Transforming compliance at Farmers Insurance with @rafael_moscatel

In the last Thursday breakout of AIIM 2018, I attended a session on initiatives within the compliance department at Farmers Insurance to modernize their records management, presented by Rafael Moscatel. Their technology includes IGS’ Virgo to manage retention schedules, Legal Hold Pro for legal holds and custodian compliance, and Box for content governance. They started in 2015 with an assessment and plan, then built a new team with the appropriate expertise going forward, then updated their policy and governance, and finally brought in the three new key technology components in 2017. For an insurance company, that’s pretty fast.

Their retention policy is based on 12 big buckets, which are primarily aligned with business functions, making it easy for employees to understand what they are from a real-world standpoint. Legal Hold Pro replaced an old customized SharePoint system, and works together with Box Governance for e-discovery. He went through a lot of the details of how the technologies work together and what they’re doing with them, but the key takeaway for me is that an insurance company — what I know through a lot of experience to be an extremely conservative industry that’s struggling to transform themselves — is realizing that they need to shake things up in terms of how compliance of digital records are managed in order to move forward into the future. He ended up with some great comments on how to work with the business people, especially the executives, to bring programs like this to fruition.

Great talk by a knowledgeable and well-spoken presenter; my end-of-the-day writing doesn’t do it justice.

Insurance technology: is this very conservative industry finally ready for its close-up?

I’ve worked with insurance clients for a long time, first helping them with automation in their underwriting, policy administration and claims processes, and now helping them with digital transformation to create new business models and platforms. One thing that has always struck me is how behind the time most insurance companies are: usually old companies (by today’s standards), they trend far on the conservative end of the business and technology innovation scale. However, new entrants to the market have been stirring the pot for a couple of years – such as Lemonade for the urban consumer property insurance market – and it seems that everywhere I look, there’s something popping up about innovation in insurance.

Capgemini has a significant insurance practice, and writes an annual World Insurance Report that is about to be updated for 2018; a couple of their consultants write about different aspects of how insurance is changing and the technology enabling that change. They’ve just started a three-part series on the insurance customer of the future, which echoes some of the points that I made in my recent post on the Alfresco blog about transforming insurance with cloud BPM, and although they use the apocryphal “millennial” definition to describe who these customers are in their first post, they point out four main characteristics:

  • Smart shoppers
  • Lower loyalty
  • Self-centred
  • Caring consumers – which appears contrary to the previous point, but check out their post for a description

They have another post on how new InsurTech models can decrease risk for the insurer, which explains more about the social risk pool models that are used by companies like Lemonade, and how risk can be proactively mitigated through the use of connected devices.

We’re also seeing platform innovation for some insurers, such as Liberty Mutual moving their documents to Alfresco on AWS cloud. As I’ve experienced for many years, just getting insurance companies to move from paper to digital files can provide huge operational benefits, and moving those files to the cloud allows a global insurer to allow access wherever required. There are a lot of regulatory issues with data sovereignty, that is, where the content is actually stored and what laws/regulations apply to it because of that, but the vendors are starting to solve those problems with regional data centers and secure, encrypted transport. With digital content comes the issue of digital preservation, which John Mancini on the AIIM blog points out is a big issue for financial and insurance companies because of the typically long time span that they are dealing with customers: consider that a personal injury insurance claim can go on for years, requiring that all documents be retained for future review. After hearing about one former insurance customer of mine that had a flood in their basement storage, destroying years of customer files, I wished that they had decided to move a bit faster on my advice about digital documents.

Cutting edge technologies such as blockchain are also getting into the insurance mix: blockchain can be used to show proof of insurance, improve transparency and reduce risk of fraud, and speed up claims with smart contracts. I can also imagine that as cars get smarter and insurance companies can tie in directly to the on-board systems, there may be less opportunity for auto repair shop fraud, which reduces overall costs to the insurer and consumer.

If you work in insurance and know that you’re behind the curve, there are a lot of things that you can do to help bring yourself into at least the last century, if not this one:

  • Convert all of your files to digital format at the front end of the process, that is, when they arrive (or are created). This will allow you to automatically extract data from the files, which can then be used for classifying and routing content as it arrives. Files can now be shared by anyone who needs to see them, and there will be no piles of completed documents/files waiting to be scanned at the end of a process. This is a big cultural shift as your workers move from working on paper to working on the screen, but if you give them a couple of big screens and a properly-designed workspace, it can be just as productive as paper.
  • With all of your content arriving in digital form, or being converted to digital immediately on arrival, you can now automate your processes:
    • New policy application? Look up any previous information for this customer, create a new business case, and route to the appropriate underwriter if required. If this is a simple policy, such as consumer renter insurance, it can usually be automatically adjudicated and issued immediately.
    • Policy changes? Extract information from the policy administration system, classify the type of change, and either complete the change automatically or forward to a policy administration clerk.
    • A first notice of loss arriving for a claim? Use that to automatically extract information from your policy administration system, set up a claim in your claims system, and route the claim to the appropriate claims manager. Simple claims, such as auto windshield replacement, can be settled automatically and immediately.
    • Additional documents arriving for a claim? Automatically recognize the document type and claim number, and add to the claim case directly.
  • Find the best ways to integrate your digital content and processes with your legacy systems. This is a huge part of what I do with any insurance customer (really, with any customer at all), and it’s not trivial but can result in huge rewards. This will be some combination of exposing APIs, digging directly into operational databases, RPA to integrate “at the glass”, and other methods that are specific to your environment. In the end, you want to be sure that no one is re-entering data manually from one system to another, even by copy and paste.
  • Automate, automate, automate. In case I haven’t made that clear already. There should be no such thing as manual work assignment or routing, except in special cases. Data exchange with legacy systems should be automated. Decisions should be automated where possible, or at least used to make recommendations to workers. Incorporate artificial intelligence and machine learning to learn how your most skilled workers make decisions, align that with your policies and regulatory compliance, and use as input to automated decisions and recommendations. The workers will be left doing the work that actually requires a person to do it, not all of the low-level administrative work.
  • Use some type of low-code application development platform that allows semi-technical business analysts – there are a ton of these working in insurance business areas – to create their own situational apps.
  • Now that you have your operational processes sorted out, start looking for new ways to leverage your digital content and processes:
    • Interact with reinsurers and other business partners using digital content and processes, not paper files and faxes.
    • Provide customers with the option for completely paperless policy application, issuance and renewal. Although I’m far from being a millennial in age, the huge stack of paper sent by my previous home insurer on renewal was a key reason that I ran directly towards an online insurer that could do it all without paper.
    • Streamline claims processes, automating where possible. Many insurance companies don’t spend a lot of time fixing their claims processes, preferring to spend their time on attracting new customers; however, in this age of online consumer reviews, an inefficient claims process is going to hit hard. Automating claims also reduces operational costs: claims managers are highly skilled, and it can take 6-12 months to train a new one.
    • Automate and streamline your ancillary processes that support the main processes, such as recovery of assets, and negotiating contracts with preferred repair vendors.
    • Build in the process monitoring, and provide automated dashboards and reports to different levels of management. As well as giving management a real-time view of operations, this reduces the time of line supervisors spent manually compiling reports. It also, amazingly, will reduce the amount of time that individual workers spend tracking their own work: in many of the insurance companies that I visit, claims managers and other front-line workers keep a manual log of their work because they don’t trust the system to do it for them.
  • Tie your process performance back to business goals: loss ratio, customer satisfaction, regulatory SLAs (such as communicating with customer in a timely manner), net promoter score, fraud rate, closure rate. It’s too easy to get bogged down in making a particular activity or process more efficient when it shouldn’t even be done at all. Although you can use your existing procedures guides as a starting point for your new digital processes, you really need to link everything back to the high-level goals rather than just paving the cow paths.

This started out as a short post because I was seeing a flurry of insurance-related items in my news feed, and grew into a bit of a monster as I thought of my own experiences with insurance customers over the past couple of years. Nonetheless, likely some useful tidbits in here.

Insurance case management: SoluSoft and OpenText

It’s the last session of the last morning at OpenText Enterprise World 2017 — so might be my last post from here if I skip out on the one session that I have bookmarked for late this afternoon — and I’m sitting in on Mike Kremer of OpenText and Kiran Thakrar of SoluSoft showing SoluSoft’s Active Client Management for Insurance, built on OpenText’s Process Suite and case management. SoluSoft originally built this capability on earlier OpenText products (Global 360) but have moved to the new low-code platform. Their app can be used out of the box, or can be configured to suit a particular environment.

The goal of Active Client Management for Insurance is to provide a 360 view of the client, including data from a variety of sources (typically systems of record for policy administration or claims), content from any repository, open tasks and pending actions, checklists and ad hoc notes. It includes the entire customer lifecycle, from onboarding and underwriting, through policy administration and claims; basically, it’s user work management and CRM in one.

The solution is built on the core of Process Suite, using the full entity modeling AppWorks-style low-code development. It also includes process intelligence for analytics, Capture Center for document capture, and Streamserve for customer communication management. Above all of these OpenText building blocks, SoluSoft has built a client management solution accelerator that (I believe) they can use for a variety of vertical applications; below the OpenText layer is a service bus integration to line of business systems. For insurance, they’ve created a number of business processes and request types corresponding to different parts of the business, such as processing a new application, amending a policy, or initiating a claim; each of these can be configured for the specific customer’s terminology, or disabled if they don’t require specific functions. It’s not completely clear, however, how much of the functionality of other insurance systems might be replaced by this rather than augmented: clearly, the core policy administration system stays as the system of record, but an underwriting or claims system workflow might be replaced by this functionality. Having done this a few times with clients that use systems such as Guidewire, I have to say that this is a non-trivial architectural exercise to decide what parts of the flow happen where, and how to properly interact with other systems.

At the heart is a generic capture-driven workflow: scan, capture, index, data entry, process, approve, review, fulfill. The names of these can be aliased for different vertical applications — their example is that “processing” becomes “underwriting” — and steps can be skipped for a specific request type. Actions that can be performed at any of these work steps are configured using checklists. Ad hoc processes can be attached to steps in this master flow, either a single-step task or a more complex flow, and be executed before, after or in parallel to the pre-defined work step. Ad hoc processes can be created at runtime, and secondary request processes created for certain case types. The ability to make any of these configuration changes is restricted by role security. Relationships between clients, policies, brokers, claims, etc. are managed using folders for customers, policies and advisers, driven by entity modeling in Process Suite (AppWorks Low Code); this ability to establish relationships between all of these types of entities is critical for providing the complete view of the customer. They also have integrated iHub analytics for showing case statistics and workload analysis, as well as more complex analysis of risk or profitability for specific customer groups or policy types.

 

Although SoluSoft built some of this in custom code. a lot of the application is built directly in the OpenText low code development environment provided by Process Suite. This means that it’s fast to configure or even do some basic customizations, with the caveats that I mentioned earlier about deciding on where some parts of the workflow might happen when you have existing LOB systems that already do that. It also provides them with native mobile support through AppWorks, rather than having to build a separate mobile application.

We saw the version focused on insurance, but they also have flavors for pensions, financial services, government, healthcare and education. However, it appears that there is an existing legacy of the Global 360-based application, and it’s not clear how long it will take for this new AppWorks version to make its way into the market.

Case management in insurance

Case Management In InsuranceI recently wrote a paper on how case management technology can be used in insurance claims processing, sponsored by DST (but not about their products specifically). From the paper overview:

Claims processing is a core business capability within every insurance company, yet it is
often one of the most inefficient and risky processes. From the initial communication that
launches the claim to the final resolution, the end-to-end claims process is complex and
strictly regulated, requiring highly-skilled claims examiners to perform many of the
activities to adjudicate the claim.

Managing a manual, paper-intensive claims processing operation is a delicate balance
between risk and efficiency, with most organizations choosing to decrease risk at the cost
of lower operational efficiency. For example, skilled examiners may perform rote tasks to
avoid the risk of handing off work to less-experienced colleagues; or manual tracking and
logging of claims activities may have to be done by each worker to ensure a proper audit
trail.

A Dynamic Case Management (DCM) system provides an integrated and automated
claims processing environment that can improve claim resolution time and customer
satisfaction, while improving compliance and efficiency.

You can download it from DST’s site (registration required).

West Bend Insurance does BPM

I attended a webinar today, sponsored by Lombardi, featuring Stacie Kenney, a senior business process analyst at West Bend Mutual Insurance, discussing how they used BPM to allow them to tap into new insurance markets. West Bend has been around since 1894 and have a strong customer base in P&C insurance in the Midwest, but you can imagine the legacy processes and systems that build up over 115 years of operation.

They’ve seen significant growth in the past five years, and wanted to get a bigger piece of the small commercial policies market. However, they couldn’t do small commercial policies cost-effectively with their old business processes because the application process is time-consuming for the agents, and the commissions are small relative to the amount of time spent on the application. The underwriters spent a lot of time re-entering data on a variety of systems, including their mainframe policy administration system, a standalone and inflexible workflow system, and Word and Excel forms. They looked at BPM to provide a more agile solution that could more easily adapt to change through rule and process changes, make the referral process during process fast and easy, and provide visibility into operations. She didn’t give a lot of detail on what they actually did, although it was focused on the quoting and underwriting processes, with a focus on reducing the quote-to-issue time from days or weeks down to just minutes or hours.

They use both Blueprint (for process discovery and modeling) and Teamworks (for full process design and execution), and Kenney talked about what they liked about both products. She likes Teamworks because it allowed her, as a non-technical business analyst, to design the actual screens that they would be using, not just sketch a mock-up that would have to be coded by developers. She likes Blueprint for the ability to keep all process documentation in one place, including using it for what-if scenarios by modeling multiple versions of the same process to allow people to see them. Iterative process development was key for them, with playbacks every 4-6 weeks to ensure that the business was fully engaged, and that there was the opportunity to include their feedback all through the development cycle. They did less formal playbacks weekly, and targeted 3-4 month delivery cycles with at least 3 playbacks during that time. Quite an impressive move to an agile-like development cycle, from an organization that had a fairly traditional development methodology prior to that.

They used an architect and a couple of developers from Lombardi’s professional services to get them started and mentor their team; she noted that while anyone could use Blueprint, you do need some developers on the Teamworks side. One of the biggest challenges that they had was getting their heads wrapped around BPM: not just the tools and technology, but BPM as a new way of doing business. She believes (and I agree) that process analysis should be a core competency of any trained business analyst, but there’s some transition to move away from an application development mindset to more of a process focus in order to become a true business process analyst in the context of BPM. BPM shouldn’t be part of an application development project, especially one that has more of a waterfall methodology, since it will tend to lose momentum and you’ll tend to lose the agility benefits that BPM brings.

The BPM project for Small Commercial business was just the start for West Bend, and having it as a showcase project means that other areas are coming to them to request BPM in their areas. IT is also using BPM internally for their “Road to Excellence” program, which is focused on consolidating the functional silos of resources and tools within IT. They are using Blueprint as a collaborative tool to model their IT processes, redesigning 14 processes in 4 weeks; implementation is underway, and they expect to implement their IT processes in BPM by March.

Much of what they experienced isn’t unique to Lombardi, although Blueprint provides some extra benefits over many other BPM vendors through a more collaborative modeling environment and a process documentation repository. However, the BPM philosophy and agile methods that they used can be used with pretty much any BPM product: that’s more an issue of corporate culture than the specific product, as long as it provide model-driven process development.

The original registration page for the webinar is here, and they’ll have a replay available soon.