Coping with unexpected demand can put immense strain on insurers.
Although the disruption to business and domestic travel resulting from the volcanic ash cloud in April was immediate in impact and unprecedented in scale, for insurance companies the real fallout in managing claims was always likely to be longer term.
Following the eruption of the Eyjafjallajökull volcano, initial analysis by risk experts Moody's was that the extent to which the insurance industry would have to cover losses incurred by this extraordinary event was likely to be limited. Among the reasons for this view were that such business interruption claims are generally not covered and that travel insurance claims typically form a relatively small part of a medium or large insurer's business.
For the industry as a whole, Moody's assessment may well be right. Yet with more than 150 000 Britons stranded abroad at the time, individual insurers are likely to be facing a significant and rapid increase in claims activity. What is certain, however, is that if not handled well, insurance companies could suffer a major public relations backlash from a large number of unhappy clients looking to recover their losses as quickly as possible.
Whatever the outcome in terms of actual claims uplift, it poses the broader question as to how well placed insurance companies are to deal with rapid increases in activity as a result of unexpected events.
The answer, in short, is to ensure a level of process agility throughout the organisation, which can flex with the rapidly changing needs of both the market and the business. An ideal way of achieving this is to overlay existing applications with key elements of an automated and intelligent process-centric business process management solution incorporating robust case management.
So how does this work? There is typically a link between two or more elements in any claim, yet the challenge for insurance companies is that, with disparate and disjointed systems, they are unable to take a holistic view of each claim by bringing together all the relevant data to create a visual representation of these associations.
Until now, there has been very little ability to correlate alerts with the same or similar attributes between different detection systems and across lines of business. A situation for a given customer or account may cause multiple alerts to be generated in several detection systems, leaving essentially departmental, or 'siloed', investigators unaware of the holistic, organisation-wide view of risk.
This has proved especially problematic in the face of increasingly sophisticated fraudulent activity, a huge growth in the portfolio of services typically on offer and the variety and complexity of customer touch points, with all of this taking place in an environment of rapidly growing regulatory supervision and tougher compliance demands.
With multiple detection systems in place, each requiring specialist manual interventions to deal with the resulting alerts, this presents a major challenge to operational efficiency, scalability and spiralling costs.
Yet by adopting a rules-based BPM approach, this minimises the number of costly false alerts, at the same time reducing commercial risk and ensuring greater process consistency and compliance.
To deliver these benefits, an intelligent BPM solution is likely to incorporate several key technologies. It must have the ability to interface with any type of system — current detection systems are leveraged, as they are critical to identifying suspicious activity and typically focus on increasingly specialised types of behavioural patterns. Alerts governed by these current and future detection engines are ingested into one enterprise-wide case management platform.
It also needs the ability to specialise processing based on the alert type and circumstance, as the structure of alerts can vary substantially. Not only are they produced by different detection engines created by different vendors, but also they require different types of supporting data.
A configurable business rules engine that drives workflow based on the situation is key — with manual or (preferably) automated triage functions triggered to apply business rules against the alert circumstance, which detects and resolves or routes duplicate or multiple alerts. Intelligent routing also determines the investigator skill-set that is the best fit for the case.
The BPM system must also have robust case management driven by rules and circumstance — providing the human investigator with the proper tools to research and investigate the case. The ability to manage and monitor investigator performance and compliance to regulatory requirements — including a range of relevant components, such as visual link analysis to link attributes to other cases identifying hidden networks of relationships — is vital.
In summary, such a best practice approach delivers three key benefits. First, it enables the insurance company to adopt a common best practice approach to dealing with each claim or enquiry quickly and effectively by using intent-driven processing to direct the claim automatically to the agent best placed to deal with it.
Second, by putting BPM in the hands of the business — rather than waiting in the queue for IT to implement any change required — the company can be highly responsive to evolving customer requirements and rapidly scale to any new level of demand.
Finally, at a time when the opportunity for fraudulent claims will undoubtedly increase, BPM systems can make automatic correlations between people and assets, identifying which possible suspicious activity to investigate, so stopping or mitigating the risk of fraud in a timely manner. Customer service and operational effectiveness is transformed, whatever the scale of demand: a win-win result indeed.
Can BPM improve customer service? Click here for all the latest updates.
Jeremy Payne is senior international marketing director at Pegasystems
- Roundtable: Is a single customer view taking off in insurance?
- O’Connor replaces Fairchild at the helm of Broker Network
- Analysis: The mystery of the missing Insurance Fraud Taskforce report
- Green light for UK-US insurance trade deal
- Home insurance insurtech Buzzvault launches
- Travel insurtech Pluto begins beta test
- Majority of customers support a ban on dual pricing