyond a simple one-step queue
  • EAI layer, including all the adapters
  • Data access layer

Some of the highlights of their New Business process in BPM:

  • Mainframe integration to eliminate redundant data entry, triggering multiple mainframe transactions from a single BPM interface
  • Integration of business rules to eliminate error for incorrect riders, saving the underwriters’ time in researching which riders are applicable in which state
  • Integration with third parties, such as MIB (Medical Information Bureau) to automatically retrieve data from these sources rather than having users look it up manually on those parties’ web pages

The results that they’ve seen in less than a year since they’ve deployed:

  • New business volume is up over 50% with essentially the same number of staff
  • Applications processed per FTE is up over 30%
  • Cycle time is significantly reduced, as much as 30% in some cases
  • Better quality and consistency, with several error types eliminated
  • Improved visibility into business processes through better and more timely metrics and reporting

Their lessons learned:

  • Implementation partner selection is key: they’ve been happy with TIBCO as a product partner, but they had a bit of a rocky time with their first TIBCO integration partner and started over four months later. They still did the implementation in 11 months total, so really seven months from the point of restart.
  • You need to develop internal expertise in the tool and technology.
  • The first project should not be mission critical, and there must be a contingency plan. Funny, they didn’t consider New Business to be mission critical, but in reality, reverting to paper is an easy fallback in that case.
  • Don’t underestimate the impact that BPM will have on operational management and work culture.

This sounds like a fairly standard insurance implementation (I’ve done a few of these), but I like how they’re moving into the use of rules, and see the introduction of rules as having a significant impact on their process efficiency and cycle time.

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