Blurring the lines: Business Processes instead of Core Systems

As Catherine discussed in her post on Monday, Celent is in the midst of writing several 100-plus page policy administration reports. Aside from the sheer size of the task, an added complication this year is the difficulty defining what the term “policy administration” even means. Each time Celent reports on the topic, the scope of policy administration grows, until it seems to cover all of a carrier’s core systems. This is all part of a positive trend in the space (even if it makes Celent’s job a bit more difficult). Each year it becomes harder to bucket projects and systems into discrete categories. More and more policy administration vendors include billing and claims as part of their solutions, agent portals tie directly to underwriting, rating and product configuration intertwine with rules and workflow, and insurers think about projects as reaching across the entire infrastructure. The lines are blurring across systems as the focus shifts from individual systems to business processes. Why has this shift begun? It’s partly an opportunity brought about by technology. With many vendor systems and insurer infrastructures embracing a service-oriented architecture, it’s easier to orchestrate a true functional flow across multiple areas of the business. But, more importantly, it’s a change in mindset. Carriers who focus on business processes rather than systems build better, more lasting solutions. There are two major processes that stand out. The first is new business automation, which follows a submission from the agent entering data into a web portal, to a set of automated underwriting rules, to human review and approval, to the generation of policy documents, and on to the policy administration and issuance. The second is the product definition lifecycle, in many ways the opposite of new business automation. The product definition lifecycle follows the business users who define and alter insurance products by designing the product data, modeling rates, building underwriting rules, and creating production document templates. For different insurers there are different steps, but the singular point is that no one system can truly modernize the business if entire processes cannot be redesigned. Some technology-leading insurers have approached this by working with vendors who provide end-to-end solutions. Others have taken a best-of-breed approach and integrated across multiple systems themselves or with professional service partners. While the technology is important, it’s the new approach that matters most. By thinking in terms of cross-enterprise processes, insurers see their relationship to vendors changing. It’s not enough to provide a specific set of functionality; instead any new system must fit into its place in a larger operation.