A perspective on Agility in InsuranceA perspective on Agility in Insurance

www.niit-tech.com

NIIT Technologies White Paper

Rupesh P.Practice Lead - Insurance Vertical

CONTENTSCurrent Environment 3

The Case for Agility 3

How Organizations are Pursuing Agility 3

The insurance industry is confronting significant challenges –

changing weather patterns leading to more intense weather

events, changing demographics, regulatory pressure and complex

macroeconomic conditions. Organic growth continues to be a

challenge, given the economic situation and the competitive

landscape. Successful players are repositioning and reinventing

their products, strategies and services. They are also taking

significant steps to position themselves for growth and profitability

in this competitive, lower-margin market.

The Case for Agility Organizations are struggling to keep up with the various changes in

regulations while trying to innovate to keep up with a highly

competitive market place using scant resources and shrinking

budgets. Carriers are attempting to leverage technology to create a

platform that makes it easy to adapt to changes whether triggered by

regulations or a changing market landscape. A flexible modern

architecture will allow carriers to release new products and make

changes to existing products quickly. Shifting demographics and

increased usage of mobile devices are transforming long standing

distribution models. The buying behaviours, attitudes and preferences

of customers are evolving. Carriers need to adapt to these changes

and find ways to attract and retain these customers.

In an uncertain economic environment, there is increased pressure to

improve underwriting ratios. It is becoming even more crucial to

assess risk accurately and provide the optimal price. Carriers realize

they will have to leverage data to create predictive models that

accurately assess risk and provide the best price. Carriers need to

identify new avenues for value creation while continuing to meet

emerging regulatory changes such as Solvency II and IFRS.

Carriers are under pressure to reduce underwriting costs while

continuing to grow their customer base and keep up with changes

in regulations without increasing head count. Customers and

producers expect the ability to process quotes faster, competitive

Current Environment

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pricing, diversified billing and payment options and real time self

service capabilities.

How Organizations are Pursuing AgilityCarriers are pursuing agility to enable them to react quickly to the

changes in the business environment described above. One of the

biggest challenges carriers face is their dependence on archaic

and inflexible legacy systems. Adding new products or making

changes to existing products can be a challenge when operating

on these rigid legacy systems. Meeting consumer expectations by

providing more self service capabilities online can be a challenge

as well. Many carriers are in the process of transforming and

modernizing their architecture in an effort to be more agile. Well

architected modern distributed systems provide the platform for

carriers to keep up with the changing business landscape.

Policy Administration Systems (PAS): Many carriers have several

disparate PAS systems – both built in house and vendor based

legacy solutions. Carriers are looking at consolidating these different

PAS systems on one distributed platform. In the interest of time to

market, most carriers are looking at distributed vendor solutions over

building their own solutions in-house. This means carriers need to be

open to changing their business processes to adhere to the out of

box process flows. It is vital carriers do not over customize vendor

solutions as this will hamper agility. It will make future upgrades and

changes more complex. These PAS solutions allow underwriters to

automate manual and paper based processes through the use of

sophisticated work flows. They also allow for real time quotes and

instant conversion of quotes to policies. It is also an excellent

opportunity for carriers to implement straight through processing

with minimal underwriting referrals for simple lines of business – for

example personal automobile LOB. It also provides tools for better

communication and tracking with the use of activities/diaries.

Carriers are also looking to implement predictive models that

provide a much more accurate assessment of risk than traditional

rating algorithms.

These predictive models are created by sophisticated data

analytical techniques that scrutinize the carrier’s book of business.

These predictive models are than implemented using modern rules

engines and come up with a tier that represents the risk posed by

the customer. This determines the pricing structure in conjunction

with modernized rating algorithms. Carriers are now offering

innovate usage based insurance product offerings. Technologies

like GIS, analytics, big data and telematics are used to provide a

different set of products that follow rating models that leverage real

time driver behaviour and usage patterns and differ from traditional

rating processes – for example those that heavily weigh claims

history, violation history, etc.

Claims Administration Systems (CAS): Most carriers are looking at

their claims processes very closely for two reasons - ensuring the

best possible customer service is offered by providing a fair and

transparent claim handling experience and creation of efficient claims

processes that reduce the time and expense to service a claim. For

most carriers claims tend to be an area that is very manual and

paper based. Most carriers are focussed on implementing Claims

Administration Systems that are based on modern distributed

architecture. These systems have built in work flow processes that

allow carriers to eliminate manual paper based processes.

Digitalization with the usage of modern document management

systems allows carriers to archive these claims files and provide a

much better mechanism for disaster recovery than the traditional

paper based approach. It also provides claim adjusters with the

mechanism to view prior claim documents and images easily during

the claim handling process. In one instance, a claims adjuster for a

particular carrier noticed that the roof damage photos submitted for

the claim were the same as the ones the insured had submitted the

previous year. Technology can be used to prevent fraudulent claims

like these while at the same time offering better service to customers

by processing genuine claims quickly and transparently. Customers

can also view the current status of their claims online through the

carrier’s portal or mobile claims app. The system can also be

designed to send notifications to customers alerting them about

changes during the claims process. The entire FNOL process and

claims allocation process can be streamlined with the application of

technology. For example, a particular carrier was following a round

4

robin process of randomly allocating claims to claim adjusters within

an area. This resulted in certain claims adjusters driving past certain

claimant addresses on their way to working on claims that were

assigned to them. Usage of GIS information allowed this carrier to

intelligently allocate claims taking into account the claim adjusters

current location. Usage of mobile claims apps that allowed claims

adjusters to capture all the information including photographs using

one single device (for example a tablet), can bring about operational

efficiencies and eliminate the need for them to take physical notes

that need to be than manually typed into the computer once they

are back at the office. Carriers are looking to use these flexible

claims system to enable their claim adjusters to focus on higher

value claim management activities with the automation of low-level

tasks and achieve quantifiable loss cost improvements through

consistent application of best practices reinforced via performance

improvement support capabilities.

Billing Systems – Carriers are looking to modernize their billing solution

with the intention of providing customers more options, letting them

choose their payment schedule as well as how they receive and pay

their bills. These new billing solutions provide various forms of billing

and payment options. These systems automate sophisticated billing

processes with flexible workflow and business-rule driven control.

These modern billing solutions help identify uncollected earned

premium to reduce billing leakage, combine invoices to reduce costs,

and leverage equity-based billing to avoid unpaid coverage. They also

provide the customers with the “green” option of paperless delivery

which results in huge cost savings for the carrier.

For most carriers this transformation will be a multi-phase initiative,

with each phase taking between 9 to 18 months. While the carries

go through the complex transformations illustrated above, it is vital

they leverage Enterprise Architecture best practices and create a

future state IT roadmap that aligns with their business goals and

priorities. Defining the architecture that depicts how the integration

between different systems will be accomplished and also

addresses security and physical infrastructure upfront will reduce

the risk of delivery and also ensure the systems built will be flexible

and agile to meet the ever changing needs of the business.

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About the Author

NIIT Technologies Ltd.Corporate Heights (Tapasya)Plot No. 5, EFGH, Sector 126Noida-Greater Noida ExpresswayNoida – 201301, U.P., IndiaPh: + 91 120 7119100Fax: + 91 120 7119150

Roopesh Poojary is the Practice lead in the Insurance vertical at NIIT Technologies. He has over

17 years of leadership experience in IT Delivery, Enterprise Architecture, Program Management,

Process Improvement and Services Management. With 12 years of experience in the insurance

domain, he has successfully led several large core system transformation/replacement

programs. Rupesh has done his Master’s in Business Administration and Finance from Indiana

University in addition to a Bachelor’s Degree in Engineering.”

About NIIT TechnologiesNIIT Technologies is a leading IT solutions organization, servicing customers in North America,

Europe, Asia and Australia. It offers services in Application Development and Maintenance,

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