Operational Streamlining in Insurance Industry

Transcription

1 Operational Streamlining in Insurance Industry Surekha Sugandhi Insurance Practice - Solution Architect NIIT Technologies White Paper

2 CONTENTS Introduction 3 Digitalization in Insurance Industry: Key Business Drivers 3 Challenges 4 Streamlining the operations, Industry best practices 4 Benefits of operational streamlining 5 Conclusion 5

3 Introduction Insurance companies today face several challenges, including shrinking margins, regulatory demands, and industry consolidation. they serve, and the knowledge workers who work with them. Above all a robust change management program is critical to the success of such a major transformation. In addition, demands from both shareholders and internal stakeholders are requiring a thorough examination of existing business models. In order to stay competitive, insurance companies need to transform their processes and operations, improve profitability, reduce costs, and meet the ever growing need for improved customer service. As digital channels grow in importance both in selling and providing service, insurers in pursuit of high performance need to develop a customer centric and digital mind set changing the way they operate to become true Digital Insurers. As insurance companies struggle to cope with these changing business paradigms, they often find that their information systems and existing business processes hinder their efforts to improve their situation. Insurance companies must shore up their IT infrastructures and begin to look at IT as a key enabler of new business processes and transformation. Transforming a business model is a delicate balancing act which requires visibility into business operations, new ways of dealing with old problems, and technology to support the changes in the business processes that will accompany this transformation. Insurance companies need an information management platform that can unite all their information systems, the business processes Digitalization in Insurance Industry: Key Business Drivers Multi channel mix remains vital: The shift towards digital channel continues to grow aggressively but a multi-channel mix remains vital. It is becoming very evident that optimization of both physical as well as digital channel is must, if insurer want to remain competitive. Customers are becoming demanding. Today s customers are spoilt with choices and becoming less loyal. They do not have difficulty in switching the providers. Customers are more aware of the market, know what they want and skilled to look for the alternatives if they do not get the value for the money. They are also looking for a seamless experience at every opportunity. They also want to be rewarded for their loyalty. Hence retaining a customer is proving to be a big challenge. Competitive pricing and values for money are the key drivers for a switch. In addition to this customer is also looking for reduction in buying and serving cycles. They no longer have patience to wait for the product or service delivery. Old inefficient legacy systems The back-office system still works in silos and is not efficient enough to keep up with the demand of front-office. Product Development Distribution New Business Policy Service Claims Not tailored to suit specific customer segments Not able to keep pace with the evolve customer dynamics Lack of digital tools Channel Conflict Multiple source of truth Manual and rigid process Longer cycle time of application processing Too much of paper work Poor Response Time Lack of Single Customer View Too much of paper work Sluggish claim processing Customer dissatisfacation Old inefficient standalone systems and inflexible enterprise architecture are contributing to the increased cost of operations and lack of organization agility. 3

4 Challenges Many insurers are operating multiple, inefficient legacy platforms, with separate operating models by line of business, lacking a central view of their customers. Consumer feedback loops accelerating with unhappy customers adopting widely accessible public campaigns to broadcast their views if they feel unfairly treated. Developing simple but smart products requires critical trust-building between seller and buyer. Building trust requires insurers to deliver on their promises at critical times, providing fast and problem-free claim and payment processing. Many insurers cutting on their IT spend aggressively and repeatedly, without necessarily addressing whether they have the appropriate functions and the most efficient structure to service customers. Paper-intensive work making the business processes sluggish. Documents are still collected and distributed physically. Insurers have not been able to make complete use of electronic media. A look at the statistics below:- Current State of Inbound Documents by Format (%) Incoming faxes Source: SMA, KPMG, PWC Insurers Planning to Increase Digitization in next 3 years 52% Source: SMA, KPMG, PWC Planned Digitization 56% 9 68% Paper Documents 25 84% 63% 24 Incoming Faxes Paper Documents Checks Cards Envelopes Checks Cards Envelopes 100% Paper Partialy Digitized Most or All Digitized Highest Degree of Digitization for Outbound Documents (%) Underwriting Quotes Current State Source: SMA, KPMG, PWC 72 Streamlining the Operations, Industry Best Practices To become a genuine Digital Insurers, offering a differentiated consumer experience, companies have to transform both infrastructures as well as operations. Strive for operational simplicity By digitizing customer facing process as well as critical support functions, insurers can reduce complexity, lowering costs and increasing their ability to respond to change including introducing variable pricing. This will enable insurers to provide the advice and quotation to customers via channel of their choice as well as offer self-service. Use Shared Service Model two decades, insurers In the last few decades insurers have invested heavily in operations and technology, incurring largely fixed costs to build IT Infrastructures capable of dealing with their estimated customer base. Now as more and more applications migrate to the cloud, information is available anywhere, anytime and at a very low cost. If you have more standardised and streamlined processes you can use the cloud to move to a low variable transaction cost model that scales exponentially. Go Green Insurers are struggling with paper incentive business processes. Not only it slows down the process and increase the customer response time, it also makes it difficult to keep record of these paper documents. When the business correspondence increases there tends to be higher volumes which would get unmanageable over a period of time. The storage cost of keeping the paper will also increase. There are some other factors like paper getting misplaced or damaged. 59 Policies Proposals Bills and Statements Claims Campaigns Rehulatory Reporting Financial Reporting Renewal Notices 3 Year View

5 Benefits of converting paper to electronic form: Automation to ensure high degree of traceability and accuracy. Streamlined and IT-enabled processes ensure a high degree of reliability, reconciliation and high productivity enabling to tackle large volumes, without having to rely on high levels of manpower. Systematic handling of documents by switching over to based delivery of letters, intimations, and notices. Improves the processing speed: Paper-less office to paper-less delivery by phasing out paper based notices, intimations, letters and replacing by , SMS, website driven deliveries to customers Benefits of Operational Streamlining Achieve cross channel excellence To do this, it will be necessary to create a single 360-degree view of customer interactions and operate seamlessly across channels, leveraging customer information to identify the best channel to reach each customer. A centralised data repository, tracking every customer transaction, should be created to provide a single customer views. Conclusion Understanding your customers is a key driver for sustainable growth and requires a focused strategy, an actionable plan and rigorous execution. To meet the high customer expectations, companies must accelerate the digitalization of their business processes. But they should go beyond simply automating an existing process. They must reinvent the entire business process, including cutting the number of steps required, reducing the number of documents, developing automated decision making, and dealing with regulatory and fraud issues. Operating models, skills, organizational structures, and roles need to be redesigned to match the reinvented processes. Data models should be adjusted and rebuilt to enable better decision making, performance tracking, and customer insights. Digitalization often requires that old wisdom be combined with new skills, the benefits are huge: by digitizing information-intensive processes, costs can be cut by up to 90 percent and turnaround times improved by several orders of magnitude. Insurers who can lap up this opportunity fast will reap the reward of grater market share as well as the customer loyalty. Become customer centric The digital operating model promotes a customer-centric approach over a product-centric one. Using analytics to draw insights out of the huge data available; insurers can come up with personalised products and offerings. This data can be easily extracted from internal and external sources like social media. The product and services can be tailored to specific channels and even segments. Increase customer self-service options By increasing the self service options for customer, the overall customer response time can be reduced and customer satisfaction can be enhanced. 5

6 About NIIT Technologies NIIT Technologies is a leading IT solutions organization, servicing customers in North America, Europe, Asia and Australia. It offers services in Application Development and Maintenance, Enterprise Solutions including Managed Services and Business Process Outsourcing to organisations in the Financial Services, Travel & Transportation, Manufacturing/Distribution, and Government sectors. With employees over 8,000 professionals, NIIT Technologies follows global standards of software development processes. Over the years the Company has forged extremely rewarding relationships with global majors, a testimony to mutual commitment and its ability to retain marquee clients, drawing repeat business from them. NIIT Technologies has been able to scale its interactions with marquee clients in the BFSI sector, the Travel Transport & Logistics and Manufacturing & Distribution, into extremely meaningful, multi-year "collaborations. NIIT Technologies follows global standards of development, which include ISO 9001:2000 Certification, assessment at Level 5 for SEI-CMMi version 1.2 and ISO information security management certification. Its data center operations are assessed at the international ISO IT management standards. India NIIT Technologies Ltd. Corporate Heights (Tapasya) Plot No. 5, EFGH, Sector 126 Noida-Greater Noida Expressway Noida , U.P., India Ph: Fax: Americas NIIT Technologies Inc., 1050 Crown Pointe Parkway 5 th Floor, Atlanta, GA 303, USA Ph: Toll Free: NIIT Fax: Europe NIIT Technologies Limited 2 nd Floor, 47 Mark Lane London - EC3R 7QQ, U.K. Ph: Fax: Singapore NIIT Technologies Pte. Limited 31 Kaki Bukit Road 3 #05-13 Techlink Singapore Ph: Fax: A leading IT solutions organization 21 locations and 16 countries 8000 professionals Level 5 of SEI-CMMi, ver1.2 ISO certified Level 5 of People CMM Framework Write to us at marketing@niit-tech.com D_65_110714