Insurance Industry Ripe for BPM Shift

Insurance companies are there to catch us when we fall, but what protects the insurance organization from the toils of Internet-enabled data overload?

Growing trust, transparency, and technology is crucial to helping insurance company CIOs weather the current economic crisis and enable them to effectively capture the insurance customer of the future. Insurers need to respond quickly to changing customer expectations and business demands.

The long-term answer may be dynamic business process management (BPM) software, a method that has been touted in other industries as the key to handling customer data in real time. But so far, BPM has bypassed agent networks, insurance industry watcher and author Joe McKendrick suggests in his latest blog.

"Organizations have been making notable progress on applying business process management principles, such as automated workflows, against their enterprise systems," he says. "However, when it comes to agent or producer networks, the old-fashioned way of doing business still prevails."

This may change -- McKendrick notes in quoting Zach McCoy, senior VP at Kaplan Compliance -- as more members of Generations X and Y start working within agencies.

"As they recruit newer and younger producers into the business, that translates into an expectation that agent systems are automated, easy-to-use, and accessible from just about anywhere."

So, the path to a better-connected insurance agent is not straight... nor is it an easy sell. A survey of 67 North American insurance companies by Forrester Research earlier this year found most will maintain last year's spending levels and, along with the perennial themes of efficiency and cost savings, are prioritizing IT spending on something completely different: business innovation. Forrester's takeaway? "Tech vendors will need new sales strategies to help their insurance clients balance these conflicting objectives."

Mutual of Omaha (MoO) is an insurance company that bucked the trend. Recently the insurer replaced its in-house, legacy BPM system with one offered by FINEOS Corp. The new system is expected to help MoO manage claims operations for its group employee benefits products, including short- and long-term disability products. The SOA-enabled software will also give users the flexibility to make changes or modify processes as their workflows evolve and are optimized.

And while North America is struggling with the BPM issue, insurance carriers in Asia/Pacific are becoming even more aware of the benefits of outsourcing similar technologies in order to compete in today's challenging marketplace, according to a new IDC Financial Insights Asia/Pacific report.

The analyst firm recommends that insurers exploring IT outsourcing ascertain that the vendor's offerings correlate with their requirements; make decisions around the extent of customization preferred and the choice of multiple vs. one-system solutions; and, examine the vendor's footprint of reference clients.

For technology vendors, IDC recommends they identify niches or underserved segments that they can tap into. They must also understand the state of the insurance industry and its shifting client demographics.

"Ideally, they should assist insurers in building agility and efficiencies; and, help them manage their ecosystem of relationships by leveraging information with greater granularity and insight in order to make smarter, more profitable business decisions," the report said.

The economic malaise has driven home the need to create a more dynamic business framework through the assistance of technology. BPM may not cure all the insurance industry's challenges, but it's a big, automated step in the right direction.

— Michael Singer, Senior Editor, Internet Evolution. His focus includes executive issues... What's top of mind for CEOs, CIOs, and CTOs?