Accenture Claims Transformation Services

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Accenture Claims Transformation Services Creating a claims function that supports the drive to high performance

Claims Transformation The imperative for change Today’s property and casualty (P&C) and general insurers compete in a rapidly changing business environment. For many, the key to success has been an increasing ability to develop, underwrite and market new products that meet a set of rapidly evolving customer needs. All too frequently, however, the claims process has not received the same attention—despite the fact that it remains a vital component in the recipe for high performance for any insurer.

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The claims process is important because it represents the quintessential “moment of truth” for any insurance customer. Any other experiences a customer has had with his or her insurer during the sales process and subsequently is cancelled out or reinforced by the way a claim is handled. The importance of this fact can hardly be overemphasized in a business environment characterized simultaneously by customers who are accustomed to escalating levels of service, and who have the tools to disseminate their experiences widely. Specifically, Claims faces the following challenges:

Keeping pace with the rest of the organization. Over the past few years, growth and competitive advantage in insurance have been largely driven by the ability to develop and market innovative products that meet rapidly changing consumer needs. Intense competition has seen a proliferation of new products but, all too frequently, insurers have neglected to ensure that their claims platforms are agile and flexible enough to cope with these constant changes while still maintaining forward momentum by the introduction of best practices.

The ability of claims departments to keep up to date with fast-moving developments in underwriting and product is severely compromised by a distinct lack of investment in modern technology platforms. Accenture research1 suggests an alarming 25 percent of insurers are still using manual and paper-based claims systems. Only 14 percent of insurers resolve more than a quarter of all claims at first contact. Moreover, up to 56 percent of an average claim professional’s day is focused on non-core activities that do not impact the outcome of the claim or improve customer service2. Meanwhile, new technologies continue to proliferate, which consumers expect to be able to use during the claims process. One such example is the use of mobile devices for first notice of loss. The end result, as insurers race to meet the perceived demand for this new claims intake channel, is that yet more information has to be keyed manually

into back-end systems because claim platforms are not appropriately equipped to integrate and optimize the use of mobile technology. Another example is the proliferation of the use of social media. These new channels are changing the game. It is now possible for clients to broadcast feedback on the claim experience while it is in progress. Listening to these interaction channels, driving an appropriate claim handling presence and developing capabilities to amplify or contain customerdriven content will become vital skills for top-performing carriers.

Many of these markets are now reaching the size to make claims platforms viable. Based on Accenture research and experience, claims handling represents the single-largest opportunity for P&C / general insurers to drive significant gains in business performance and customer service. Typically, claims represents more than 70 percent of an insurance company’s expense base in the form of claims payments and associated costs for processing claims.

In response, most insurers have adopted “quick-hit” initiatives and isolated point solutions. In Asia Pacific particularly, it was not always economical to adopt large-scale claims platforms.

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Accenture Claims Survey.

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Accenture Unlocking the Value of Claims Survey.

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Turning data into business insight. In business generally, it is rapidly becoming apparent that the next competitive battleground will be companies’ relative ability to turn the vast quantities of data they generate into actionable insights. To gain this ability to close the loop between what happened in the past and what should happen in the future, companies are investing in sophisticated analytics capabilities. Many claims departments have inflexible and heterogeneous IT systems, and thus face a considerable challenge when it comes to consolidating data, determining what can be used for advanced analytics, and then formulating plans to put that data to work to drive improved claims accuracy and efficiency. A case in point is China, where branch networks are large and claims data is not consolidated. Sheer analytics capability is also a challenge in itself, both on the level of the technology platform to support it and the analytics talent required to drive results. Many insurers are running different claims platforms for various parts of their businesses, making it a daunting technical challenge to determine which analytical tools can plugand-play with existing applications and infrastructure portfolios. Assuming the technical hurdle can be surmounted, how to find, develop and align the necessary analytics talent organizationally can be as critical to success as the underlying technology.

Winning the war for talent. Accenture research clearly indicates that attracting and retaining the right talent—wherever it might be—will be one of the competitive differentiators in today’s and tomorrow’s global business environment. The competitive implications of talent are particularly clear in claims which has, in the main, an aging workforce. Claims departments are thus faced with some fundamental questions: Should I look for new people to train? Where will I find them? Would outsourcing help me to overcome this challenge? Whatever the answers are, it is clear that the claims department will have to accommodate itself to a workforce and operating model that are more distributed. Technology will have an enormous role to play in this scenario as it will enable collaboration between this distributed workforce, whether employees or outsourced. Collaboration technologies will also help to bridge the talent gap by allowing specialized talent, like adjustors, to be leveraged across much wider geographical areas.

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A clear path to high performance in claims

The claims opportunity It is clear that claims faces some significant challenges. But, as we have shown, it is equally clear that claims has an important role to play in ensuring the overall health of any insurer, and its ability to achieve high performance.

It therefore follows that claims transformation has the potential to provide immediate and sustainable bottom line impact. Companies striving to achieve market leading cost structures that deliver on customer expectations are fundamentally rethinking the claims function. In particular, claims hubs have a role to play in providing economies of scale across countries. In focusing on their claims capability, these insurers seek to: • Improve claims outcomes and settlement accuracy. • Achieve reductions in unit cost per claim. • Lower IT costs. • Dramatically improve service to customers.

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Carriers aiming for high performance in their claims operations as they seek to build durable competitive advantage will need to adopt a new vision of claims. Accenture envisions that the successful claims organization will establish claims as a center of growth, rather than just cost, based upon four basic pillars of excellence: • Human performance. • Information access and management. • Claims segmentation and assignment. • Organizational agility. In clearly defining and achieving a new claims vision, carriers in search of high performance will adopt crossindustry best practices encompassing people, process and technology, while taking a holistic approach to claims transformation and industrialization focused on three critical actions:

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Redefine the role of the claims professional. The insurance claim is the most human of insurance processes, providing relief to policyholders in a time of need. To distinguish their service and meet customer expectations, insurers must transform the role of the claims professional to be less administrative and more consultative. A truly outcome focused claims professional, equipped with the most effective set of tools and supported by a strong back office, will bring claims to more rapid and satisfactory resolution for both the customer and the carrier.

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Create a data-driven claims lifecycle. Integrating systems and reducing manual processes are prerequisites for increasing speed, efficiency and effectiveness in claims. Streamlining and standardizing processes will enable more and more to be automated, thus releasing staff to perform tasks that add value. Detailed and highly segmented claims information is the best armament available to insurers seeking to either grow the business or understand which risks do, or do not, make sense in distinguishing themselves from competitors. To outperform on both efficiency and service, insurers must strive for a data-driven claims lifecycle that can truly unlock the hidden value in their claims organizations.

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Build an extended enterprise. In a rapidly globalizing marketplace, insurers can reach maximum operational agility by decomposing activities within their claims organization and distributing those activities to people equipped with the best skills to handle them. Using a more open model, powered by information technology and focused on methodology, insurers can adapt to changing business opportunities and scale more rapidly and efficiently. With greater access to data and the ability to identify discrete pockets of skill and functionality, insurers can also measure what works and what does not on an ongoing basis and adjust to make the most of their business opportunities—through both economic headwinds and tailwinds. Insurers that pursue these strategies and embrace a new claims vision will achieve gains that exceed the benefits of even the most successful piecemeal solutions. And, they will create a unified foundation for continuous improvement.

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Case Study: XL Insurance’s Global Claim System XL Insurance is a segment within the XL Group of companies, which is comprised of global property and casualty (P&C) and reinsurance insurers, offering a broad portfolio of products and a reputation for managing complex risks. The XL Insurance companies operate out of offices in 20 countries throughout the world and fronting partners that extend its operations to a further 75 countries. In 2009 XL Insurance’s P&C division generated net written premiums of $3.6 billion and achieved a healthy combined ratio of 93.6 percent.

Business Challenge Over the years, XL Insurance has expanded through a combination of organic growth and acquisitions. With each new acquisition the company inherited a new claims system, which had to be maintained as it was tailored for the specific requirements of the newly acquired book of business. Eventually the legacy environment had grown to five separate claims platforms. In addition to the cost and operational difficulty of maintaining these disparate systems, there were other challenges. It was impossible to set key performance indicators for XL’s claims function as a whole, as each system worked in a different way and produced reports that were not directly comparable with those of the other systems. For the same reason, as well as the fact that the legacy systems used old programming languages that isolated them from the enterprise system, it was difficult

to produce the timely but complex consolidated information required by the business. Perhaps most importantly, service was suffering. As customers grew their businesses and spread geographically it became increasingly difficult for XL to provide a consistent service across its various product lines and countries of operation, as multiple claims systems were often used to handle the claims of a single customer. It had become clear that to achieve efficiency, agility and the distinctively superior customer service required to sustain high performance, XL would have to shed the millstone of its legacy claims systems and replace them with a more advanced consolidated system.

How Accenture Helped Accenture helped XL Insurance transform its claims function from the very first stage, and continues to assist with the world-wide roll-out of its new Global Claim System (“GCS”). This began in the US, Canada and Bermuda, with the second phase being its roll-out into South America, Europe and Asia. The GCS is based on Accenture Claim Components and supports the full range of claims processing transactions, from first notice of loss through final payment, for all of the XL Insurance companies’ P&C business lines. These include professional liability, aviation, environmental and other specialty insurance coverage, general liability and automobile insurance, and workers' compensation. Paul Tuhy, Executive Vice President and Global Head of Claims at XL, said at the launch of the GCS: “This solution was built upon a deep understanding of insurance claims

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processes and best-in-class IT implementation, systems integration and change management." When it is fully implemented, every one of XL’s claims will be processed on a single claims platform, “and that will be unique in the industry.”

High Performance Delivered The benefits of the GCS soon became apparent in XL Insurance’s ability to adapt its business more rapidly to the many different locations, regulatory requirements, cultures and languages that confront it. The adoption of an advanced, consolidated processing platform also significantly improved communications within the claims function. This is particularly important on global accounts, where claim handlers on different continents need to keep in close contact. The system helps assure outstanding customer service, and has markedly improved the efficiency of the claims function. “But it’s not just a good claims system,” said Tuhy. “It’s also a business system that analyses everything we do. It’s made us look internally at our workflows and given us the ability to report better, aligning different trending analyses of data, which helps the business units become more competitive. That’s a huge advantage of the system.” XL Insurance and Accenture, he concluded, had reached a key milestone in the pursuit of a truly global claims management system. "What’s more, we’re under budget and on schedule, and I don’t think we’d be there without Accenture.”

Figure 1. Key Accenture software, tools and services for Claims Transformation and Industrialization

Vision and Diagnostic Tools

Implementation Assets (Software/Management)

Claims Operating Model

Accenture Claim Components

Claims Data Analysis Diagnostic

Insurance Data Migration Factory

Claims Activity-Based Costing Diagnostics

Procurement Software Alliance

Sourcing Solutions Accenture Insurance BPO Services: P&C Claims Services Claims Managed Service Offering Express Claims

Capability Benchmarking & Self Assessment

Accenture Procurement Services

Business Case Framework Business Process Models Claims Workforce Performance Claims Predictive Analytics Assessment

Key Accenture software, tools and services for claims transformation and industrialization Accenture brings proven, enabling claims solutions, toolsets and methodologies that are being used by more than 40 insurers worldwide. Accenture has assembled a unique combination of specialty skills, patented tools, intellectual property, best practice processes and technology required to help insurers maximize their business opportunity in claims (see Figure 1). Together they make up Accenture Claims Transformation Services, which P&C / general insurers can use to jumpstart the complex diagnostic, implementation and measurement activities involved in transforming their global claims organizations. The claims assets that Accenture brings to insurers have been honed through years of proven industry and solution implementation experience. For example: • Accenture works with half of the top 20 P&C carriers in North America, and more than 40 claims clients worldwide.

• Accenture Claim Components, with an event-driven and rulesbased architecture, has been implemented more than 21 times – including one insurer that reports 32,000 users. In addition, it is used as a means to achieve high performance in claims in six countries. • Accenture Insurance Data Migration Factory, with unique methods and tools, has helped leading insurers quickly migrate complex data from any platform onto target systems. • Accenture Insurance BPO Services, with more than 4,500 insurance processing resources worldwide, handles more than 7 million claims transactions a year. • To help companies – including insurers – turn data into business insight, Accenture has consolidated its vast analytics experience and talent pool into Accenture Analytics. We have also partnered with SAS, the recognized leader in analytics

technology, to form the Accenture SAS Analytics Group, to drive claims-specific analytics solutions into the marketplace. To enable high-quality, cost-effective implementation, clients leverage the Accenture Global Delivery Network which provides IT and BPO services onshore and offshore. It allows us to apply our proprietary Accenture Delivery Methods and associated framework and tools consistently across engagements and delivery centers, helping to realize the business case, mitigate risk, increase delivery efficiency and accelerate the pace of transformation and industrialization. The Global Delivery Network also has a large complement of highly skilled insurance professionals, and a proven capacity to build, manage and deploy complex and large-scale claims systems. The Global Delivery Network includes claims-specific innovation centers in Bucharest, Romania; Murray Hill NJ, USA; and Bangalore, India.

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Allstate reinvents its claims process to enhance customer service Providing the best possible customer experience while moving toward accurate claim resolution has long been a goal of Allstate Insurance Company. Achieving it has involved leveraging fresh technologies and strategies, and taking a hard look at the claims operation and its relation to the bigger picture. Allstate embarked on a multi-year journey to improve its customers’ claim experience. Working with Accenture, it implemented a new claims technology platform, and drastically shifted its organizational mindset. According to Michael J. Roche, Allstate’s Senior Vice President of Claims, bolstering customer satisfaction means, to a large extent,

doing business with people when and where they want to do it. "We installed a feature last July called self-service," he told Claims magazine*. "It offers customers more options based on how they want to interact with us. We can keep all parties apprised of the progress of a claim as it moves along via e-mail status updates." Allstate’s incremental approach to a next generation platform serves as a model for successfully flattening silos in claim processing. The specific focus will be on reducing cycle time and keeping people informed, as well as measurement at the desk level — using customer input to gauge staff performance. Another

*Consider the Customer, Allstate VP Advises – Claims Magazine, 2 June 2010

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crucial element is parallel handling, which aligns the people with the appropriate functional expertise with the tasks at hand. "Now everything is electronic, so we can have one to three people working on different aspects of the claim at the same time. "Allstate has reinvented the claimhandling process to enhance the customer experience,” said Roche. “We have realized an estimated 30-percent reduction in the average time to inspect, resolve, and settle a claim."

Getting started with Accenture to make it happen Accenture is ready to help you begin and / or progress through your claims journey. There are a large number of different ways in which insurers can get started. For some, it may begin with a diagnostics exercise to identify and quantify business improvements in both the effectiveness and efficiency of the claims operation. For others, we can help execute specific solutions against an existing roadmap or help institute check points to measure and refine the journey. It is very likely that you will be looking at ways to use your claims data more effectively to provide insights that will give you an edge over competitors. Combining

our decades of experience in the insurance industry with the cuttingedge skills of our recently launched Accenture Analytics will deliver the insights you need to make informed decisions, improve business outcomes and accelerate high performance. Accenture is also a leader in the implementation of sophisticated collaboration technologies to help claims departments leverage scarce skills and deliver exceptional service. After all, we use the same technologies to run our own company.

our remuneration to the success of critical claims transformation and industrialization programs. We believe that this sort of commercial arrangement can provide a powerful alignment of interests and objectives, and demonstrates our commitment to working with you to drive high performance throughout your business journey.

Not only do we have an exceptionally strong track record of delivery within prescribed budget and schedule, we are also willing to link a portion of

To learn more about Accenture Claims Transformation Services and how we can help your company achieve high performance, visit www.accenture.com/claimsservices. 11

Copyright © 2010 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

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Accenture is a global management consulting, technology services and outsourcing company, with approximately 204,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.6 billion for the fiscal year ended Aug. 31, 2010. Its home page is www.accenture.com.

For more information or to arrange a consultation, please contact: North America Jim Bramblet [email protected] Europe, Africa and Latin America Oliver Netz [email protected] Asia Pacific Glenn Rogers [email protected]

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