White Paper

Automating Insurance
Processes with BPM
This whitepaper focuses on Adeptia “BPM for
Insurance solution” that helps insurance companies
reduce operational costs and improve profit margins
by streamlining and automating their business
processes.

Adeptia, Inc.
20 North Wacker Drive,
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.

Automating Insurance Processes with BPM 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 6
Process Flow Template 7
Agency - Carrier Interface 8
Solution Highlights 8
Claims Management 9
Solution Highlights 9
Process Flow Template 10

Benefits to the Insurance Industry 11

Adeptia BPM for Insurance Architecture Illustration 12

Adeptia Features and Functionality 13

Summary 14

About Adeptia, Inc. 15

Automating Insurance Processes with BPM 3

 White Paper

Overview
As there are Before change could come completely to this heavily regulated and
most paper- and process-bound industry, there are challenges to be
no physical addressed and opportunities to be availed. 9/11 has posed the biggest
goods to challenge to the core business of insurance industry therefore existing
deliver, strategies, offerings and processes are being reviewed carefully. As a
customer result of terrorism and fraudulent activities, industry has been imposed
with many federal regulations. Irrespective of the fact that these
service and
regulations would benefit both insurers and customers, industry is
product going through tough time in implementing them. Commoditization of
offerings insurance is another disguised opportunity for insurers; however it
remain the challenges their efficiency and agility to think innovatively and take
key proactive actions to provide customers with need based and easy to
buy solutions.
differentiator
for On one hand is a need to minimize exposure to risk, save claims,
customers to underwriting and other administrative costs. On the other hand is the
evaluate their constant push to provide better service and customized offerings.
insurers (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 insurance The following are most dreaded factors for the insurance industry.
industry is
looking for State and federal regulations
Some state and federal regulations present a competitive disadvantage
solutions that for insurance carriers competing with other financial service
convert institutions. For example, compliance with regulations like Financial
challenges into Modernization Act of 1999 (Gramm-Leach-Bliley) and Health Insurance
opportunities and Portability and Accountability Act of 1996 (HIPAA), USA Patriot Act of
2001, Terrorism Risk Insurance Act of 2002 and Sarbanes-Oxley Act of
provide them
2002 have all added to the costs of doing business.
with a
competitive Commoditization of insurance
advantage 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 client base to sell packages of various financial products,
including insurance products.

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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

In this era of To achieve business success by improving operational efficiencies,

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

To be successful at doing this, insurers need to nurture both parts of

the solution equation, that is, creation of solution-oriented strategy
and deployment of solution-based scalable technology that enables
meeting 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 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

Automating Insurance Processes with BPM 5

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• Agency – Carrier Interface

• Claims Management

Book of Business Transfer

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
extensive re-keying of records, which is error prone therefore
compromises data integrity. Furthermore, carriers, agents and brokers
deal with external data in different formats that do not have the same
data elements as required by their internal systems.

Adeptia’s book of business transfer solution standardizes the data such

that it can be reused across multiple systems and departments. The
data is directly integrated into the insurance carrier, agent or
broker's back-end 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.

Adeptia
solution Book of Business
transfer: Records
reduces the are replicated
administratio from multiple
n cost by carrier systems
50% while and transferred to
external systems
decreasing
(e.g. reinsurers’)
time to roll a based on business
book of rules
business by
as much as
75%

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

Automating Insurance Processes with BPM 6

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 - Verify the data format
external source
- Notify source to take corrective
action
- Check policy information to meet
business rules
- Notify users to take corrective action
Automating Insurance Processes with BPM
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
- Send failure notification to source, if
applicable
7
 Agency - Carrier Interface
Insurance companies that manage independent agent and partner
channels face growing competition for mind share with the market.
Adeptia BPM for Insurance allows insurance carriers the agility to
take data flows and quickly give agents the information for approvals
and add on sales.

This solution from Adeptia functions as an interface between

independent agents and insurers. It ensures that carriers and agents
quickly roll out real-time transactions. These transactions include
inquiry, first notice of loss and request for quote, which can be
provided seamlessly to agency systems.

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.
Adeptia
Carrier
Interface
solution Integrated insurance
supply chain:
makes it easy customers, agents /
for brokers to partners and insurers
do business
with their
carrier and so
can increase
revenue by
up to 10%

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

Automating Insurance Processes with BPM 8

 Claims Management
Adeptia Claims processing is perceived as an effective tool for achieving
Claims customer satisfaction because claim recovery is the ultimate criterion
for customers to evaluate the reliability of their insurers. Adeptia
Management solution supports interaction and collaboration among all participants
solution of the claims value chain across the entire life span of a claim i.e. from
significantly first notice of loss to settlement. It has a multi-line claims tracking and
reduces cost management system that helps control losses, facilitates effective risk
management and actuarial analysis by capturing extensive information
of for all claims functions.
automating
claims Solution Highlights
processes
• 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

Automating Insurance Processes with BPM 9

Process Flow Template
Note: This is a generic process template that will be customized to meet specific requirements of each customer situation.
Notification 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
Automating Insurance Processes with BPM
Validation Process
-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
Negotiation Process
-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
Settlement Process
-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
10
 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

Deploy • Operational efficiency and agility: Adeptia solution helps
portfolio reduce dependency on humans for time bound tasks. It
ensures that tasks are executed rapidly with more accuracy,
faster 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 hire
Improve new resources to manage ad-hoc or seasonal tasks.
productivity
of IT staff • Effective cost management: Since tasks are executed
and reduce quickly; without errors, person hours and other operations
overheads are reduced significantly. The saved cost can be
costs
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
Well customized offerings with much ease, and reach to their
connected customers much early. Since all the required data can be
groups: accessed with a single click, need for personal meeting is
carrier, reduced to minimum.
brokers, • Better capacity to manage diverse insurance offerings:
partners and It becomes easy for insurers to tie up with third parties and
customers 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.

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
Improve profit the flexibility to 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.

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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.

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 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
Automating Insurance Processes with BPM
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.
13
 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.

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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

D-4, Ist Floor, Sector 10,
Noida, U.P., 201 301
India
Phone: +91-120-3052137
Email: info@adeptia.com

Automating Insurance Processes with BPM 15