March 07, 2014
The long-term growth of insurers hinges on the readiness and ability of carriers and other key players to undertake transformational changes when it comes to the technology solutions they deploy, according to a recently released report from the Deloitte Center for Financial Services.
While one-off solutions may address a problem in the short term, an increasing number of carriers are realizing that more comprehensive solutions can lead to enterprise-wide gains and a sustainable competitive advantage. This is true especially when it comes to software integration. A siloed approach to multiple applications combined with arduous manual processes takes IT away from more high-value tasks and creates a bottleneck for business users that ripples across the entire organization.
[Insurers are making progress retiring legacy core systems, but they're not always satisfied with the new policy admin systems they're implementing: The State Of Policy Admin Systems Modernization]
However, legacy systems are expensive and difficult to replace, and for most organizations rip-and-replace solutions are just not viable. How can insurers move their IT infrastructures into the 21st century while still leveraging their current IT investments?
Lou Ennuso, Adeptia
Here are four areas to which insurers should be paying attention:
1. Customer Layer
The growing real-time nature of the insurance industry necessitates that carriers be more agile in how they interact with their customers. Smaller firms that don't work through clearinghouses haven't changed the way they connect with customers, and this failure to adapt comes at major organizational and transactional costs.
As touch points increase, the means of customer interaction must change accordingly. Small insurance firms typically spend most of their resources managing a small group of their clients -- other small businesses. When a company simplifies its back-end infrastructure by specifying paths of customer connection, it opens the opportunity to more rapidly onboard customers.
For example, top-tier customers will retain the freedom to connect with an insurance provider based on their preference but mid-level customers should only be provided with a few avenues to connect with a provider, and small customers, with only one or two paths of connection.
2. Delivery of IT Services
Whether it's onboarding new customers or new benefit enrollment, multiple siloed systems around industry processes create parallel manual procedures, doubling the work for IT and duplicating the efforts of different business users across the organization. Furthermore, entrenched legacy systems and extreme organizational resistance make it very difficult for IT departments within insurance companies to drive innovation and efficiency.
Self-provisioning for the customer base has been a challenge for payers in terms of inputting information into the system in a common format. Empowering insurance agents to do their own web-based mapping provides a tremendous value to customers and insurance payers and can be achieved through simplified drag-and-drop mapping interfaces that stream data and put it into a common format for payers.
Empowering business users to take on day-to-day operational tasks yields benefits that spread throughout the organization. Now, IT is free to focus on strategic initiatives as business users become more self-sufficient in performing IT tasks that allow them to do their jobs better and faster, cutting onboarding time in half and eliminating ad hoc manual processes to ultimately provide huge consumer benefits.
Lack of visibility into IT architecture is especially problematic for the insurance industry. When manual processes and one-off solutions become buried within the system, it becomes difficult to measure efficiency and see what the customer is doing. Not only does it become difficult to make good business decisions, but also prescriptive and predictive recommendations. Tying these systems together yields a complete picture of the process, leading to better and more-informed decisions. Easy access to clear data is essential, and the ability to mine data continuously throughout IT processes will help the organization as a whole grow.
4. Error Rate
Ten percent of claims fall outside normal parameters, and without the proper error handling system in place, these claims can take up to a year to resolve. Many providers feel locked into black-box solutions from major vendors, but older, heavier applications aren't mobile or agile enough to handle claims that error out.
The solution is software initiatives that include workflow to automatically assign processes when something errors out, measure where it goes, and track the claim to completion -- allowing companies to make up vast amounts of lost revenue. By layering these software solutions on top of existing infrastructure, providers cannot only reduce costs, but also reassign resources to turn claims around more quickly.
Insurance companies are grappling with how to deal with these issues as they attempt to modernize their business and IT. Processes that used to be driven by business users have become IT heavy, slow, and costly to the bottom line. Adjustments in these four areas are critical in bringing IT infrastructure into the 21st century -- and reaping the cost and customer benefits that will undoubtedly follow.
Lou Ennuso is the CEO of Adeptia, an application integration and business process management company that provides software to companies of all sizes. He is a long-time technology veteran and has held leadership positions at Xerox, Oracle and EDS Corporation.
[To hear about how insurance companies and financial firms are managing their complex data architectures, attend the Future of the Financial Services Data Center panel at Interop 2014 in Las Vegas, March 31-April 4.
You can also REGISTER FOR INTEROP HERE.]