NelsonHall: Property & Casualty blog feed https://research.nelson-hall.com//sourcing-expertise/healthcare-insurance/property-casualty/?avpage-views=blog Insightful Analysis to Drive Your Property & Casualty Strategy. NelsonHall's Property & Casualty Program is a dedicated service for organizations evaluating, or actively engaged in, the outsourcing of healthcare or insurance industry-specific processes such as policy management, and claims and new business processing. Non-industry specific services such as HR outsourcing are supported within separate dedicated programs. <![CDATA[Insurance BPS: Delivery & Service Line Trends for 2017]]>

 

The insurance outsourcing industry is moving at a fast pace in response to the need for rapid deployment of digital platforms and offerings, as well as advancements in new distribution models that are emerging via ‘insurtech’ start-ups. Here I take a look at some of the key trends driving the insurance BPS market in 2017, both in terms of delivery and transformation, and by individual service line.

New distribution models, analytics & automation

Health insurance start-ups (Oscar Health, Clover Health, Bright Health, etc.) have been flourishing, followed by property & casualty insurance (Lemonade, Verifly, Metromile, Wrisk, etc.) and life & annuities insurance (Ladder, League, InforcePro, etc.), who are also seeing an increasing amount of investment. Outsourcing vendors will be actively looking to partner with, or potentially acquire, such companies in order to leverage their capabilities on an add-on basis, or using a completely transformative approach. And the insurance start-ups that will be most targeted by vendors are those investing in new distribution models.

Insurtech developments will bring more regulations at federal level in the U.S., as the application of new operational models will overtake the current state-level regulation framework of insurance companies. It is also possible that the new regulations will allow for the fostering of further innovation compared to current state regulatory frameworks.

Big data and analytics in insurance will see further growth, stemming from the vast amounts of data stored by insurance carriers. Vendors will either develop offerings to leverage such information, or will acquire companies in order to do so. It is still commonplace to find old-school insurers who are unable to analyze and leverage their clients’ and prospective clients’ data.

In terms of operating systems, vendors will continue to optimize legacy platforms with add-on proprietary or third party software, as well as retire dysfunctional and costly systems for newer ones that have modern distribution model capabilities. Digital transformation will increase among insurers, with larger numbers of insurance carriers shifting their operational model towards emerging market segments (millennials, middle-market consumers, etc.).

In the area of automation, the insurance sector has been at the forefront of RPA adoption to date, and this will continue in 2017. Meanwhile, AI technology is taking small steps towards greater adoption within insurance offerings, mostly in policyholder-facing applications. Policyholders will continue to request better, more personalized, engagement by their carriers through omni-channels, with a digital approach, with the policyholder engagement market segment seeing growth of more than 10% per annum.

Elsewhere, wider application of telematics offerings among passenger vehicles and industrial devices will allow for more accurate and individualized calculation of premiums.

Trends for 2017 by insurance service line

Property & Casualty BPS trends include:

  • Launching new digital products and services in untapped markets for traditional insurers
  • Emergence of fully digitally-operating carriers with a Bermuda-style regulatory framework, backed by PE/VC firms
  • Emergence of new products for traditional insurers (drone insurance, on demand insurance, etc.)
  • Wider application of analytics for process improvement and trend identification among policyholders.

Life & Annuity BPS trends include:

  • Insurers outsourcing more responsibility to vendors that are able to provide specialized actuarial and predictive analytics services targeting customer retention
  • Insurers requiring guidance on regulatory product adjustment from Solvency II implementations
  • The middle-income and millennials market in the U.S. will see increased growth, as investments in digital channel communications expand
  • Vendors will continue to improve customer service levels, CSAT scores and customer retention rates.

Healthcare Payer BPS trends include:

  • The future of Obamacare and health insurance exchanges in the U.S. is uncertain after the Trump election. There will definitely be changes in the ACA care models and payers will most probably bear some of this cost of change in healthcare policy
  • Consolidation among lower-tier healthcare payers will continue its momentum in 2017, creating opportunities for legacy platform retirements and updates from outsourcing vendors, eliminating disparate assets in newly-formed organizations
  • Population health management and wellness programs through innovative delivery and distribution models will see significant growth, as well as engaging with patients through omni-channels, improving retention and satisfaction
  • Applying analytics that identify opportunities for process improvement, as well as reducing fraud, waste, and abuse will be a top priority for payers
  • Distant monitoring of patients and telemedicine will also see increased growth
  • Preventive care and wellness offerings, in conjunction with traditional healthcare insurance, will see a rise in demand.
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<![CDATA[WNS: Applying RPA in P&C Insurance with Focus on FNOL, Claims & Underwriting]]> This is the second in a series of blogs looking at how business process outsourcing vendors are applying RPA and AI in the insurance sector.

 

 

WNS’ RPA journey is moving quickly, with six pilots underway and five more ready to go. WNS has decided to wait on AI for the time being, in favour of developing its process automation capabilities, which has included the launch of eAdjudicator (a bolt-on RPA tool for claims adjudication) and InsurACE (a policy administration workflow tool) earlier this year.

RPA delivering 25% savings; 40% achievable with employee retraining

Echoing its peers, WNS started by applying RPA to defined, rules-based, and transaction-based insurance activities, specifically in payments and first notice of loss (FNOL), followed by subrogation, since these sub-processes are relatively standardized and do not require human judgement. Based on its pilot experience to date, cost savings in these areas have been around 25%, but in order to realise further cost savings, there is a ‘Phase 2’ that requires re-training of the labor force and process reengineering to take advantage of the automation, which could see a further 10-15% savings. Three of the pilots are in this second phase.

To take its journey forward, WNS required a technology partner who had an insurance focus, a cloud-based offering, and a particular strength in robotics for analytics – specifically with a capability to handle the vast number of compliance requirements imposed by the different U.S. states.  It found these in Blue Prism (although it continues to be open to additional partnerships with other technology vendors), who also happened to be looking for more traction in the insurance space – something that WNS brought to the table.

P&C FNOL, Claims & Underwriting the Focus for 2016

In 2016, WNS has three focus areas in which it will be applying RPA, based on client appetite: FNOL, claims processing, and underwriting (UW), with an overall aim of removing the unnecessary steps in each sub-process.

As yet, there does not seem to be huge traction on the life insurance side and, as such, WNS will be focusing on property & casualty (P&C) processes. An example of a recently on-boarded UW client is a U.S. P&C insurer who was seeking to reduce the number of UW assistants it would need to hire. The client expected to hire ~75 UW assistants, but since partnering with WNS, the expectation is now that it will be in a position to hire ~30% less than this, and a further ~20% additional capacity will be created. The client moved from pilot mode for this first line of business (personal auto) to full production in April 2016, and is set to add further lines of business to the scope, each one going through separate pilots.  

An example of cost saving achieved through applying the Blue Prism framework to a set of UW processes was with a client whose workforce operated in a predominantly virtual environment. The ‘before’ state saw work passing through ~40 handoffs, which WNS was able to bring down to 7, using workflow mapping. This alone has yielded ~35% savings for the client and has proved ‘transformational’ for the business.

In most cases, the conversations appear to be led by WNS. One of the key concerns raised by clients, however, is around what happens to staff allocation once RPA is deployed. Typically, staff are still very much required, but need re-training to make the most of the new systems and to ensure they operate effectively.

For now, WNS believes that sufficient savings and efficiencies can be gained through applying RPA to an insurance sub-process such as claims logging, which will provide the claims adjuster with a better summation of the situation and enable the handler to carry out the insurance process more effectively and accurately. For example, reducing the number of claims pages down from 50 to 10, and eventually to as little as 7 bullet points of actionable items.

Other similar areas in which WNS has successfully applied this type of RPA include medical review and transcription. However, WNS is of the view that there are some sub-processes that cannot be carried out by anything other than human effort, e.g. bodily injury; as it stands, WNS has not found a way to simulate the experience of the claims handler with RPA for this type of process.

Areas that are now progressed beyond pilot mode and are proving successful for WNS are:

  • Vendor payment
  • Subrogation (clients are almost all on transaction-based pricing)
  • Claims logging
  • FNOL (~60% of clients are on transaction-based pricing).
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<![CDATA[Wipro: Applying RPA to Insurance Claims & New Business, Looking to Holmes to Support KYC]]> This is the first in a series of blog articles looking at how business process outsourcing vendors are applying RPA and AI in the insurance sector. First up: Wipro.

 

 

Wipro started its automation journey in the late noughties and has since gone on to set up a dedicated RPA practice, and also developed its own AI platform, Wipro Holmes. Currently, Wipro is principally partnering with Automation Anywhere for RPA software.

Clients showing early interest had questions around which insurance processes bots could most easily be deployed in, and where should they be applying RPA. The processes Wipro found to be most suitable for application of RPA in the insurance sector are claims processing and new business, and hence these are the key focus areas for Wipro.

Efficiency improvements of ~40% in target insurance sub-processes

Today, over 50% of Wipro’s RPA clients are in the BFSI sector, with ~40% using bots for data entry processes and 60% for rules-based services. Wipro currently has four clients for RPA services in the insurance sector split across life, annuities & pensions (LA&P), property & casualty (P&C), and healthcare insurance. Two of these companies are focused on a single geography and two are multi-geography, including U.S., Europe, LATAM and the Middle East.  

One of the insurance clients is a Swiss provider of life and P&C services for whom Wipro provides RPA in support of new business data entry. Pre-bots, the filling in of a new business form required the use of multiple unsynchronized screens to collect the necessary information. To address this issue, Wipro developed an interface (a replica of the application form) to enable 100% automated data entry using bots, a typical ‘swivel chair’ use of RPA. This yielded a 30% - 40% efficiency improvement.

In the healthcare payer sector, Wipro has implemented RPA in support of provider contract data management, specifically in the area of contract validation. Here, Wipro designed four bots in 90 days, automating ~75% of the contract validation process and improving productivity by ~40%.

In 2016, Wipro has noticed a shift in customer attitude, with organizations now appreciating the enhanced accuracy and level of auditability that RPA brings.

Of course, the implementation of RPA is not without its objections. One frequent question from organizations just starting the RPA journey is ‘how do I stop bots going berserk if the process changes?’, since once programmed, the bots are unable to do anything other than what they have been programmed to do. Accordingly, Wipro ensures that any changes that occur in a given process are flagged up in the command centre before an attempt is made for them to be carried out by a bot, and a signal is given that the bot needs ‘re-training’ in order to carry out that process.

Secondly, IT departments sometimes ask how long the bots are required to stay in the work environment and how do they fit into an overall IT transformation strategy. Wipro’s response is to treat the bot like an FTE and to keep it for as long as it is achieving benefit, ‘re-training’ it as required. Wipro suggests that bots wouldn’t conflict with the aims of an IT transformation, and ought to be considered as complementary to an IT transformation.

Complementing RPA with Cognitive using Holmes

So far, so good for Wipro regarding its application of RPA in the insurance sector. RPA is being used to address data entry processes (40% of activity) and rules-based transaction processing areas such as claims (60% of current activity). However, this still leaves the question of complementing the rigid process execution of RPA with machine learning and self-learning processes, and also the question of addressing knowledge-based processing requiring human judgment.

This is where Wipro Holmes comes into the picture – a proprietary AI platform with applications for cognitive process automation, knowledge visualization, and predictive services. The platform is not currently being used with insurance clients, but conversations are expected to start within the next 9 months. It is expected that, in contrast to the RPA conversations which were led by Wipro in more than 95% of cases, the AI discussion will be led by existing RPA clients and across a wider pool of services, including finance & accounting (F&A).

Accordingly, the focus now is on developing Wipro Holmes, to ensure it is ready for use with clients in 2017. Insurance activities that will benefit first from this platform could include the area of Know Your Customer (KYC) compliance, to enable more rapid client on-boarding. 

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<![CDATA[NelsonHall Launches NEAT Vendor Evaluation and Assessment Tool for P&C Insurance BPO in the Automotive Sector]]> NelsonHall, the leading global BPO and IT outsourcing analyst firm, has today launched a new tool to assist strategic sourcing managers in assessing vendor capability in Property & Casualty Insurance BPO for the automotive sector.

The NelsonHall Vendor Evaluation and Assessment Tool (NEAT) for P&C BPO in the automotive sector is now available to NelsonHall clients, and is also available for a period free-of-charge to buy-side organizations through NelsonHall and through its partners SIG and SSON.

The tool covers a number of P&C BPO business situations, including the provision of end-to-end P&C BPO processes for the automotive sector, specific focus on claims process improvement, reduction of customer churn through improved service levels, and activity in support of improving the underwriter’s use of time and efficiency.

Suppliers of P&C BPO in the automotive sector covered by this NEAT evaluation include CSC, Cognizant, EXL, Genpact, Infosys, Innovation Group, MphasiS, Quindell, Sutherland, TCS,  and WNS.

The NEAT tool for P&C BPO in the automotive sector is part of NelsonHall’s “Speed-to-Source” initiative. The tool sits at the front-end of the vendor screening process and consists of a two-axis model: assessing vendors against their “ability to deliver immediate benefit” to buy-side organizations and their “ability to deliver innovation in support of client-specific requirements”.

The NEAT evaluations are based on a combination of interviews with the vendors and their clients. The vendors are scored against a wide range of criteria, establishing a number of scenarios, each representing a different business situation or client business need.

To add further value, the NEAT tool enables buy-side organizations to input their own weightings and tailor the P&C BPO dataset to their specific requirements across 40 individual vendor evaluation criteria. Using the interactive web-based tool, sourcing managers can configure the NEAT evaluations in accordance with their own priorities and business requirements for service offerings, delivery capability, customer presence, benefits achieved, and other criteria. 

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<![CDATA[NIIT: Insurance Product Launch]]> NIIT is set to launch its latest offering to the insurance market next week, in the form of an upgraded policy and claims administration system which will join its existing set of insurance tools.

NIIT has delivered IT services to its Lloyds of London clients for some 20-years, using its insurance specific tools:

  • Subscribe: NIIT’s existing policy administration platform, a multi-currency insurance and reinsurance policy administration system
  • Exact Advantage: a data capture facility for property, terrorism, credit risk, aviation and marine. The tool is used to assess and monitor risk exposure, using a mapping interface and GIS technology
  • Ipf3: process automation and workflow tool
  • Acumen Advantage: provides management information, encompassing underwriting, claims, reinsurance accounting and actuarial data.

Over the years, NIIT has enhanced these tools and also made acquisitions such as Room Solutions in 2006 (see separate article) in support of its insurance business.

In anticipation of new opportunities in the P&C insurance sector, stemming from a combination of factors (see below), NIIT is now launching a suite of software which combines all these tools, also a new tool.

The new product is intended to help commercial insurers deal with the challenge of operating with multiple systems: NIIT’s insurance clients, for example, typically operate with around a dozen systems, each with different regulatory and LOB capabilities. The new platform enables the effective integration of these systems by operating as an overriding core platform, while allowing clients keep the individual reporting processes of the various PAS, and the specific functionalities for different LOBs (some in the London market being particularly specialist).

The new product allows NIIT to address some of the key issues faced by insurers today, including:

  • Increasing regulatory requirements
  • Ongoing M&A activity: insurers continue to acquire books of business which operate on different PAS. A system that enables the assimilation of additional systems gained through acquisition is likely to be attractive; it also removes the need for training on different PAS and requires knowledge of just one system.

NIIT has between 15 and 20 clients operating on its existing Subscribe system currently and anticipates that all its clients will ultimately move onto the new platform. The first wave of client switch over is under way with two clients in PoC trials and a third in a model office. In effect, the move from Subscribe is an upgrade and the cost of switch over will be picked up by the client.

NIIT will continue to maintain Subscribe for a minimum of five years, as users migrate onto the new platform. NIIT is about to make improvements to Subscribe to ensure it is kept technically up to date - improvements will include replacing the Adelphi front-end and bringing the back-end up to a modern version of Sequel.

A major difference is that Subscribe is a post-bind system, running processes after submission and quotation, whereas, the new platform is a pre-bind and post-bind system starting at the point of initial case creation and running through to pricing.

Bringing its various insurance software tools and applications under one umbrella will help raise the profile of NIIT’s insurance solutions. The official launch of the new platform is October 1, 2014.

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