In its 2007 report titled "Insurance 2020: Innovating Beyond Old Models,"
IBM looked at why insurers, who were among the earliest adopters of information
technology (IT) as a group, are also among the slowest to adopt newer IT. The
issue is not that insurers and their ecosystem members, such as agents and brokers,
are not automated. Instead, IBM found that insurers are not adopting IT to increase
return on equity, reduce prices, and so forth. IT has driven similar metrics
in the right direction in other industries, but not in insurance.
A related finding was that the insurers tend to automate and optimize their
processes as they exist rather than change to suit new technologies. For example,
property and casualty insurers have added global positioning systems (GPS),
bar coding of parts, and digital cameras almost seamlessly to replace physical
maps, inventory tags and the Polaroid camera. When they did, neither adjusters
and estimators nor the subsequent workflow had to change.
While insurers certainly want to improve their financial metrics, they do not
feel they should have to change processes to do so. Even if they were willing
to do so, IT Investment Research hasn't found an ERP software that can accommodate
all of the various geographic/governmental, size-of-company, type-of-business-process,
type-of-IT-architecture, type-of-delivery, and most important, type-of-insurance
permutations possible. Instead, business process management (BPM) software lets
insurers work the way they want to work while embracing new technologies such
Workflow the way you work
That's why BPM software is so popular among insurers. Suppliers include Active
Endpoints, Adobe, Appian, Cordys, Global 360, IBM, Metastorm, Pegasystems, Software
AG and almost any BPM supplier with a workflow heritage. Some offer insurance-specific
solutions, others offer templates and/or development frameworks and tools, and
others have had success although their BPM offering is not insurance specific.
Generic BPM is well aligned with insurance ecosystem needs.
IBM provides both BPM software specifically tuned to insurance and templates/frameworks.
In May 2008 IBM released its Insurance Operations of the Future (IOF) solution,
a composite application that can recognize inbound tasks (including those coming
from unstructured sources), interpret information within the source, and route
work to a human or straight-through processing (STP) business process set.
IOF's foundation, according to IBM, is its separately available Insurance Process
Acceleration (IPA) framework. IPA includes elements from IBM's WebSphere, Information
Management, Lotus, and other brands. It lets insurers automate processes such
as claims management, policy administration, underwriting, and self-service
inquiry not handled out of the box by IOF. IPA won two awards at the 2008 Association
for Cooperative Operations Research and Development (ACORD) conference, the
key event for insurance industry IT standards development.
Cordys' Business Operations Platform for the Insurance Industry lets insurers
manage business processes by integrating legacy systems, disparate databases
and even paper. This is another example of the do-it-your-way advantage of BPM.
Like IOF, it enables insurers to build new applications through the re-use of
discrete, independent components (or composites). Cordys enables cross-selling
by creating a single, real-time view of the customer across different lines
Templates and frameworks
Adobe ties together various products more loosely into a BPM offering for insurers.
Classic Acrobat document preparation software along with Adobe AIR's run-time
support for rich internet applications and LiveCycle ES suite let an ecosystem
support property/casualty (P/C) and surety, life, annuity, and health insurance
and re-insurance requirements. LiveCycle can support over 600 ACORD P/C
forms in .pdf format. It also supports different roles such as for the adjuster,
estimator, independent agent, and so forth. In addition, Adobe users can leverage
ACORD-standard XML Schemas throughout LiveCycle processes.
Of course any one of the Adobe products can be used individually with other
brands to accomplish similar goals. With LiveCycle ES, organizations can automate
digital rights protection of documents that need to be shared or collaborated
on with the insured as part of a process. This has important implications where
Health Insurance Portability and Accountability Act (HIPAA) regulations are
Pegasystems offers the Claims Repair Solution Framework, a pre-packaged BPM
software containing an extensible library of claim edits, HIPAA 837 claim message
handling, and best practice pre-adjudication workflows. It is important to look
closely at different supplier offerings vis-a-vis specific insurance needs,
because the use of the phrase "solution versus framework" can be simply
a supplier marketing decision. In healthcare insurance, Pegasystems has landed
recent wins at Blue Cross/Blue Shield of Minnesota and Kaiser Permanente.
Using core BPM
Global 360's Case360, although not unique to insurers, is very well suited
to general, health, life, reinsurance, and indemnity business process sets.
Per an IT Investment Research survey, insurers typically deploy Case360 solutions
to sign up new customers, underwrite, manage claims, research fraud and manage
subrogation claims -- that is, basically wherever the set can be looked at as
Metastorm BPM and Metastorm Integration Manager (MIM) combine to form a horizontal
suite that supports insurers that especially need to model and monitor human-centric
sets, and enforce processes for compliance and governance (see
recent ebizQ article "Five Ways BPM Enables Enterprise Governance").
MIM provides an environment for small insurers and independent agents to manage
business processes that span outside of their agencies. Larger agencies can
use the software to support processes that run behind an agent portal.
Generic Appian Enterprise and Appian Anywhere can also automate and manage
the lifecycle of a case and provide status visibility with real-time alerts
and key metrics reporting. Self-service Appian capabilities let customers and
independent agents interact through a multi-channel strategy. Software AG's
webMethods BPMS Process Designer lets insurers design and implement complex
process "as is," another example of the key advantage of BPM in insurance:
if the insurer does not want to change proven business sets, the technology
should not force such a change.
Development tools for BPM in insurance
Often, to achieve competitive advantage where a function is not tied to regulatory or other demands, insurers want to develop special BPM capabilities in house. Two offerings announced in mid 2008 illustrate tools that can help such efforts. Active Endpoints, an early mover in the Business Process Execution Language (BPEL) standard, released ActiveVOS 6.0 in September 2008. ActiveVOS 6 0 is an all-in-one development system that permits insurers to create and execute web services-based applications. It contains an integrated complex event processing function, which lets insurers respond to changing work output and quality conditions.
Other middleware and tools can be used to build a development and on-demand delivery environment
About the Author
Dennis Byron brings three decades of analyst experience to his role as
ebizQ's Community Manager for Improving Business Processes. This
community covers Business Process Management (BPM), Process Modeling,
Process Analysis, and Business Alert Monitoring (BAM), among other
As Community Manager, Byron will blog and podcast to keep the ebizQ
community fully informed on the latest news and breakthroughs relevant
to enterprise BPM. Byron will be responsible for bringing you breaking
news on BPM daily, writing feature articles and sourcing content from
other analysts, industry associations and vendors for publication on
ebizQ. Finally, each week, Byron will compile the most important news
and views in an e-mail newsletter for ebizQ's ever-growing BPM
Byron is ideally suited to the job, as he has researched and analyzed
all areas of IT and information-systems use for the past 30 years.
Byron looks at BPM market dynamics backed up by facts, while taking
into account the perspective of the IT and business person. He is a
frequent speaker and moderator on business processes, which will also
be one of his roles as Community Manager.
Byron was the ERP and Middleware Analyst with the Datapro division of
McGraw-Hill and IDC from 1991 to 2006. In these roles, he was the
primary analyst for Business Process Management. He has conducted
over 500 specific information-systems case studies. He has contributed
to Application Development Trends, IT Business Edge, Research 2.0 and
Byron is also the principal of IT Investment Research, which is aimed
at institutional and individual investors in IT, or anyone who enjoys
peering under the covers of "the financials," where large companies
and emerging IPOs like to bury their most interesting facts. His main
area of interest is investment opportunities in enterprise software.
ebizQ is the insiderís guide to next-generation business process management. We offer a growing collection of independent editorial articles on BPM trends, issues, challenges and solutions, all targeted to business and IT BPM professionals.
We cover BPM standards, governance, technology and continuous process improvement, as well as process discovery, modeling, simulation and optimization, among many other areas. We follow case management, decision management, business rules management, operational intelligence, complex event processing and other related topics. We closely track important trends such as the rise of social BPM, mobile BPM and BPM in the cloud. We also explore BPMís use in functional areas, such as supply chain and customer management, and in key verticals, such as financial services, health care, insurance and government.
ebizQ's other BPM-oriented content includes podcasts, webcasts, webinars, white papers, a variety of expert blogs, a lively online forum and much more.