Claims Transformation:

Transcription

1 Claims Transformation: New Benefits via New Paths Featuring as an example: L&T Infotech Author: Denise Garth, Partner Published Date: February, 2015 This perspective is based on SMA s ongoing research on transformation and modernization in insurance. L&T Infotech has purchased distribution rights SMA All Rights Reserved Page 1

2 Table of Contents About This Perspective This SMA Perspective is a summary of SMA s ongoing research on transformation and modernization in insurance. L&T Infotech has purchased distribution rights for summary results of selected research and opinion. This is not paid-for research. The Changing Face of Claims Transformation 3 Required Business Capabilities 4 Modernization 4 Optimization 4 Innovation 4 Required Technology Capabilities 6 Modern Architectural Foundation 6 Capabilities for Claims Transformation 7 About L&T Infotech 8 L&T Infotech Company Overview 8 Breadth and Capability 9 Strategy Meets Action Commentary 10 About Strategy Meets Action SMA All Rights Reserved Page 2

3 The Changing Face of Claims Transformation Digitalization and emerging technologies are changing the game in insurance opening up new possibilities for success. Insurers are creating greater business value and competitive differentiation with investments in claims modernization, optimization, and innovation. The digital revolution is driving transformation in every industry and having major impact on every process and every interaction. Insurance is no exception. The implications for the industry are profound, opening the door to new possibilities for success, creating new opportunities to engage and delight the customer, providing new options for collaboration and partnership, enabling new products and services, and even offering new concepts for and approaches to risk management. Digitalization and emerging technologies are changing the game. And, there are major implications for the claims arena the area of the business that represents the moment of truth for the customer, the point where the insurance company s promise is experienced. Embracing new technology is no longer a choice. It is a business imperative. For most insurers, tangible and far-reaching transformation is required a shift in traditions and thinking. Transformation takes a holistic approach, involving a reevaluation of traditional claims business assumptions and models, identification of new ways to deliver an exceptional customer experience, the definition of innovative and optimal ways to manage risk, and consideration of the supporting IT systems and delivery mode. It is no longer enough to implement a modern claims system that just speeds up existing processes, streamlines existing transactions, supports existing products, and automates current behaviors. Leading insurers must find inventive ways to extend modern claims operations. Hence, they are capitalizing on new tools, technologies, and data using mobile, cloud, collaboration, smart analytics, third-party data, geospatial intelligence, Internet of Things (IoT), drones, aerial imagery, and more all with the mission of optimizing today s business and innovating for tomorrow s advantage. This shift empowers changes in fundamental business assumptions and behaviors that create substantial and meaningful changes in outcomes. The basic management focus of claims moves from a reactive response to proactive care and avoidance of loss. The claims mindset shifts from pay-the-claim fast to mitigate and/or prevent the risk and eliminate and/or reduce potential damages. Emphasis shifts to engaging and providing real value to the customer with new services by helping manage, reduce, or eliminate their overall risk. Response to catastrophic events is proactive, with overt actions that save lives, secure properties, minimize damage, and comfort customers. Insurers investing in claims modernization are creating a transformational foundation with the future in mind. It is an investment in creating greater business value and competitive differentiation. By providing a platform for capitalizing on the possibilities, it becomes feasible to incorporate maturing and emerging technologies that help insurers make essential changes in the way they interact with their partners and customers. The integration of advanced analytics to improve and gain new insights is made easier. These insights can then be used to manage the risk portfolio proactively while servicing claims in innovative and engaging ways. The result insurers are positioned to transform their business models to predict rather than detect, to alert rather than react, and to prevent rather than restore. Modernization and transformation enable the delivery of new value propositions and leading-edge, valueadded services that encompass safety, security, protection, mitigation, prevention, and more SMA All Rights Reserved Page 3

4 Required Business Capabilities Transformation of claims requires a comprehensive understanding of the business and technology trends that are influencing the evolution of business capabilities for the entire claims value chain. Insurance companies should view and assess their claims processes and operations with both an inward and an outward focus. This requires extending the historical focus on internal operational efficiency to claims effectiveness across the entire claims value chain, including interactions with supply chain vendors, business partners, data providers, and customers. These comprise the very connections that play an increasingly important role in redefining claims outcomes. Modernization Transformation of claims requires a focus on effectiveness across the entire claims value chain using both an inward and an outward view. Today s digital reality demands that legacy business assumptions, processes, and information points, as well as systems, technologies, infrastructure, and IT delivery methodologies must be upgraded or replaced. Claims transformation is much more than just replacing legacy with a modern core claims system. Transformation requires establishing a flexible, agile, and scalable foundation that enables business capabilities to be quickly updated or extended, positioning claims for optimization and innovation. In today s competitive environment, claims modernization has become a table-stakes business requirement. Optimization Once a foundational modern claims environment is established, insurers can begin the optimization of the environment, moving beyond basic efficiencies to notably improved effectiveness. In an optimized environment, internal and external claims workflows are enhanced and streamlined. Mobile and self-service capabilities are created. Portals for collaboration of all parties are implemented. New data sources and analytics are integrated into the business processes to enable enriched decision making. Together these new capabilities redefine customer engagement. Optimization accelerates the insurer s progress along their transformation journey. It gives them the ability to reach higher levels of excellence. It gives them the power to optimize the business in many varied ways, from how decisions are made to how work gets done, how services are delivered, and how interactions are managed. An optimized claims environment positions for innovation. Innovation An optimized claims operation facilitates the integration of maturing and emerging technologies to create an environment that radically transforms claims. Leveraging the Internet of Things (IoT) can help with risk mitigation and even eliminate risk while creating new services that generate new revenue. Drones and aerial imagery can provide real-time data for faster alerts and claims assessments. Advanced analytics can decrease fraud, enhance risk management, speed claims assessments, and maximize supply chain efficiencies. Innovation is the game changer creating competitive differentiation, 2015 SMA All Rights Reserved Page 4

5 eliminating or reducing losses and risks, and establishing customer excellence that together position an insurer as a market leader. Transformation is a crucial undertaking in today s increasingly competitive environment. Claims transformation, the journey from modernization through optimization and innovation, impacts every aspect of the business, internally and externally. Transformation enhances and redefines interactions and relationships with the customer, product and service offerings, risk models, pricing, and business and revenue models. Figure 1. Claims Transformation Business Capabilities Source: Strategy Meets Action 2015 As shown in Figure 1, the critical, required business capabilities for far-reaching claims transformation impact many areas: Mature claims management processes across the value chain create efficiency, effectiveness, and ultimately competitive differentiation. Capabilities extend beyond modernization to embrace collaboration with partners and customers, to enhance overall risk management, and to deliver expanded value to the customer. Excellence in repair management combined with broader capabilities helps mitigate and prevent loss occurrences. Requirements include the ability to integrate and incorporate maturing and emerging technologies to better assess, manage, and eliminate claims and risk; improve fraud detection and management; effectively manage subrogation; and maximize salvage. Exceptional, compelling customer service that is personalized extends care and concern beyond just a response. Excellence requires the ability to offer proactive service and anticipative, value-added action SMA All Rights Reserved Page 5

6 An expansion of the customer experience provides channel choice through an omnichannel environment. Customers expect more than multiple channels; they want a consistent, compelling engagement through any channel they choose from selfservice portals to mobile, call centers, agents, and more. Advancing from rules-based workflow management to analytics-driven intelligent workflow management yields results in optimum workload balancing, smart routing, collaboration, superior case management, and insightful decision-making. Maximized operations deliver efficiency through straight-through-processing, effectiveness with optimized operations, and differentiation through embedded analytics-based intelligence. Robust CAT management (the ability to proactively prepare for, assess, and respond to both the predictable and unpredictable catastrophe situations) is augmented by technologies such as geo-analysis, visualization through drones and aerial imagery, and advanced analytics-driven intelligence. Required Technology Capabilities The modern claims solution is not a standalone system. It must integrate with other core systems, as well as maturing and emerging technologies, to create a differentiated and competitive claims environment. The technology environment requires a foundation that will allow insurers to expand and extend claims capabilities as their businesses evolve and new technologies emerge a foundation that will help them respond to today s rapidly changing environment. Modern Architectural Foundation A modern claims solution must integrate easily with existing and new systems as well as maturing and emerging technologies to create a differentiated and competitive claims environment. The claims technological foundation must be architecturally robust, with an expansive configuration that is able to provide flexibility and adaptability to address new or changing demands, technologies, and expectations. The foundation must also provide a robust platform for integrating new and emerging technologies, like the Internet of Things (IoT), mobile, aerial imagery, geocoding, collaboration, and advanced analytics. Some of the results will be realized through improved capabilities that capitalize on the benefits of the digitalization of claims, while creating more innovative ways to optimize claims adjustments, detect fraud and recoveries, and collaborate with providers in the supply chain. Other results will be apparent in the ability to better contain losses, mitigate or eliminate risk, and gain deeper and more useful insights to enhance the customer experience across the process. The underlying foundation will enable claims thinking and action to transition from reactive to proactive and from restoration to mitigation and prevention and at the same time create more frequent and value-added customer interactions that drive value and loyalty SMA All Rights Reserved Page 6

7 Capabilities for Claims Transformation As depicted in Figure 2, the technology capabilities required for far-reaching claims transformation include a variety of critical elements. Many of these involve technology enablers that create a flexible, adaptable, and scalable environment for building, augmenting, and expanding the foundational modern claims solution. Figure 2. Claims Transformation Technology Capabilities Insurers need the following technology capabilities for claims transformation: Source: Strategy Meets Action 2015 Modern technical architectures leveraging SOA principles accommodate plugand-play solutions that can be quickly integrated and deployed. These flexible architectures facilitate the easy exchange of data from a wide variety of sources. Dynamic configuration capabilities enable the agility needed to manage future demands and needs for personalized claims management, proactive FNOL, and digital claims management. Platforms for easy integration of maturing and emerging technologies let insurers capitalize on existing and rapidly emerging technologies. The ease of integration facilitates the ability to experiment, pilot, and implement new technologies that create highly optimized and differentiated business capabilities. For example, the use of technology-aided collaboration allows insurers to readily and effectively interact with agents, brokers, adjusters, and customers jointly in a real-time environment creating a personalized and customized experience. Another example integration with IoT technologies (such as sensors embedded in machinery, farm equipment, crops, vehicles, clothing, and wearables) gathers new data and information that opens the door to new offerings, new services, and new revenue while helping to manage risk, loss, and customer expectations. Scalable infrastructures prepare insurers for quick responses and adroit reactions to unexpected claims situations and new opportunities, and in doing so create competitive advantage. The elasticity and agility that is required to respond or grow with the needs of the business will be there when it is needed SMA All Rights Reserved Page 7

8 There are critical technology enablers that provide a platform for creating, leveraging, and deploying new approaches for the management of claims, offering new ways to make major transformation and modernization progress in a shorter timeframe. Dynamic integration of new and real-time data, as well as big data, will help insurers differentiate and compete. This is a major difference-maker one that reshapes claims outcomes. Flexibility to integrate advanced analytics into the claims processes makes it possible to significantly improve decision-making and capabilities in the area of loss prediction, mitigation, and prevention. Intelligent and intuitive workflows augment rules-based workflow management with analytics and intelligence, making the management of workflows much more dynamic. The routing of work and the assignment of cases can be automatically orchestrated based on accurate knowledge and even system-generated wisdom. All of these critical technology enablers furnish a platform for creating, leveraging, and deploying innovative approaches for the management of claims. Visualization tools, embedded advanced analytics, automated workflows and rules, emerging technologies, and others contribute to decision-making excellence that impacts all areas of claims at the macro and micro levels. With change happening so fast, new options for accelerating the claims transformation journey are essential. Fortunately, there are new ways to make major progress on the journey in a shorter timeframe. Some of these options are possible thanks to powerful frameworks and blueprints that define foundational capabilities, help pinpoint requirements, and lay out a customized transformation roadmap. Jumpstart capabilities are available in the form of kits and solution accelerators that can help fast-track the journey. Because the industry is rapidly maturing and gaining experience, claims expertise and best practice insights are emerging and available to help others on their journey. Forward thinking solution providers can offer partnership environments for achieving transformation, with some even offering facilities that can be used as an innovation incubator an opportunity to experiment with, prepare for, and respond to emerging trends and technologies. About L&T Infotech L&T Infotech is a fully-owned subsidiary of Larsen & Toubro (L&T), a US $14B engineering and technology conglomerate that is one of India s oldest and most respected companies. L&T was founded over 75 years ago by two Danish engineers Henning H. Larsen & Soren K. Toubro. Over the seven decades of its existence, L&T has built a reputation for being an organization that is financially sound, possessing a strong engineering culture, driven by world-class process and quality standards, and governed by a values-based management style. L&T Infotech Company Overview In concert with its parent s values and culture, L&T Infotech has focused its energies on providing premier technology services to its chosen market. With annual revenues of about US $850M and over 18,000 employees globally, L&T Infotech is ranked by NASSCOM (association of Indian IT and BPO industry) as the 8th largest software and 2015 SMA All Rights Reserved Page 8

9 services exporter from India. Headquartered in Mumbai, India, L&T Infotech operates through 14 delivery centers and 22 sales offices around the globe. L&T Infotech is organized along industry verticals. The dedicated insurance business unit offers a wide range of IT solutions and services across the insurance value chain. The insurance business unit is the fastest growing vertical within L&T, experiencing a CAGR of over 30% for the last ten years, with over 90% repeat business. With a pool of over 3000 associates serving more than 20 leading insurance players globally, L&T Infotech is focused on the P&C, Life & Pensions, and Health market segments, delivering over 15,000 person years of work for various customers over the last 12 years. Breadth and Capability L&T Infotech offers a comprehensive set of services for the claims life cycle ranging from assessment through modernization, optimization, and innovation all grounded by a deep knowledge of and expertise in claims capabilities across the value chain. Their claims transformation framework provides a broad structure that includes assessment, planning, blueprinting, realization, and optimization, underpinned by organization change management. This framework supports their focus on four critical claims capability pillars: customer experience, operational efficiency, loss containment, and CAT response management. L&T s partner network, toolkits, competency center, and innovation lab fuel and enhance the breadth of their experience and capabilities, ensuring that the claims transformation journey evolves to meet new business and technology trends, while balancing efficiencies and effectiveness to redefine claims outcomes. Figure 3. L&T Infotech Claims Transformation Framework Source: Larsen & Toubro Infotech Ltd L&T Infotech helps insurers progress on their claims transformation journey from modernization to optimization and innovation, enabling the delivery of new value propositions and leading-edge, value-added services SMA All Rights Reserved Page 9

10 Strategy Meets Action Commentary Tomorrow s leading insurers are implementing a modern claims system foundation that can be extended by capitalizing on new tools, technologies, and data to optimize today s business while innovating for tomorrow s leadership advantage. The claims transformation journey, from modernization through optimization, is an increasingly crucial undertaking in today s fast-paced, rapidly changing, and highly competitive environment. Tomorrow s leading insurers are implementing a modern claims system foundation that can be extended by capitalizing on new tools, technologies, and data to optimize today s business while innovating for tomorrow s leadership advantage. L&T continues to deepen their claims expertise and capabilities, positioning them to help insurers accelerate their pursuit of claims transformation. SMA observes an expanding and evolving trend where insurance companies capitalize on the strengths of partners like L&T, finding them critical for incubating and piloting new capabilities and new technologies. These new capabilities and technologies can then quickly be brought to market to offer value to both the customer and the insurer. Insurers that are serious about defining and pursuing a claims transformation strategy should consider L&T Infotech and their expertise and offerings a framework of transformation capabilities that can be used to guide and power their claims modernization, optimization, and innovation journey. About Strategy Meets Action Strategy Meets Action (SMA) is dedicated to helping the business of insurance modernize, optimize, and innovate for competitive advantage. Exclusively serving the insurance industry, SMA blends unbiased research findings with expertise and experience to deliver business and technology insights, research, and advice to insurers and IT solution providers. By leveraging best practices from both the management consulting and research advisory disciplines, we take a unique approach offering an unrivaled set of services, including retainers, research, consulting, events, and innovation offerings. This SMA Perspective is a summary of SMA s ongoing research on transformation and modernization. L&T Infotech has purchased distribution rights for summary results of selected research and opinion. Additional information on SMA can be found at Contact the author Denise Garth, SMA Partner at or dgarth@strategymeetsaction.com SMA All Rights Reserved Page 10