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The Key to Insurance Success: Adopting Business Process Management (BPM)

By August 13, 2023March 5th, 2024No Comments9 min read


Businesses today, specifically the insurance sector, must navigate a multifaceted terrain to retain their existing clientele and captivate new customers. Our mission necessitates a critical evaluation of solutions that tackle the escalating challenge of customer attrition and efficiently curtail operational expenditures while steering the ship toward projected profitability.

The Strategic Value of Business Process Management (BPM) in Insurance

This blog sets its sights on a pivotal objective: identifying and delineating insurance business functions poised to reap substantial rewards from the strategic embrace of a business process management (BPM) framework. Within this strategic partnership, the aim is to realize intrinsic value for stakeholders. The key lies in optimizing business processes to enhance efficiency, quality, and response time. This has been a practice since the Industrial Revolution, but in recent times, the concept has evolved into what we now call Business Process Management (BPM). Despite its success in other industries, the insurance sector has been hesitant to fully embrace BPM, especially in areas like underwriting and claims. However, times are changing. Insurers are recognizing the potential and benefits of BPM, and its adoption is on the rise.

The compass now points towards establishing metrics that serve as the yardstick for measuring improvements in process performance. These metrics, akin to stars guiding a ship, enable businesses to quantify the enhancements brought about by migration and validate the judiciousness of their investments in the chosen BPM platform. Furthermore, these metrics paint an illustrative canvas, vividly depicting the performance of these processes in quantitative strokes. This visual insight becomes the lodestar, steering management to optimally allocate resources and activities while maintaining an agile grip on the operations in motion. As the sails of flexibility and visibility are unfurled and buoyed by the winds of process control, the horizon of strategic advantages extends across the diverse domains that house the insurance carrier’s operations.

To unlock the treasure trove of strategic benefits that BPM promises, the initial step is a deep dive into the foundational business processes that underpin the day-to-day functions of insurance carriers. Like layers in an archaeological excavation, these processes reveal their evolutionary journey, molded and shaped by the tides of market evolution. By applying various lenses—applications, resources, data elements, and the interplay of human and systemic agents—we unveil the organic essence of each process. Rooted in this analysis, our narrative focuses on pivotal insurance processes: lead management, underwriting, and claims processing. We unveil the tangible business advantages that sprout from embracing BPM methodologies. It’s important to note that the depicted business processes and accompanying metrics are not an exhaustive compendium; they serve as a tantalizing glimpse into the rich tapestry of our process catalog’s offerings.

A Glimpse into the Evolution of BPM

BPM has been on a growth trajectory, with a projected market growth rate of 12.2% in the coming years. Emerging markets in Asia Pacific, the Middle East & Africa are leading the way in this expansion. What’s intriguing is the role BPM is set to play in various industries worldwide, including financial services. By 2012, about 20% of customer-facing processes were expected to be assisted by BPM. By 2014, an estimated 40% of business managers and knowledge workers in major enterprises would utilize comprehensive BPM models. This transition indicates that BPM is no longer just a choice but a core business strategy to maintain competitiveness.

Understanding Business Process Management

Customer expectations today reign supreme. Meeting their needs has never been more crucial. The bar has been set exceptionally high by industry giants like Amazon and Apple, who have redefined global customer service standards. These benchmarks, ranging from round-the-clock accessibility to diverse products and platforms, have reshaped what customers anticipate. Concurrently, the global business landscape navigates intricate and stringent regulations spanning various regions, compelling companies to invest substantially in compliance mechanisms.

Vsynergize gives you the ultimate partner in equipping insurers to confront these challenges head-on. Our comprehensive solution revolves around prioritizing the customer experience. By harnessing the power of AI-driven accent translation, we empower customer service representatives with a consolidated perspective that effortlessly enhances interactions. Our streamlined processes are standardized but also specialized and automated, minimizing the need for manual intervention. With Vsynergize, you’re not just adapting but thriving in a customer-centric world.

So, what exactly is BPM? It’s a management discipline that treats business processes as valuable assets that enhance enterprise performance. It drives operational excellence and business agility by coordinating actions taken by people and tools to achieve specific organizational goals. For insurers, BPM offers a way to monitor and optimize their processes continuously, leading to a competitive edge.

Challenges of Insurance Business Process Management

Insurance encompasses various products, spanning categories like auto, property, casualty, commercial, and life. These products are upheld by many distinct process implementations and application systems, each tailored to their specific needs.

Within this dynamic landscape, a series of process-related challenges emerge, each demanding attention and innovation:

  • Cross-Selling Conundrum: While a single customer or household might express interest in multiple insurance products, more than a unified process platform hampers effective cross-selling opportunities.
  • Repetitive Data Woes: The necessity to repeatedly capture customer details at a household level leads to growing customer frustration. This frustration stems from having to provide the same demographic information across numerous interactions.
  • Unstructured Workflows: Agents, call center executives, underwriters, and claim adjusters engage in tasks needing clear structure. This lack of system extends to their modes of communication, often involving paper or email. Consequently, users are burdened with repetitive manual tasks and data entry, resulting in decreased productivity and lower satisfaction.
  • Transparency Troubles: A lack of transparency regarding the status of interactions within the process cycle further exacerbates challenges.

These hurdles confronted by insurers serve as a clarion call for a more robust process management approach. The solution lies in embracing a comprehensive philosophy and harnessing the analytical toolsets offered by Business Process Management (BPM). Once this realization takes root, the arsenal of BPM tools, including business process reengineering, process automation, workflow management, and business activity monitoring, can be adroitly employed to address specific use cases.

In this pursuit, the intricate tapestry of insurance processes stands to benefit from the precision and efficiency that a refined BPM approach brings to the table. Through the methodical adoption of BPM principles and tools, the industry can navigate these challenges with acumen and elevate its operational efficacy to new heights.

Advantages of Business Process Management for Insurance

BPM has proven its worth across various industries, and the financial sector has also reaped its rewards. Financial services firms have witnessed operational efficiency and innovation enhancements, with some boasting more than a 100% rate of return on their BPM implementations. This return on investment has been primarily measured through cost savings per transaction. Some operational efficiency benefits include increased employee productivity, accelerated decision-making processes, enhanced partner responsiveness, and improved inventory management. On the business innovation front, BPM enables agile product design, innovative problem-solving, improved customer service, and enhanced product capabilities.

BPM for the Insurance Industry: A Strategic Approach

For insurers, embracing BPM is more than staying current; it addresses industry-specific challenges. Insurers must focus on cost-effectiveness, risk management, and improving agent and client satisfaction to increase market share. This means streamlining IT systems supporting insurance transactions or processes to be agile and flexible. The good news is that BPM can provide solutions across various aspects of insurance operations:

  • Front Office Enhancement
    • Introducing multiple insurance options to customers
    • Monitoring distribution channel performance
    • Updating agent compensation management
  • Multi-distribution Channel Optimization
    • Adopting new channels rapidly and integrating them seamlessly
    • Supporting data and information flow between channels
  • Enhanced New Business and Renewal Management
    • Automatically initiating policy renewals
    • Supporting enhanced prospect identification and quote generation
  • BPM in Underwriting
    • Achieving rule-driven decision-making and straight-through processing
    • Supporting consistency, better performance metrics, and compliance
  • BPM in Claims
    • Automating claims routing to adjustors
    • Enhancing adjustor experience and compliance
    • Enabling straight-through processing for claims

Controlled Migration Approach: A Path to Success

The journey towards embracing BPM can be challenging, especially for insurers who are hesitant to implement it over critical core processes like underwriting and claims. Implementing BPM necessitates careful planning, and often, insurers must choose between a “big bang” approach or an incremental approach with stages. The concept of “controlled migration” emerges as a solution.

Controlled migration involves a step-by-step approach to creating an optimal application landscape for insurers. This strategic approach facilitates insurers in ameliorating risks linked with substantial BPM implementation endeavors. It empowers insurers to undertake measured strides, transitioning from archaic platforms to contemporary BPM-enabled systems. This process curtails resistance to alteration, seamlessly integrates with pre-existing frameworks to avert downtimes, optimizes extant assets, and ensures reasonable resource allocation.

Conclusion: The Future is BPM-Driven

In insurance’s fiercely competitive terrain, attaining prominence constitutes a formidable trial. BPM presents insurers as a conduit for setting themselves apart through ingenuity. Through the embrace of BPM, insurers stand to refine operational efficiency, propel business innovation, and augment their market dominance and profitability. The expedition towards efficacious BPM assimilation may be strewn with challenges, yet with methodologies like controlled transition; insurers can surmount obstacles, reaping the rewards of streamlined, nimble processes attuned to the demands of the contemporary BPM-infused insurance market.

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