Final IBM IMPACT session for me this year is If P&C Insurance talking about the role of process and rules in claims processing. If is the largest property and casualty insurer in the Nordic region and covers all sorts of risks across personal and commercial lines of business. Insurance Customer Satisfaction can seem like an odd topic as so much of what the industry focuses on is price – getting quotes, cheaper rates and so on. Yet the purpose of Insurance is to cover you in difficult situations – when you have a loss or a crisis of some kind. If’s perspective is that better claims handling is key to customer satisfaction and this has gone from a concept to an implementation to something that drives If’s advertising.
In claims handling, customers want to get their money quickly. If wants to reduce the amount of money spent on claims and to increase customer satisfaction. If’s approach is to provide web forms for filling out your claim and then let you submit it and be done. To get here If had to automate the processes behind claims across multiple types of claims in multiple countries. The results of this include:
- No paper flowing into the company related to claims
- 60% are straight through processed with money flowing out in 3 seconds!
If restricts this to 60% as it wants to check a certain number
- ALL claims are handled within 24 hours
- People handle more claims, more quickly and can focus where they need to
- Save money with handling and pay out less in claims because the process is consistent and error-free
- Customer satisfaction is up
- It’s open and available 24×7
To get to this state If had to analyze and define the entire end to end process for claims processing. The process used to be in the head of a claims handler and each one had a slightly different process. So it had to be extracted and standardized – registration, decision, payment, recourse, closing (note the emphasis on a decision EARLY in the process).
This required a way for business and IT people to collaborate and talk so they focused on four core concepts: Process, Service, Rules, Typicality (is there something out of the ordinary with this claim). IT developed a common process-oriented architecture based on the IBM WebSphere stack, Rational and ILOG JRules. They began in Finland to expand into the other countries and types of claims (still not done with all the kinds of claims). They have found that the process is pretty stable over time once established, but some of the rules-based services (for fraud say) do.
If differentiate between different kinds of rules – simple, process-centric ones, complex logical ones and complex statistical or scoring rules (based on analytics). They use JRules for the rule management and a product called AutoScore that is a neural, learning analytic system.
Historically business users would do some research and thinking about how they might do things – creating documents and presentations. These would be handed to the IT department where more documents and presentations are created until a design and some code get created. Then there is a whole back and forth to resolve the differences and confusion. Once they had a business rules management system they tried to see if a different approach was possible. The new approach involved the business people doing more or less the same steps before creating and updating the business rules directly and pushing them into production – empowering the business people using the BRMS. The use of the BRMS also meant that the underwriters and actuaries (the business people) can run tests and do impact analysis across the whole portfolio – far more thorough than old approach. It’s faster, the results are better and the business people are happier with the increase of control they now have. Expansion came from business people encouraging other business people with their own stories – not an IT push.
They also developed services that use rules to do things like determine what needs to be on a health declaration while removing more and more rules from their legacy systems/services. One example was a pricing change for private cars – took a business user 4 hours to make a change when the previous change had taken the IT department more than a year!
IT resisted this transition rather more than the business did. People who had been essential found themselves “out of the loop” and this was a problem. But there is an impact on the business too, as they now “own” a system that runs 24×7 and support becomes an issue. It is also true that finding examples, best practices and so on is hard with a “newer” approach like Decision Management and business rules management systems. Daniel Selman of IBM got a plug as did his blog.
A great example of a rules-based decision management approach that uses analytics and delivers real business control and business agility.