Technology Efficiency: Start Your Engines

How long does it take your company to generate an insurance quote? Are your underwriters acting more like clerks or performing the role of knowledge workers in making critical business decisions? How automated are your workflow systems in dealing with standard risks and identifying exceptions?

While the answers to these questions vary from company to company, they do highlight typical challenges faced by those involved in the business processes of the industry. Although companies are actively working to improve their workflow and integrate new technology, the benefits seem to be months, if not years away. Meanwhile, brokers and customers experience the usual array of callbacks, corrections and delays. To use one benchmark, many companies still cannot issue guaranteed rates on a web-based front-end system for their broker network. In fact, this was a major obstacle for the CSIO portal before it signed on to use a comparative rating service, known as “Webwriter Rules Engine”. Estimates of getting company auto insurance rates onto a common platform ranged from months to years.

BUSINESS BASICS

As of mid-September, ten major insurers began offering online and non-guaranteed quotes for Ontario auto insurance through the CSIO portal. This initial testing will be expanded to more companies and provinces throughout the fall. Offering brokers guaranteed quotes is the next step.

Today’s technology can change the way companies operate, but first you have to start with the insurance business itself. This is often overlooked. The insurance industry presents a unique set of challenges – you have to understand the business and then apply the technology. Quoting is just one aspect of the portal, and it may be the smallest step insurers have to take. The long-term objective of the portal is to give the broker linked access to web-enabled functionality residing on company partner systems. For this to happen, companies must move to XML standards and real-time transaction exchange at a pace that makes sense to them – this is where the rules engine kicks in.

WHERE WE WERE

If we take a snapshot of where insurance companies are, or have been, in their traditional underwriting processes, it would look something like this. A broker receives a call inquiring about rates, requests a quote for new business and submits the client information to the insurer. An underwriter takes it, finds missing or incomplete data and calls the broker back. After discovering this is a fairly standard commercial risk, the underwriter requests a quote on a batch-processing legacy system. The broker receives the quote three days later and gets the green light from the customer.

Final paperwork is arranged, but a few small exceptions in the risk mean the quote (which was non-guaranteed) will be $400 higher. The company gets the business, but both the broker and customer are frustrated with an unreliable process that takes twelve business days to complete. And this, of course, presents another question – how many clients are lost as a result of this antiquated process?

In the traditional insurance company, rules and business logic are scattered throughout the organization. Collecting the information required to underwrite a risk often means running in circles. There is little differentiation between routine and exceptional risks in workflow, business rules and level of automation. Many insurance companies estimate that standard risks account for at least half to as much as 90% of business. When you add in the limitations of legacy systems, double and triple entry, and hard-coded, inflexible software programs, the results are obvious – companies cannot respond quickly to requests for quotes, renewals, regulatory changes and new products.

ENGINE DYNAMICS

Fortunately, there are solutions out there and they do not involve “reinventing the wheel”, nor do they involve replacing legacy systems, changing database structures or throwing out whatever insurers have inherited over the last 30 years. New models of rules engines give the modern company what it needs – a single repository for business logic and processes, a centralized rating system across some or all business lines, a web-based platform accessible by any standard browser, integrated security and an open design model that users can manage external and/or internal systems.

A leading-edge rules engine can evaluate and rate everything from complex commercial risks to standard auto policies. It should integrate with existing legacy systems to provide rule-based underwriting evaluation across business lines. This knowledge is captured from front-line underwriters, placed in the engine and transferred to a Web-based platform.

An issue which brokers should take into account is “scalability”. Can the model adapt to new opportunities and communicate with a variety of external systems? In today’s business world, this flexibility is a necessity. For example, a company could allow brokers to set up their own customer quoting site, which would use a web services model to access rates from a company-hosted rate server. Or a broker management system could call the underwriting or rating service from the broker’s office, offering a method of integrating the company’s underwriting rules with the broker’s data entry in real-time.

There is also security to consider. Insurers are rightfully concerned about putting their back-office processes onto a front-end web-based platform. A rules engine has to build in a complete and integrated security model. It must allow formulas, table, message and actions to be locked down according to group or user.

Once these issues are addressed, a different picture emerges of how an insurance company can work with its intermediaries. A broker gets a call from a customer asking about auto insurance. He logs onto the CSIO portal, gets five quotes in less than two minutes and confirms the lowest rate with the customer. He then transfers to the insurer of choice’s own secure web portal and enters the necessary information. As this is a standard risk, the insurer’s rules engine permits the broker to enter relevant data and red flags any items outside the pre-set criteria. The experienced broker, operating with sufficient security, can issue the policy on the spot. The time to quote, bind and issue a policy decreases from weeks to mere minutes.

The open design models of today’s sophisticated rules engines allow infinite possibilities in connecting to internal or external systems. Insurers are slowly opening up to this world of opportunity. The starting point for many companies is the realization that they have the key to revamping their operations and revving up their efficiency.