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www.niit.com www.niit-tech.com www.niitsmartserve.comGlobal Learning Solutions
Insurance BPO:the way forward
Dhiraj Dolwani
NIIT SmartServe
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Business Process Outsourcing
The delegation of one or
more IT-and-labor-
intensive business
processes
(such as accounts
payable, call center-based
customer service, or
claims processing)to an external provider
that owns, administers,
and manages the
selected processes basedon defined and
measurable performance
metrics
Forrester
The final word!
Work where it makes economic sense
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Three essential elements to BPO delivery
Labor
arbitrageProcess
improvement
Technology platform
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BPO provides real benefits
Capture significant savings
Use mix of process efficiencies and low-cost labor
Avoid IT capital investments
Outsourcing allows companies to escape the upgrade
treadmill -- especially in non differentiating processes like
HR or accounting.
Move to variable pricing
CFOs like the idea of paying per policy for claims
processing, per headcount supported in HR, or perinvoice in accounts receivable or accounts payable.
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Changing nature of BPO work
Example: Low end data entry Medical transcription
Low end(simple &
standardizedactivities)
Example:
Billing services Document management Policy servicing
Advanced technicalskill and some
judgment required
Example: Strategic planning and
forecasting Research & KnowledgeManagement
Critical work-typesExtensive
judgment andanalytical skillsrequired
Commodityfunctions, notdifferentiators;
with littlevalue add for
Insurers
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Lines of Business
Business Processes
Life
HealthAnnuities
Retirement
PlansAuto
Liability Property
Marine
C H A N N E L S
Distributors Independent
AgentsThird Party
AdministratorsKiosks Call Centers Branches
Infrastru
ctureLayer
(HardwarePlatfo
rm,SecurityLayer)
Financial
Markets
Regulators
Banks
Internal
Communication
Channels
Call Centers
Distributors
Third Party
Administrators
ProductDevelopment
ClaimsMgmt
PolicyAdmin
ReinsuranceMktng. &Sales
E N A B L I N G P R O C E S S E SRisk
ManagementLegal &
ComplianceAgency
Management
Finance &
AccountingInvestment
ManagementSupport
Systems
E
XTE
R
N
A
L
IN
TE
R
F
A
C
E
S
Life Non Life
W
OR
KFLOW
Customer Management
Regulatory & Tax Environment
Insurance Spectrum
Underwriting
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Insurance BPO:
Management of closed books of business Life policies are particularly well suited
These are old mainframe applications thatcan be expensive to maintain
Most choose to maintain the old applications
themselves or outsource them Offshore outsourcers are particularly well
placed for this
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UK Life & Pensions policy admin services
InsuranceInsurance
CompanyCompanyUKUK
OutsourcerOutsourcer
OffshoreOffshorePartnerPartner
10 year
contract
Offshore BPOOperations for Life& Pensions
7yearco
n
tract
Tiger Business Process Outsourcer (BPO) UKs leading BPO for life andpensions work Maintains 4 million policies
Scope
All aspects of life andpension policy processing general servicing
amendments payments in payments out new business
US HQ36,000 employees100 countries
Whollyownedinsurancesubsidiary
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Case1:
L&P closed book policy admin services
17th Nov2003
1st Dec 2003
26th Jan 2004
29th March 2004
Address change
Client change &
Quotes
Agent change
27th Sept 2004
25th Oct 2004
28th Feb 2005
28th June 2004
Pension Enquiries,
PensPolAlt & CeasePremium
Transfers, IncAddBen
& NewBusApps
Indexing
SP (legacy
platform)
Gone Away
8th Dec 2003
Contract (MSA & WPA) signed on 30th Sep 2003
14th Mar 2005
Suspense &
Refunds
Retirements
Simple work types
(contract amendments)
Indexing
(vital to onshore work
mgmt also)
Complex work types
(enquiries, payments-in
& payments-out)
OUTBASKET QUALITY
100% 100% 100% 100%
98.29%
98.86%
100%
96%
97%
98%
99%
100%
101%
Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06
Outbasket Quality Target
INDEXING QUALITY
97.3% 97.94% 96.82% 97.26%97.63% 96.84% 97.18%
65%
70%
75%
80%
85%
90%
95%
100%
F eb-0 6 Mar- 06 A pr- 06 May -06 J un- 06 J ul-06 A ug-0 6
Indexing Quality Target
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Case 2: US variable annuity POS
Contract Set Up
1035 Exchange
Projects
Training
Production Logging
by SR's
38a-1 Reporting by
SR's
PRD - ServiceRequest
Reviewing reports
UpdatingProcedures
Sox Document
Maintenance
Weekly and Monthly
Production ReportingOMR Survey
Maintenance of
IIRWin Skill sets
System
Enhancement
Process (RITS)
Monitoring Daily
Production Queues
Merrill Lynch
Quarterly Reporting
Breakage Tracking
Address Change
Beneficiary
Changes
Agent Changes
Ownership Changes
Name Changes
Power of AttorneyTelephone
Authorizations
SSN ChangesClient Numbers
CIP Checks
Cost Basis
Account Values
ContractAcknowledgments
Trusts
BD Mergers
DOB Changes
SA Renewal
Options
Correspondence
Reallocations
Block Reallocations
Regulation 60
Advisory Fees
Cash Surrender
IRA Withdrawals
Partial 1035
Partial Withdrawals
Telephone Partialwithdrawal/surrender
Trustee to Trustee
TransfersTSA Loan
Processing
Approving ATR's
Free Looks
Check RegisterStop Pay and
Reissues
72T/Q Withdrawal
Automatic
Rebalancing
Dollar Cost
Averaging
Pre-Authorized
Checking
Systematic
Withdrawals
Death Claims
Scanning
Indexing
Cash Processing
QA of Service
Requests
QA of Financial
Transactions
Initial Payments
Rollovers
Pay-Ins
New
BusinessPayments
Imaging
and Admin
Services
Service
Requests
and
Reallocations
FinancialsMngmt
AdminQA
Death Claims
Monitor Disb/Systematic Email box
Non-Financials
Systematics
Disbursements
Admin
Processing lifecycle
Monitoring NF/Reall
E-mail box
Reallocations
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The BPO market in the near future
Outsourcing simple tasks will continue to lead the market Check processing, Credit card processing
Shared services will ramp further Processes like finance and administration, and HR which are highlycommon across industries but require more interpretation than simplebulk transactions. Lend well to using self-service portals.
High-volume vertical processes will grow as a segment policy administration, claims processing
Specialized complex vertical processes (KPO) will gather more momentum: compliance support, environmental data
analysis & reporting
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Knowledge based services
A major area for growth for offshore BPO is emerging inthe form of knowledge-based services, sometimes knownas knowledge process outsourcing (KPO).
KPO services are diverse, but are not typically amenable toa cut-and-dried rules-based approach. Instead, theyprovide higher value addition in which subjective analysis
or judgment is required (often using staff having higherlevel of educational qualification)
Examples include research & analytics, equity research
support, legal support and judgment-based aspects ofmortgage and insurance claims processing.
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Case3:
Knowledge based Compliance Support
ClientClient
IFAIFA(Independent(Independent
FinancialFinancial
Adviser)Adviser)
SesameSesamewww.sesame.co.uk
ProductProductProvidersProviders
RegulatorRegulator
FSAFSA(Financial(Financial
ServicesServicesAuthority)Authority)
- Compliance Help-desk
- Commissions
- Compliance Services
- System Tools
- Product research
- Indemnity
Compliance Support for UK IFAsPost Sale Compliance Service(suitability of advice) for businesswritten for: Designated Investments(S&I, Pension, Protection), GeneralInsurance, Mortgage
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Compliance support: process overview
Deficienciesareidentified
India
QC
Feedbackto IFA
Case
Review
Case
Closed
ReReview
UK
QC
UK
QC
IFAErrorLog
IFA responds withclarifications / data
Check if allpoints
resolvedand / orany furtherdeficiencies
After all pointsare resolved
CaseSelection,
CaseRequest, etc
QualitySampling
UK Process India Process
Customer serviceover telephone
Calling Members:
-To send in overdue
documents / cases
-Pro-actively Resolve
deficiencies if resolvable
over telephone
Receive Calls:
Addressing Advisers
concerns on
- reviews / approvals,- Financial Services
Authority based
guidelines / regulations,
Providing pre-sales
guidance
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Future of BPO Delivery
An SOA formula lies at the heart of BPO delivery success Allow providers to build BPO-enabling extensions across multiple
customers
Ease the integration challenge for customers and suppliers Minimize implementation costs in the context of one-to-many
engagements
Longer-term, BPO blends with SOA to foster independentbusiness process services. Pursue a unified IT/business process approach to BPO
Take an active role in shaping BPO delivery
Organize for business process and SOA
IT enablement will not be an afterthought in BPO delivery:BPO is the beginning of the process-focused IT era.
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Some insurance market implications
Insurers are redefining and reengineering their businessprocesses (such as policy and claims management) toattain greater operational efficiency and improve
financial performance. This will force integration andoptimization of business processes across multiplefunction areas.
Insurers' focus will return to their core competencies of
assigning and assuming risk, as well as underwriting.Internal investment for business process operationalexpertise will be reduced as insurers buy these servicesfrom BPO providers.
BPO providers' penetration into the core insurancebusiness will take different forms for different segments.
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BPO key success factors
Process Transitioning Capability: proven methodology forbusiness process migration management
CAP-D
SOL-D
Transition
Service Delivery Robust technology & telecommunication infrastructure
Not necessarily bleeding edge!
Ramp-up and skill management
Ability to hire talent & train for skills
Cost control and productivity management
Six-sigma for continuous improvement & Reengineering for
radical benefits Trust and confidence
Ongoing long-term relationships
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Case 4: Reimbursement process
Doctor entersproceduredetails on PDAat point-of-care
Claims Rules Engineintegrated at the back endcatches coding errors and
omissions and results in
cleaner claims & significantlyreduced denials
Further rules added based onclaims experience/denials
Registration/Schedulingapplication helps reducepatient wait times andcaptures all necessarypatient information
Image & Workflowsystem to manageelectronic access tocorrespondence,appeals, paper etc
Web based dashboard giveswindow to operations -status of claims batchessubmitted and ports topatient financial ledger
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Summary
Changing nature of Insurance BPO work
Simple Rule-based Knowledge based
The way beyond could be to map the
customer view innovatively
BPO: US modelUK-Europe model
Australian modelInnovative/hybrid?
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Questions?
NIIT Technologies Pty. LtdLevel 1, 51 Walker Street,North Sydney, NSW 2060
Stewart EvansSales DirectorTel : +61-2-9963-0098Mobile: [email protected]
NIIT SmartServe Ltd223-224, Udyog Vihar Ph-I, GurgaonHaryana 122002, INDIA.
Dhiraj DolwaniAssociate Vice President OperationsTel : +91-124-4002701Mobile: [email protected]