White Paper

Automate and Optimize

Insurance Industry
Processes
This whitepaper focuses on “Adeptia BPM for Insurance”
solution that can help the insurance industry reduce
operative costs and improve profit margins by enabling Adeptia, Inc.
carriers, brokers, reinsurers to meet major challenges and 20 North Wacker Drive,
avail opportunities that remain latent Suite 2000
Chicago, IL 60606
Phone: (312) 442-4420
White Paper

Copyright

© 2005 Adeptia, Inc. All rights reserved.

Trademarks

The Adeptia logo and Manage, Automate and Optimize Business

Processes are trademarks of Adeptia, Inc.

Statement of Conditions

Adeptia, Inc. provides this publication "as is" without warranty of any
kind, either express or implied. In no event shall Adeptia be liable for
any loss of profits, loss of business, loss of use or data, interruption
of business, or for indirect, special, punitive, incidental, or
consequential damages of any kind.

No part of this work covered by copyright herein may be reproduced

in any form or by any means—graphic, electronic or mechanical—
including photocopying, recording, taping, or storage in an
information retrieval system, without prior written permission of the
copyright owner.

Adeptia, Inc. may revise this publication from time to time without
any notice.

Automate and Optimize Insurance Industry Processes 2

White Paper

Table of Contents

Overview 4

Challenges and Opportunities 4

Adeptia BPM for Insurance Solution 5

Book of Business Transfer 6
Solution Highlights 7
Process Flow Template 8
Agency - Carrier Interface 9
Solution Highlights 9
Claims Management 10
Solution Highlights 10
Process Flow Template 11

Benefits to the Insurance Industry 12

Adeptia BPM for Insurance Architecture Illustration 13

Adeptia Features and Functionality 14

Summary 15

About Adeptia, Inc. 16

Automate and Optimize Insurance Industry Processes 3

 White Paper

Overview
Before change could come completely to this heavily regulated and
As there are no most paper- and process-bound industry, there are challenges to be
physical goods to addressed and opportunities to be availed. 9/11 has posed the
deliver, customer biggest challenge to the core business of insurance industry
therefore existing strategies, offerings and processes are being
service and product reviewed carefully. As a result of terrorism and fraudulent activities,
offerings remain the industry has been imposed with many federal regulations.
Irrespective of the fact that these regulations would benefit both
key differentiator for insurers and customers, industry is going through tough time in
customers to implementing them. Commoditization of insurance is another
evaluate their disguised opportunity for insurers; however it challenges their
efficiency and agility to think innovatively and take proactive actions
insurers to provide customers with need based and easy to buy solutions.

On one hand is a need to minimize exposure to risk, save claims,

underwriting and other administrative costs. On the other hand is
the constant push to provide better service and customized
offerings. (Although claims recovery is the ultimate truth that
validates the dependability of insurers, claims are yet far away from
being the single point of judgment.)

The industry needs tools that could help save cost yet improve
quality of offerings and service. Insurers need to strike a balance
while implementing the cost saving and quality service strategies to
make best use of the dual faced situation.

Challenges and Opportunities

The following are most dreaded factors for the insurance industry.
The insurance
industry is looking State and federal regulations
Some state and federal regulations present a competitive disadvantage
for solutions that for insurance carriers competing with other financial service institutions.
convert challenges For example, compliance with regulations like Financial Modernization
into opportunities Act of 1999 (Gramm-Leach-Bliley) and Health Insurance Portability and
Accountability Act of 1996 (HIPAA), USA Patriot Act of 2001, Terrorism
and provide them Risk Insurance Act of 2002 and Sarbanes-Oxley Act of 2002 have all
with a competitive added to the costs of doing business.
advantage Commoditization of insurance
Policies are becoming more packagable, particularly in the low value,
high volume sector. As a consequence of this commoditization, reducing
costs of managing policies and claims has risen as a key issue. Keeping
expense ratios in control is all important for maintaining profitability.

Compete with non-insurance verticals

The industry is experiencing increased competition from other industry
verticals like banking and manufacturing. Now many banks leverage their

Automate and Optimize Insurance Industry Processes 4

 White Paper

client base to sell packages of various financial products, including

insurance products.

Mergers and acquisitions

As a result of mergers and acquisitions in 1990’s many companies have
more than one system for any given function such as claims processing
systems, multiple billing systems, and multiple user interfaces. These
systems are not compatible; therefore require dedicated human staff to
manage information exchange, data consistency and integrity.

Expanded scope of risk management

Risk management after 9/11 has increased its scope. Now it also
includes operational risk in addition to investment risk. It is important
that companies balance their risk portfolio to withstand political mishaps,
terrorism etc.

Downfall in equity market

Volatility in the equity market has risked insurers’ reliance on the returns
from their investment portfolios, because the low interest earning is no
more sufficient to balance underwriting losses.

Adeptia BPM for Insurance Solution

To achieve business success by improving operational efficiencies,
insurers need to tighten up and streamline both channel partner
relationships and back office operations. The brokers and channel
partners are the interface between the insurance companies and
customers. They play a vital role in helping insurers sustain existing
customers as well as attract new customers through better and diverse
In this era of services. So it is imperative that insurers are well connected with brokers
/ channels partners as well as meet their needs. Improvement in back
technology-driven office operations can happen if policy production and billing are
businesses, success automated; overall claims expenses are reduced, and claims settlement
of a business also is made faster.

depends on its To be successful at doing this, insurers need to nurture both parts of the
enterprise IT solution equation, that is, creation of solution-oriented strategy and
deployment of solution-based scalable technology that enables meeting
strategies of strategic goals laid out as part of their enterprise strategy. In the
current scenario however many insurers either rely on either manual
methods or custom coded solutions that lack strategic approach to
address their business needs. Manual execution of their crucial
operations leads to many errors that occur in documents passed from
insurers to brokers or ceding companies to reinsurers, which results in
lengthy settlement cycles. While custom coded interfaces are developed
to meet a certain set of needs only. They are not scalable so cannot
meet changing needs and require recurring IT investment to keep them
in use.

Adeptia BPM for Insurance solution has been developed to offer strategic
value to insurance companies through systematic design and deployment
of BPM and integration technologies. Adeptia BPM for Insurance can

Automate and Optimize Insurance Industry Processes 5

 White Paper

address volatile situations, and it is a scalable and reusable solution. It

helps insurers meet the challenge of operational costs saving while
enabling them to exploit business expansion opportunities. Adeptia BPM
for Insurance includes solutions for the following business processes:

• Book of Business Transfer

• Agency – Carrier Interface
• Claims Management

Book of Business Transfer

Adeptia solution Due to volume and diversity of policies records, the process to roll out a
book of business is very time consuming and costly. It usually involves
reduces the extensive re-keying of records, which is error prone therefore compromises
administration data integrity. Furthermore, carriers, agents and brokers deal with external
data in different formats that do not have the same data elements as
cost by 50% while required by their internal systems.
decreasing time to
roll a book of Adeptia’s book of business transfer solution standardizes the data such that
it can be reused across multiple systems and departments. The data is
business by as directly integrated into the insurance carrier, agent or broker's back-end
much as 75% systems. The Adeptia solution manages exceptions that occur while
processing policies records. It also automates regular updates of those
records. The solution has the ability to transfer and repair the data in real-
time.

Book of Business
transfer: Records
are replicated from
multiple carrier
systems and
transferred to
external systems
(e.g. reinsurers’)
based on business
rules

Automate and Optimize Insurance Industry Processes 6

White Paper

Solution Highlights

• Helps carriers transfer millions of policies records in a matter of

days

• Provides a single and complete view of customer to better meet

her requirements and identify new business opportunities

• Helps carriers and reinsurers diversify their businesses

Automate and Optimize Insurance Industry Processes 7

Process Flow Template

Note: This is a generic process template that will be customized to meet specific requirements of each customer situation.

Receipt of Records Validation of Records and Format, and
Notification
- Receive policy data from external - Verify the data format
source
- Notify source to take corrective action
- Check policy information to meet business
rules
Conversion of Records
- Apply mapping to convert data into
target format
Upload of Records, and Notification
- Send properly formatted data in to target
application
- Notify users to take corrective action
- Send acknowledgements to source

- Notify users to take corrective action - Send failure notification to source, if applicable

Automate and Optimize Insurance Industry Processes 8

 Agency - Carrier Interface
Insurance companies that manage independent agent and partner
Adeptia Carrier channels face growing competition for mind share with the market.
Interface solution Adeptia BPM for Insurance allows insurance carriers the agility to take
makes it easy for data flows and quickly give agents the information for approvals and
add on sales.
brokers to do
business with This solution from Adeptia functions as an interface between
independent agents and insurers. It ensures that carriers and agents
their carrier and quickly roll out real-time transactions. These transactions include
so can increase inquiry, first notice of loss and request for quote, which can be
revenue by up to provided seamlessly to agency systems.

10% With Agency - Carrier Interface, front desk can track and manage
insurance brokers / agents. Insurers can adopt new channels that help
them package various insurance options and reach to more customers.
Using Adeptia, they can optimize relationships with brokers, channel
partners and provides flexibility to set channel specific rules for
effective broker management, hence streamline and speed up key
agency processes.

Integrated insurance
supply chain:
customers, agents /
partners and insurers

Solution Highlights
• Helps engage new brokers and introduce new channels
• Ensures that partners and channels view the insurer as a preferred
solutions provider
• Empowers brokers and channel partners to perform better
• Helps brokers/ channel partners enhance operational efficiency
• Helps defines KPIs and regular evaluation parameters
• Helps monitor performance across channel hierarchies, geographic
regions and divisions

Automate and Optimize Insurance Industry Processes 9

 Claims Management
Adeptia Claims Claims processing is perceived as an effective tool for achieving
customer satisfaction because claim recovery is the ultimate criterion for
Management customers to evaluate the reliability of their insurers. Adeptia solution
solution supports interaction and collaboration among all participants of the
claims value chain across the entire life span of a claim i.e. from first
significantly notice of loss to settlement. It has a multi-line claims tracking and
reduces cost of management system that helps control losses, facilitates effective risk
automating management and actuarial analysis by capturing extensive information
for all claims functions.
claims processes
Solution Highlights
• Business managers can define several processing rules depending on
the availability of resources, skill-sets, a particular claims process,
different product types, and different service level to mention a few
scenarios
• A complete customer view is provided through assimilating all related
documents/files in a structured format
• Automatic distribution, allocation and prioritization of work for each
user
• Robustly integrated policy administration, finance, expert and bureau
systems

Automate and Optimize Insurance Industry Processes 10

Process Flow Template

Note: This is a generic process template that will be customized to meet specific requirements of each customer situation.

Notification Process Validation Process Negotiation Process Settlement Process

-Allows first notification through a variety
of access devices like fax, email and
phone
-Collects and compiles customer details
from disparate customer information
systems
-Validates the information, generates lists
of documents required and
acknowledgement on the documents
received
-Verifies and validates the claim
against business rules; no scope for
human errors. Therefore easy to
identify claims submitted against
policies that have expired, claims
submitted before the due date etc
-The process engine maintains a
complete audit trail of every activity
related to a policy
-Manages exceptions e.g. if a claim
application is rejected, a letter of
denial is also automatically issued
-If a claim recovery case is not clear,
the system sends notification to
authorities for manual adjudication of
the claim, and allocates a ‘task’ to the
adjudicator group
-An audit trail of all activities is
recorded
-Sends alerts to the finance system to
release payments as per the payment
schedule generated during the negotiation
process
-Generates letter on “Explanation of
Benefits” along with each payment. When
the last claim installment is made, the
system automatically closes the claim

Automate and Optimize Insurance Industry Processes 11

 Benefits to the Insurance Industry
Benefits of Adeptia solution start from operational efficiency and extend
to profitability of an insurance organization. While these benefits are
common across all BPM based solutions, Adeptia provides more
measurable value over custom coded solutions that require recurring IT
investment.

Efficiency and Productivity

• Operational efficiency and agility: Adeptia solution
Deploy portfolio helps reduce dependency on humans for time bound tasks. It
faster ensures that tasks are executed rapidly with more accuracy, and
errors leading to duplication of efforts are eliminated.

• Better human resource management: Key day-to-

day functions are automated; therefore, human resources can
be allocated other crucial tasks. Organizations do not need to
Improve hire new resources to manage ad-hoc or seasonal tasks.
productivity of
IT staff and • Effective cost management: Since tasks are executed
reduce costs quickly; without errors, person hours and other operations
overheads are reduced significantly. The saved cost can be
invested in managing other priority tasks that take a back seat
due to financial constraints.

Business Expansion
• Easy to manage commoditized insurance: Integrated
organizations, channel partners, brokers can create customized
Well connected offerings with much ease, and reach to their customers much early.
Since all the required data can be accessed with a single click, need
groups: carrier, for personal meeting is reduced to minimum.
brokers,
partners and • Better capacity to manage diverse insurance
customers offerings: It becomes easy for insurers to tie up with third parties
and expand the insurance packages by incorporating policies that
help cover a variety of risks for customers. Automated operations
can handle voluminous data with much ease as opposed to manual
processing that has capacity constraint.

Automate and Optimize Insurance Industry Processes 12

 Customer Satisfaction and Profitability
• Better customer service: Customer can apply for services
through web; she can check her records online; request changes
online. Customer receives responses quickly and has the flexibility to
Improve profit buy services that suit her needs completely.
margins
• Improved profit margins: Improved operations save
cost. Diverse and agile business helps sustain existing customers
and attract new customers easily. Together these factors
enhance profitability of insurers.

Adeptia BPM for Insurance Architecture

Illustration
Three layers of Adeptia BPM for Insurance architecture enable
collaboration among users, their business objective and the tools that
help meet the objective. The top most layer shows that users interact
through a graphical user interface to create and run business process
flows. The second layer includes a configuration of the process flows.
The third layer, with the help of most suitable technologies embedded in
the solution, makes the processes live.

Automate and Optimize Insurance Industry Processes 13

 Adeptia Features and Functionality
Features
• Complete process
automation eliminates the
need for manual activities
and human dependency
• Horizontal and vertical
workflow capabilities
engage multiple delivery
mechanisms like print,
email, electronic archival
and retrieval to execute
macro as well as micro
business tasks
• EAI, ETL and Web Services
based integration of
resources connects
enterprise systems, data
and human resources for
better and agile
communication
• Globally acknowledged
templates are used for
documentation based on
ACORD industry standard
forms
• ACORD XML/EDI-AL3 based
standards are used for
standardizing enterprise
wide data interchange
• Web services enable the
insurance carrier to
seamlessly collect
information from disparate
internal and external
sources and allow
customers to communicate
with various departments
through a few clicks
• Carriers and customers can
track claims status through
Web or email/mobile phone
alerts
Automate and Optimize Insurance Industry Processes
Functionality
Business Process Management
Process Designer
Allows designing of graphical processes using BPM notations.
These processes include both vertical and horizontal processes
that are required for automated implementation of book of
business transfer, agency – carrier interface and claims
processing. Process Designer’s ease of use allows business users
to create complex designs without any help from IT department.
Workflow Manager
Workflow Manager allows IT department to quickly create and
attach ‘activities’ to process designs or business rules in order to
align them with integration logic. The Workflow Manager handles
exceptions automatically, and sends notification to decision
makers for further actions. Tasks are not considered ‘complete’
until the Workflow Manager is ‘updated’ on the execution of
activities and their respective statuses.
Process Engine
Process Engine is a robust state machine that executes workflow
tasks. Its support for decision nodes, sub-processes, exception
handling, forks and joins, loops and long-running transactions
allows execution of process flows of almost any complexity. It
also supports failure recovery and clustering for reliability and
high performance.
Business Resources Integration
Web Services
Comprehensive support for Web Services includes ability to
utilize any Web Service as a task in a process flow. This includes
support for introspection of UDDI/WSDL and both RPC and
message-style invocation. Process flows can be triggered by and
even exposed as Web Services by using the Publish-WS
capability of the product. Includes support for WS-Security.
Data Transformation
Powerful data integration capability includes support for complex
data formats and transformation. Data transformation engine
allows any-to-any mapping between different data formats.
Complex data processing functions are included such as string,
math, and conditional operations as well as DB and XML file look-
up. Data can be aggregated from multiple sources. Content can
also be distributed to multiple destinations automatically.
Supported data formats:
• XML-DTD, XSD, Hierarchical, attributes, enumerated values
• ASCII Text/Flat, Fixed-length, EDI, AL3, Excel files
• SQL compliant relational databases such as Oracle, Sybase,
DB2, Informix, MySQL etc.
Data Transport
Rich, secure, two-way data transport capability gives flexibility to
specify different source and destination systems. Supported
transport protocols:
• HTTP/S, FTP, SMTP/POP3, JMS,JCA, ODBC/JDBC, SOAP
• Adapters: Legacy data stores, SAP, JDE and Peoplesoft etc.
14
 Summary
Adeptia BPM for Insurance solution has been developed to address the
most challenging and common needs of carriers, brokers, channel
partners, and reinsurers. Adeptia helps streamline and automate front
office as well as back office processes that transform organizations at
every level, thereby bringing about operational efficiency, customer
satisfaction and profitability.

The BPM for Insurance solution has been designed in a way that it can
be deployed quickly and put to use after customer specific
customizations. The compartmentalized architecture of the solution
allows for rapid creation and addition of new business process templates
to the business layer. For instance, underwriting process template can be
quickly created using the User Interaction layer and configured to the
business layer, and finally executed through the technology layer.

Automate and Optimize Insurance Industry Processes 15

About Adeptia, Inc.
Adeptia, an enterprise software company headquartered in Chicago,
Illinois, provides business process integration technology to easily and
quickly automate business processes across supply chains using
industry-specific standards. Adeptia’s unique product combines business
process management with business-to-business integration. Adeptia’s
reusable and highly scalable technology has been deployed by Fortune
1000 companies. For more information, visit
http://www.adeptia.com.

Adeptia Headquarters
20 North Wacker Drive, Suite 2000
Chicago, IL 60606
Phone: (312) 442-4420
Email: info@adeptia.com

Adeptia India R&D Centre

A-757, Sector 19
Noida, U.P., 201 301
India
Phone: +91 120 2548295
Email: info@adeptia.com

Automate and Optimize Insurance Industry Processes 16