The Next Big Wave: Location Intelligence in Insurance Web Enabled Channel Rationalization

Insurance Market in Asia

Straight-Through Processing and its Application in the Insurance Industry

Table of Contents

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Editor’s Note

The Next Big Wave: Location Intelligence in Insurance
By Govind Seshadri


Web Enabled Channel Rationalization
By Satyashree Sai Rout & Manik Vinnakota


Insurance Market in Asia Improving Effectiveness of Bancassurance -An IT Perspective
By Suseel Kumar Kammara & Saumyajit Ray


Straight-Through Processing and its Application in the Insurance Industry
By Lawrence T. Gillick, Sr., & Bhavesh Mandlas

we have always prided ourselves on the fact that our primary focus is to better understand our customers’ business needs. The concept is readily applicable across all lines of business and activities. With the drive for more creative IT products and management in the insurance industry. we focus on four themes: n Insurers spend approximately 25% of their development budget on improving and streamlining their existing distribution process. In the current article. transaction processing.n Insurance Insights Editor’s Note The Cognizant insurance practice welcomes you to another edition of “Insurance Insight. claims management. In this article. such as catastrophe modeling and mapping services. STP brings automation to all steps in the transaction process.” a journal that aims to share our view of emerging technology and business trends in insurance. location intelligence and Bancassurance. the various models of Bancassurance and the key IT enablers. At Cognizant. e-wholesaling and enhanced agency portals bring a new perspective and solution to improving the traditional distribution process. Conventional transaction processing encompasses multiple steps. achieving suitable economic value from that investment remains elusive. Straight-through processing (STP) is a method of adopting automation as a processing goal. More insurance companies are relying upon analytics technology to promote faster and more effective decision making than ever before. customer self-service portals. This journal underscores this core belief by focusing on four distinct areas: distribution. n n n We hope Insurance Insight is both informative and enriching to you in terms of the thoughts and ideas it presents. from the initial request to its completion. Bancassurance has emerged as an important new channel for the distribution of insurance in Asia. INSURANCE INSIGHTS 3 . However. as well as best practices in harnessing and deploying IT in the insurance sector. We evaluate location intelligence (LI) technology for the insurance domain for different scenarios. etc. We look forward to your feedback and suggestions to help us focus and highlight the themes of interest to you. we discuss the different drivers for Bancassurance.

By combining geographic and locationrelated data with other business data. be it a person.n Insurance Insights The Next Big Wave: Location Intelligence in Insurance By Govind Seshadri It has been boom time for Business Intelligence (BI) vendors and solution providers in recent years. it does not take long before you feel lost! The other equally significant factor to consider is that much of the data present within these generated reports pertains to location -.0. 4 INSURANCE INSIGHTS www. a leading advisory services firm (Figure 1). Which brings us to the question. This location-sensitive data can pertain to anything that can be associated with a place on a map. Scientific studies have proved that our short-term memories are generally considered to have a capacity for seven elements at a time. Given the location context.cognizant. The result is more of a human shortcoming than a technical one. While the leading BI platforms have proven their efficacy in helping translate raw data into actionable intelligence. The data being mashed up can also be the output of conventional analytics engines beyond public sources of information. as indicated by Ventana Research. providing business users the ability to overlay seemingly disparate layers of location data onto a map-based dashboard. geographical entity or even natural phenomena like a tornado or earthquake. identify a trend or recognize a pattern among customer and demographic information. More insurance companies are relying upon analytics technology to promote faster and more effective decision making than ever before. to power better decision making. what exactly is location intelligence? Location intelligence (LI) can be defined as the capacity to organize data and analyze complex phenomena through the use of geographic relationships inherent in most information. This happens especially when users are dealing with relatively large data sets. business.the spatial environment in which a given business transacts business and interacts with its customers. as well as by leveraging technologies like global positioning systems (GPS) and Web 2. organizations can gain critical insights. LI platforms typically use a map-based dashboard for visualization. such as census data feeds. it could be a lot more intuitive to visualize and query the data using a location intelligence platform rather than report-based BI products. this is the most common application of location intelligence. So. etc. if you are trying to analyze a report with tons of rows and . They also provide the ability to create enterprise mashups. In fact. many scenarios exist where two-dimensional spreadsheets and reports remain in use but often fall short of the mark.

for example. on a digital map to see how much business is concentrated within. A risk can be pre-screened by the underwriter by simply plotting it on the map-enabled dashboard. carriers can simply click on a specific target address on a dashboard map to fully understand their exposure. Claims Management: The timeliness of claims processing is always an important differentiator among P&C companies. say. the 9/11 attacks on the World Trade Center brought into focus the challenge for property & casualty insurers to more quickly and effectively understand their risk exposures in the immediate vicinity of the attacks. as demonstrated by the following scenarios: n Catastrophe Modeling and Mapping Services: Using LI software. then a map is worth many more! In a homeowner insurance underwriting scenario. This gives them a clear picture of the potential risk. For instance. etc. n Customer Self-Service Portals: LI services can be directly integrated within customer selfservice portals to increase customer satisfaction. For instance. wildfires. especially as it relates to properties located on the borders of different counties. A carrier’s selfservice portal can also help a policyholder find the nearest authorized auto body or glass repair facility. hurricanes. including contact information for each shop and step-by-step driving directions. If the risk falls in the area shaded red. a 25-mile buffer zone. For instance. Providing an intelligent “agent locator” service online can substantially reduce the amount of phone calls received by the help desk.Most Important Use of Location Intelligence Analyze customer and demographic information Analyze location patterns across location and non-location data Understand location-related patterns in operational data Present many sources of content and data on one screen Identify location relationships Provide directions or navigation to employee or customer Analyze employees and office locations Collaborate via threaded discussion group on location 45% 42% 43% 41% 41% 37% 14% 11% 15% 24% 28% 26% 29% 30% 34% 31% 30% 33% 21% 14% 16% 16% 17% 20% 29% 46% 8% 14% 10% 9% 10% 12% n Very Important n Important n Somewhat Important n Not Important Figure 1: Common applications of location intelligence Another key feature is the support for spatial queries. LI technology is perfectly suited to the insurance domain. and they cannot write it based on the current guidelines. underwriters can examine a specific area or “catastrophe zone” that’s historically prone to floods. not only within that building but also within an indicated radius. With LI supported spatial querying. but especially so when major disasters such as hurricanes occur. consumers can be directed to an agent who is located near their residence by enabling them to perform a search based on their postal code or home address. earthquakes. without a visual perspective. If a picture is worth a thousand words. visualizing property information on a map makes a world of difference. it means there is already a concentration of risks. it is impossible for underwriters to avoid inadvertently insuring too many properties within a high-risk zone that may overlap multiple counties. n INSURANCE INSIGHTS 5 .

n Geo-Analytics for Agents: As mentioned earlier. If new. With this type of LI. market penetration. thereby incurring significant cost savings. which may not exist after such catastrophes.However. the magnitude of the challenge for a timely response can be formidable in an emergency. the schedule can be re-prioritized. it is possible to meld LI platforms with traditional analytics regarding customer segmentation. It has been expensive to develop point solutions under these . The forecasting can also help predict if carriers need to add independent inspectors and adjusters and establish contracts well before their competition. some areas may be completely devastated. For example. information on a hurricane’s path and damaging wind fields is publicly available from agencies like NOAA on an almost real-time basis. an agent can simply use a handheld GPS device to locate the affected area and adjust the claim without delay. Traditional vendors in this area are typically vendors of geographic information services (GIS) products. This could prompt the agent to conduct a home owner’s insurance cross-sell campaign to get more of these customers’ business.cognizant. Claims departments. Without location-based analysis. Location intelligence platforms have traditionally been proprietary and expensive to acquire and maintain. it is possible to build a relatively inexpensive LI platform that leapfrogs the capabilities of traditional vendors. There are multiple other areas where carriers can act preemptively. For example. recently. producer and channel effectiveness for any service area. Call centers can queue First Notice of Loss (FNOLs) within their system. the claims department can go about proactively blocking hotel rooms and car rentals for policy holders who have replacement coverage much earlier than otherwise. carriers can analyze geographies likely to be affected on a virtually real-time basis to take preemptive action. for example. a carrier can quickly identify whether the frequency of claims for a particular area exceeds expected thresholds just by plotting and analyzing claims data over any given time period on the map. Nowadays. making it possible to identify geographic trends or anomalies that would otherwise not be apparent. like ESRI. 6 INSURANCE INSIGHTS www. there is a reliance on street signs and landmarks. since auto owner information can be obtained from a third party such as the DMV. This may be possible even without having a 360-degree perspective of their customers. more urgent FNOLs arise. with the widespread availability of SOA-compliant mapping software from companies like Google. n Fraud Detection and Incident Tracking: Claims departments can conduct pattern analysis for fraud detection and provide the carrier with the insights needed to improve underwriting and rating. with new routes and assignments provided to adjustors in real-time while they are in the field. avoiding a rush for hard-to-find adjustors post-event. For instance. This would help agents better identify and target the best business and consumer sales opportunities. we could easily indicate to an agent that 100 clients within his service area have auto insurance but do not have home owner’s insurance. If locations are geo-coded by augmenting them with latitude and longitude coordinates. A carrier can then overlay this data on to the LI platform’s map-based dashboard with the locations of its insured properties to dynamically determine the PML (Probable Maximum Loss) associated with the event. However. Yahoo and Microsoft. Insurance carriers can also adjust claims in areas with no landmarks with LI. In addition. can accurately forecast the number of adjusters and inspectors necessary to handle the incident and optimize their routes using location intelligence. assigning them to the appropriate claims adjustors based on the proximity of the claims locations. For instance. after catastrophes such as earthquakes and hurricanes. LI technology can be utilized by carriers to optimize routing and workloads for claims adjustors through wireless applications. as well as widespread implementation of spatial querying features within many commercial and open-source databases. more than eight million Florida residents (over half the state population!) were affected by Hurricanes Frances and Charley. LI platforms provide powerful tools to spatially analyze and visualize claims data.

shows an Auto Garage locator accessed from the iPhone.This is exactly what Cognizant’s Insurance Technology Consulting Group (iTCG) has done. INSURANCE INSIGHTS 7 . We invite you to explore CLIPS and realize the power of location intelligence. ITCG has also created numerous POCs using CLIPS for many of the scenarios described below. Figure 3 is a SOA/SaaS platform built from the ground up. Our solution. enabling organizations to enrich their data with location intelligence. Enterprise Data Adapters Mashup Server Visualization External Data Adapters Security Security Analytics Server Geo Analytics Data Server Data Services Data Figure 2: CLIPS Architecture Figure 3: CLIPS Garage Locator Application accessed via iPhone About the Author: Govind Seshadri heads the Technology Consulting Group for Cognizant's Insurance practice. His responsibilities include driving the technology strategy and consulting agenda for the practice as well as fostering key CIO/CTO client partnerships. He can be reached at govindkolar. each of the tiers shown in Figure 2 on the previous page is fully interchangeable with open source and commercial components. allowing a highly flexible architecture.seshadri@cognizant. CLIPS solutions can be accessed by conventional browsers or smart mobile devices like iPhone and gPhone. For example. Cognizant Location Intelligence Platform Services (CLIPS).

This. Moreover. we will discuss e-wholesaling and enhanced agency portals as two potential options to streamline operations using Web-enabled solutions. Insurance distribution is undergoing a structural change. Insurers spend approximately 25% of their development budget1 to improve and streamline their existing distribution process. By Satyashree Sai Rout & Manik Vinnakota The global insurance industry is facing serious challenges with respect to the traditional policy distribution process. but returns on these investments have not materialized.n Insurance Insights Web Enabled Channel Rationalization The challenges faced in conventional product distribution require innovative technology solutions to optimize cost. with commoditization of insurance products and fragmentation of consumer segments. External wholesalers. they must reexamine how they refine key functional areas.. distribution-related costs are rising over time. For insurers to realize the highest value from distribution. as can be observed from Figure 1 on the following page. In this article. At the same time. but achieving suitable economic value from that investment remains elusive. E-wholesaling Insurers have been working to get advisors to consult and sell better. financial advisors) on various available products. Figure 2B on the following page presents a distribution model where internal wholesalers are equipped with Web-enabled communication tools and are actively involved in providing product information to financial consultants with speed and convenience. insurers must approach distribution with a technology solution that is flexible and cost-effective. the increased expenses in the layers of wholesalers and advisors are undermining insurers’ profitability.“Improving Insurance Distribution Profit Margins with Modern Technology” by Tower Group 8 INSURANCE INSIGHTS www. In fact. In the conventional mode (Figure 2A).are not able to find any differentiation in services offered to them. internal wholesalers of the insurer share knowledge and key details about the products only with designated external .cognizant. Also. In this article. frees up time for the external wholesalers 1. two forwardlooking solutions are recommended. spend most of their time in field visits to educate consultants and brokers (i.e.mostly in the high net-worth individuals (HNI) segment -. in turn. rationalize channel structures and enable more targeted customer segmentation. customers -. in turn.

To develop an effective e-wholesaling strategy.S. etc. E-wholesaling: Level 1 An e-wholesaling solution should be developed and implemented in a phased manner to target customer needs in different segments. more timely and robust performance updates. A study by Financial Research Corp. These tools will greatly reduce the labor intensity for high-level comprehensive expert advice. marketing materials. versus $372 for a field wholesaler. that examined 19 mutual fund houses in the U. It will comprise the following elements: collateral (e. Electronic Investment Policy Statement. It should comprise the following tools: Electronic Asset and Liability Study.) and Web-enhanced conventional wholesaling. e–mail communications. Technology advances are showing financial professionals that INSURANCE INSIGHTS 9 . Agency Portals The next tool available to insurers to optimize operations using the Web is agency portals.Acquisition Expenses Rising Faster Than Income 120 115 110 Index 105 100 0 2002 2003 2004 2005 2006 2007 n Acquisition Expenses n Gross Earned premium Source: ACLI Life Insurers Fact Book Figure 1: US Life Insurance Market Distribution Cost Analysis. the barriers to entry for financial advisors to provide high-level advice will be removed. Carriers have to take their agency portals to the next level. Level 1 should be geared toward strengthening marketing channels for the mass market of retail investors that account for 90% of investors but 10% of the assets. The average cost per presentation for an e-wholesaler is $44. found that ewholesalers average three times as many sales contacts with banks and broker-dealers per week as field wholesalers.). prospectus. E-wholesaling: Level 2 The next level of e-wholesaling should be more focused on the advisory practice. It also saves travel-related costs. ewholesaling will provide speed and access to a mass market that does not require a high degree of sophistication in support of commission sales. Moreover.). etc. PowerPoint presentations. the firm must first finalize its distribution objectives. sales desks (targeted customized sales support. These external wholesalers can also reach out to the HNI customer segment in conjunction with financial advisors and thus play a key role in improving customer management. and Electronic Performance Monitor. etc. It should be geared toward 10% of the investors who have 90% of the assets and who are far more discerning and sophisticated.g. At this level. call desks (webcasts. Estate Planning Optimization.. It also requires adopting an IT strategy that is more holistic in nature and allows functions across the supply chain to access technologies that work in conjunction with each other. 2002-07 (2002 Baseline Year) to work more efficiently and exclusively on improving relationships with current and potential producers.

insurers need to build their agency portals on open industry standards. the real-time processing should be in line with straight-through processing (STP) norms to ensure that resulting systems are based on industry standards and achieve paperless transactions. It's become an increasingly important factor in their decision to place business with a carrier. quoting systems should be able to integrate new business modules with advisory components to provide customers higher levels of insight during the decision-making cycle. a certain amount of deep introspection at each layer of the supply chain is required to identify which one(s) should be targeted. Agency and brokerage professionals yearn for the ease of doing business. The same solution should be integrated further with other policy administration systems for comprehensive customer management. sales focus. The real challenge is how quickly insurers sense changing business dynamics and re-align their business objectives to introduce the right solution at the right time. change request processing and quoting (Figure 4). Easy integration through open standards The top area that causes anxiety among many distribution partners is dealing with proprietary company systems or Web sites. All solutions may not be economically viable for medium. The solutions described above should be approached in a phased manner. It is not recommended to bring in every possible solution to achieve some competitive advantage. including but not limited to customer service.Figure 2A Insurance Organization Figure 2B Insurance Organization External Wholesalers Internal Wholesalers External Wholesalers E-Wholesalers Financial Advisor Financial Advisor Customers HNIs & Institutional Customers Relationship Building Sales & Marketing Web-enabled Tools Retail Customers Level 2 Tools Level 1 Tools Figure 2: E-Wholesalers integrated into the insurance distribution channel it is possible to make business processes more efficient. As the 2006 AUGIE (ACORD-User Groups Information Exchange) Agency Technology Survey results point out (Figure 3). the industry needs to focus on real-time processing that includes new business processing. Many carriers still use standalone sales illustration tools as a part of their sales presentations to customers. Real-Time Processing Capabilities As real-time inquiry capability has matured. Going paperless will drive considerable benefits to the producer and insurer in a number of ways. time savings and increased productivity. 10 INSURANCE INSIGHTS www.cognizant. and more and more agents and brokers are taking advantage of it. Technology-aided solutions such as e-wholesaling and new-generation agency portals provide ample opportunities to rationalize the distribution channel. This has led to a new set of “needs” from agents and brokers on carrier-sponsored portals. Overall. Going forward. Quoting or sales illustration systems should become more than just a tool to help life insurance agents meet regulatory “truth-in-selling” rules. keeping the IT and operations strategy in mind.or small-level .

Apart from Insurance. He holds certifications from LOMA and AAPA in addition to a Masters degree in Management. His areas of interest are Distributor/ Agency Management. Manik Vinnakota is part of the Cognizant Business Consulting group with expertise in the Life Insurance and Annuities domains. he has good knowledge in ITIL framework and IT Infrastructure Management. sales and marketing can establish distinct distribution advantages over competitors. Requirements Engineering and IT Transformation. INSURANCE INSIGHTS 11 . Reaching new distribution channels easily. Driving more revenue to agents and insurers. in addition to a Masters degree in Management. This will help insurers build a rationalized distribution channel and realize higher value through: n n n n n n Improving operational efficiencies. Decreasing distribution channel management costs. He holds certifications from LOMA. Satyashree Sai Rout is part of the Cognizant Business Consulting group with expertise in the Life Insurance domain. retirement plans and business analysis. He has carried out a number of technology and process consulting engagements for North American insurers and has wide knowledge of insurance operations. AAPA and IBM Rational. Expanding into new markets quickly. He has been part of a number of consulting and business analysis engagements for North American clients. annuities. operations. Increasing agent retention (captive agents) and distributor loyalty (independent agents). policy administration.4% Extremely likely 19% 14% Very Likely Somewhat Likely 35% 28% Not Very Likely Not at all Likely Figure 3: Intermediaries preference to choose a carrier whose systems are built on open industry standards Real Time Processing New Business Processing Real Time Inquiry Changing Needs… Quoting Change Request Processing Figure 4: Real Time Processing Focus areas Collaborative capabilities brought in through Web technologies in information.

Drivers for Bancassurance In countries such as China. deregulation in the financial services industry allowed banks to partner with insurers to distribute insurance products (hence the term. fueling economic development and helping to improve insurance penetration ratios. Bancassurance. Insurers are choosing the Bancassurance route to escape from the high cost of captive agents and reach out to the huge untapped customer base of banks. Compared with the beginning of this century. Retail Assurance and Internet direct sales to expand their reach. Banks are increasingly looking at Bancassurance as an opportunity to augment their revenues with minimal investment in human and physical assets. South Korea and Thailand. Due to deregulation in these markets.cognizant. As the competitive landscape expanded and the cost of acquisition (through the traditional tied agency network) increased. Japan. India. at the same time leveraging the existing bank customer relationships.n Insurance Insights Insurance Market in Asia Improving Effectiveness of Bancassurance --An IT Perspective By Suseel Kumar Kammara & Saumyajit Ray The insurance market in Asia has witnessed significant growth in the last decade. Indonesia. Lured by Bancassurance’s low initial investment. a number of new insurance companies have been established. Bancassurance – A Win-Win Proposition Bank n n Alternate revenue source with minimum investment Enhanced customer satisfaction though cross -selling bundled products Augment revenue using partner’s existing distribution network Reach out to untapped customer base Leverage customers’ trust in partner when entering new market n Insurer n n 12 INSURANCE INSIGHTS www. when Bancassurance was virtually non-existent. it accounted for 28% of life insurance premiums and 2% of non-life insurance premiums in 2005. insurers embarked on it as a favorable alternate distribution channel. Market reforms across Asian countries during the late ‘90s attracted foreign investment. insurers explored innovative distribution channels such as corporate agency. Bancassurance).com .

credit insurance bundled with personal loans) are a natural Bancassurance Models Joint Venture n PRODUCT COMPLEXITY n n n Distribution Agreement n n Strategic Alliance n n n n n Can involve multiple insurers or banks Banks serve as distribution points for insurance Commission based income for banks Insurer responsible for underwriting and product design Insurer retains underwriting profit n n n Exclusive bank-insurer relationship Banks responsible for distribution and assist in product design Principally commission-based income for banks Insurer responsible for underwriting Limited sharing of underwriting profit Figure 1: Bancassurance Models choice for the distribution agreement and strategic alliance models.g. while distribution agreement and strategic alliance models are not. systems and cultures of the bank and the insurer improves the effectiveness of the channel in the distribution of the products and establishing/improving customer satisfaction. as participants are hesitant to make significant investments before exploring the channel and realizing tangible benefit. insurers have designed customized products to suit the banking customer’s needs. and divergent regulatory structures and pressures. Simple products and bundled products tied with the financial products (e. workflow applications and sales reporting systems. as confidence in the channel increases. The level of integration also helps address challenges that impact the performance of a Bancassurance channel. Level of integration between the processes. They have also entered into diverse partnerships/ alliances with banks to unleash the strength of the channel. business cultural differences (demandoriented environment vs. With time. JV and fully-owned financial service group models are well-integrated and hence able to sell complex products. Integration – Key driver behind success! Studies conducted in Europe indicate that an integrated Bancassurance model leads to greater sales efficiency and significantly greater administrative efficiency than a non. IT – A key enabler! During the early stages of a Bancassurance relationship. These systems include sales illustration. IT’s role is limited. IT initiatives play a major role in accelerating time to market.. INSURANCE INSIGHTS INTEGRATION Common management and higher degree of commitment from both parties Profit sharing arrangement based on stake in JV Sharing of bank customer data for lead generation and underwriting Insurance advisors assist bank staff in setting complex products Fully Owned Financial Services Group n n Developed through acquisition or formation of subsidiary Modalities similar to JV with even higher integration 13 . customer ownership. rule-based underwriting tools. proactive sales culture and incentivized compensation). IT plays an increasingly important role in achieving a higher level of integration by bringing disparate systems and processes closer to improve channel effectiveness.integrated model. application capture and data entry. Key IT initiatives that help reinforce the strengths of the Bancassurance channel include: n Higher level of integration: Disparate functional systems need to be tightly integrated to simplify the sales management process and enable faster decision making. bridging communications gaps and improving customer satisfaction. These include banks’ lack of experience. While insurers embark on multiple initiatives to improve the level of integration.Bancassurance Models To effectively leverage the distribution channel.

It also helps bridge the insurance knowledge gap of bank sales personnel. and driving higher revenue. underwriting and reporting. n n The figure on the following page represents an ideal-scenario technology platform that addresses business drivers that help a Bancassurance channel achieve optimum efficiency. Web enablement: Various functions need to be Web-enabled. While managed services provide minimum support to run the channel. data entry. increased investment in IT is expected as insurers take the natural next step to achieve higher levels of systems integration to further improve channel effectiveness.n Rule-based processing and PoS (Point of Service) enablement: Automation of application data validation and underwriting rules at the PoS to enable straight-through processing and preapproval of policies for enhanced customer satisfaction with faster processing of the application. maintaining online repositories of product brochures and marketing materials ensures ease of access. Conclusion Bancassurance has emerged as an important new channel for distribution of insurance in Asia.cognizant. Data mining: Sharing of customer data between banks and insurers through effective use of CRM and data mining helps with better lead generation and identification of cross-selling opportunities. The importance of IT in a Bancassurance channel increases with an increase in the level of integration. Players are developing confidence in the channel with an increase in both life and non-life premiums generated. as well as consistency and accuracy in data collection. marginal integration aims to improve productivity of the bank employees and sales staff deployed at bank branches. driving greater underwriting profits and cross sales through CRM implementation. In addition. In the coming years. including form . Integration High Roadmap for Bancassurance System Integration Full Integration Sharing of customer data n CRM and data mining n Auto underwriting at POS for STP and pre approval n Marginal Integration Medium n n n Illustration application at POS Application data entry by sales staff Electronic form fill up using web Managed Service Low Minimal investment in IT n Physical transfer of forms to insurer n IT used for commission calculation and disbursement n Time Figure 2: Roadmap for Bancassurance System Integration 14 INSURANCE INSIGHTS www. A fully integrated IT model enables development of customized insurance products.

He has been a part of several key consulting and business analysis assignments for clients across Asia-Pacific and North American regions. India. 2004 INSURANCE INSIGHTS 15 . History Manual Underwriting Web Source: Celent Call Center Underwriter Figure 3: Source: Bancassurance Global Update: Lessons from Around the World in China. Celent. Scor. March 2008 • Analysis of Bancassurance and its status around the world. Milliman.Bank Program Managers Licensed Bank Rep Client Web Compensation Web Web Financial Institution Insurance Platform Policy Info Sales Tools Application Entry Automated Underwriting Policy Admin Sales Reporting Financial Reporting Web Application Status. and US . Europe and US. India. Underwriting and Policy Administration processes. October 2005 • New Trends in World Bancassurance. Suseel Kumar Kammara is part of the Cognizant Business Consulting group and has worked on multiple technology and process consulting assignments for Insurance Clients across North America and Asia/ Pacific. Europe. He currently manages the Center of Excellence for New Business and Underwriting at Cognizant. He has a wide knowledge on insurance operations and has played a key role in setting up and managing domain Centers of Excellence (CoE) for Underwriting and Agency management. Saumyajit Ray is part of the Cognizant Business Consulting group and has deep understanding of the New Business. Celent. References • Bancassurance Global Update: Lessons from Around the World in China. March 2008.

As partners on multiple projects. as well as retaining existing customers. even when data has been captured in multiple application silos. business process management (BPM). but not yet achieved. rules-based engines and a single view of customers. – When business units gain insights into effective utilization of these IT improvements. e-mail and interactive voice -. The traditional view of a paper-driven environment has been changed as IT replaces every step in the long stream of transaction processing. & Bhavesh Mandlas In response to the growing need of insurance carriers to respond to shifts in the marketplace. Today’s insurance operations are increasingly entering into the long-promised. 16 INSURANCE INSIGHTS www. they can drive vital changes in their activities.cognizant.. we’ve even been able to create environments through which customers can receive individualized and validated cross-sell and up-sell information as part of their standard site interaction. we’ve been very successful in providing requirements documentation. Cognizant has become a major player in straight-through processing (STP) for insurance . Cognizant consultants have worked alongside and partnered with technology vendors to bring customized IT solutions and services to insurance carrier operations. Cognizant insurance consultants understand that achieving top-level returns on technology investments in the insurance marketplace is an ever-increasing challenge. Certain technology investments – including integration of data across systems.can provide carriers with the power to deliver service excellence while they meet business unit objectives. Web. portals. process flow automation. service-oriented architecture (SOA). led by requirements studies.n Insurance Insights Straight-Through Processing and its Application in the Insurance Industry By Lawrence T. Our model of straightthrough processing for insurance carriers can be applied to all distribution types. Gillick. realm of a paperless environment. For self-service Web sites. customer relationship management (CRM). Sr. such as increasing productivity and sales.

n Commissions. e-Signatures. we still recognize and build business rules that require human intervention. and the concept is readily applicable across all lines of business and activities. real-time transaction processing. Blaze. Figure 1: Industry trend in Straight through processing Conventional transaction processing encompasses multiple manual steps. improved audit trails. Business Implementation Model Exception Interception Model n n n Electronic documents and forms. FirstBest UMS. Provision for human intervention in case of exception. Increase new business by Current Focus Areas reducing policy issuance time. Case management and workflow. which is where STP comes in. The insurance industry has a need to adopt the STP concept even if the realities of specific policies and risks require some human intervention. Automated underwriting. A significant advantage of the STP process of integrating external rules engines with legacy applications is its significant impact on competitiveness. Involvement of partners (e. Other Process Areas with Potential for STP Implementation: n Licensing and n Accounting. Electronic content management.Industry Trends Business Drivers n Implementation Risks n n n n n n n Non-integrated heterogeneous applications. and SOA to enable the development of links necessary for BPM integration. Xenos: Guaranteed Issue. Straight-through processing provides the insurance industry with a framework for meeting the goals of rapid response to change. n New business. Electronic contract generation and distribution. removing many of the advantages of start-up operations. Carriers have been moving toward STP.. maximized legacy systems efficiencies. Poor documentation of business rules and processes. Change management. through automation. STP brings automation to all steps in the transaction process. decreased operating costs. distributors). Our view of STP for insurance carriers is to ensure that all necessary data is captured only once and is available throughout the enterprise for all applications. as evidenced by the utilization of BPM to automate the business process. Easier to implement and cost-effective. Enabling Solutions n n n n n n Industry Trends on STP Become responsive and Processes customer-centric. STP is a method of adopting automation as a processing goal. Even with each step in every application automated. n OTS Products n n n n n n Planet soft: The Policy Processor. Electronic payment & settlement. n Disbursements. INSURANCE INSIGHTS 17 . n Claims. from the initial request to its completion. including application review and the ordering of credit and medical reports. iLog. Automation is now seen as the only way to improve the process. improved productivity.g. Increase productivity n Underwriting. Process orchestration. improved time to market. n Post-issue services. and greater satisfaction in the distribution channel and among customers. CRM to automate the customer relationship process. appointment. Optimal combination of process automation and human intervention. of STP Include: Reduce transaction cost.

Requirements Engineering and IT Portfolio Assessment..cognizant. Bhavesh Mandlas is a member of the Cognizant Business Consulting group and has extensive experience in consulting assignments in both Life Insurance and Annuities domain for North American and APAC insurers. CPCU. He has wide knowledge on insurance business processes and his areas of interest are Process Rationalization.Data access processes must perform independently of any specific database. A graduate of the City College of NY. but the core technology is Web services. To discuss how to implement STP or obtain our white paper on which this article was . DMA and CRM processes offer simpler systems that integrate well with existing platforms and can be easily modified. integrating and processing real.or best-time data through all channels of information across your enterprise can optimize your legacy systems running on multiple platforms and enable more timely and effective strategic and operational shifts to meet today’s and tomorrow’s business requirements. STP applications incorporating BPM. Learn how STP. SOA. is a member of Cognizant Business Consulting group and has extensive experience in P&C insurance. Gillick. Life and Accident and Health State Licensing. Succeeding with STP requires a close partnership with an expert who understands how to effectively create an optimized business services organization. He has been a consultant in insurance processes for 12+ years. he taught insurance at Hofstra University and is certified in New York to teach and monitor exams for Property and Casualty. He holds a Masters degree in Management and also insurance specific certifications like LOMA. The white paper addresses the core issues for any organization wishing to adopt straight-through processing techniques to modernize its operations. Lawrence T. Sr. please contact your account manager. Various application programming interface (API) design models can be utilized. AAPA & IRDA certifications 18 INSURANCE INSIGHTS www.

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