But take heart: Read on for five tips on achieving process excellence and examples of how several insurers have made process improvement work for them.

Newton's first law of motion says objects at rest stay at rest unless acted on by outside forces. Likewise, processes tend to stay in place unless they are changed, and people naturally resist change. You need to work to overcome that inertia at all levels.

“BPM moves us into change management, defining what it is you want to do and why you want to do it, and selling that vision to various audiences in the company,” Lachal says. On top of having a proactive, audience-specific communication plan, Lachal suggests companies need to discover key “process controllers” within the organization.

“That's not necessarily people who have the title, but they have the influence over the project and people, and you need to get them on your side,” he explains. Also, particularly where processes cross departmental and product boundaries, top-management sponsorship is essential to prevent turf battles and infighting.

That support also helps overcome the natural human inclination against change. “Business staff members will say, 'We do things differently because we're special,' and you have to determine whether that's true or whether they're just unwilling to change,” says Kimberly Harris-Ferrante, vice president of research at Gartner. “It's almost a political debate.”

When Michigan-based Auto Club Group (ACG) looked to change from a 100 percent manual underwriting pro-cess to include automated, point-of-sale underwriting via its agent sales portal, it made sure to involve people not just from underwriting but from other areas, as well. “We had underwriters, staff from sales, claims, product management, people who file rules [with state insurance departments], and IT, including developers and maintenance, so everyone was on the same plane,” notes Michael Koscielny, director of regional underwriting operations at ACG.

Ultimately, the insurer chose Blaze Advisor, a rules-based system from Fair Isaac, as a basis for automating the underwriting process. ACG retained Accenture as a consultant on the project to help establish the initial architecture and rule base of the system, which was first deployed in 2002. “In the rule development, we also made sure to include sales, underwriting, and product staff so we didn't miss anything,” says Koscielny. And in the ongoing rule maintenance of that system, the same groups of people are involved to ensure rules contribute to the optimal underwriting process.

Similarly, American National In-surance Company (ANICO) looked first to people when it needed to solve a vexing process problem in its customer service center. ANICO, which sells life/health and property/casualty products, annuities, and mutual funds, knew the problem stemmed from customer service representatives having to enter and exit a number of different back-end systems to handle one customer call, but the company didn't want to take a systems-first approach.

“We had to identify what people had found to be the most effective practices, the shortcuts, and the real ways they got work done, then use that knowledge to improve the process,” says Gary Kirkham, vice president and director of planning and support at ANICO. “That helped them realize talking about [those shortcuts] was a good thing, the project didn't endanger their jobs, and we held them in high esteem as 'process experts.' The majority of people who became our workflow architects had worked in the call centers.”

This initiative led to a number of far-reaching and ongoing projects, beginning in 1999 when the insurer implemented a workflow system from Pegasystems to give the CSRs a single viewpoint into the systems that hold customer information and, by defining rules that embodied the best service practices they identified, to guide CSRs through a service task. Additionally, ANICO has taken its people-first approach to that project to effect ongoing process improvement in the years that have followed. The carrier initially developed a workflow process team focused on service workflow. Later, it created a cross-functional customer-service action team to identify and implement best practices in overall customer service.

In addition to recognizing the importance of staff in pro-cess change, companies need to reward process experts accordingly. “We tend to reward people for having a project come in on time and under budget,” Burlton indicates. “We don't translate that back to the [project's] initiation.”

Besides elevating the role of process experts, ANICO continually looks for ways to recognize staff involved in process improvement. “We've had incentive parties along the way, we've given T-shirts, we've done other recognitions,” Kirkham says.

The Pegasystems project at ANICO has had several quantifiable results, including reducing call abandonment by more than 70 percent and average service call time by more than 60 percent. But more important, adds Kirkham, is it has allowed ANICO to service a growing book of business, which included an increase in its annuity business from $200 million in 2000 to $2.4 billion in 2004. “We couldn't have done that with the old process,” he remarks.

“Before you fix processes, you need to understand them,” Lachal advises. It sounds simple, but often it's not. “Many companies talk about their processes, but when you ask them whether they understand what they're doing, they don't. They just do it.”

The history of understanding business processes didn't involve technology. “We had brown butcher paper and tape, where we'd stick the process up on the wall and talk about it,” Kirkham recalls. But like everything else, process modeling has become more sophisticated, and process modeling tools, whether stand-alone or part of BPM suites, not only help insurers understand existing flows but also are able to simulate the impact of process change. Today, ANICO has replaced butcher paper with IBM's MQ WebSphere Workflow process modeling software.

As carriers go about the modeling task, they must be prepared to find some surprises. “When you sit the people down who actually do the work, not everyone agrees with what the process is,” notes Harris-Ferrante. Even if a company has its processes documented, employees may not follow them consistently. “There's a lot of subjectivity. Just understanding and agreeing upon the process takes a lot of time,” she says.

Even though ACG's underwriting rules were defined and documented, there still were surprises. “There was a group [of rules] in the manual we could put our hands on, and there was another group we kept in-house, close to the vest, things underwriters do. And there were unwritten rules passed down through the ages, things we did but no one ever sat down and defined.”

Eventually, ACG was able to codify its rules to the extent where today 99 percent of personal auto applications are underwritten automatically. That level of automation, in turn, created some more surprises.

“When you write a manual, those [rules] are subject to interpretation,” Koscielny says, adding that's not so when those rules are automated. After first deploying the Fair Isaac system, he found himself deluged with calls from agents who claimed the system's underwriting analysis was wrong. A “listener” feature to the system allowed him to view in-process quotes and answer agents' questions.

“My phone rang off the hook for two months,” he says. “Of course, our underwriters had been battling that all along on a file-by-file basis, but now rather than dealing with it after issuance, the agents could see the discrepancy at the point of sale.”

In addition to the high pass-through rates, Koscielny credits the system with helping ACG achieve “significantly better” loss experience in states where it has the tool deployed vs. ones that are still pending deployment.

Carriers not only need to understand a process before they can improve it, but they also need to be able to measure the before and after states. “The capability to generate simulations has emerged in the last few years,” Lachal points out. “Once you've created a process model in a modeling tool, the tool allows you to feed data into it. That can tell you such things as how long it takes for a case to be processed, how much it costs, where and what the bottlenecks are, and how much a company needs to invest to make that process faster and better.”

At Lincoln National, CSC's Auto-mated Work Distributor (AWD) process management system, in place at the insurer since the late 1990s and upgraded in 2002, provided both the basis for and measurement of recent improvements to processes involved in the annuity business, specifically regarding new-business processing.

“As our volume [of annuity business] increased, it was getting more difficult to process new business because we're obligated to do same-day pricing. Our overtime costs were going up significantly,” explains Steve Johnson, Lincoln National's second vice president of business solutions and support.

Having undertaken a Six Sigma initiative, Lincoln had a group of staff trained in process analysis and improvement. The annuity area was able to pair some of those staff members with business and technical staff members who maintained the AWD tool to attack the problem.

“By taking the baseline metrics on productivity and cycle time, we could simulate how process changes would impact the bottlenecks we were experiencing,” says Colin Chin, Lincoln National's director of operational support.

The analysis, begun in late 2004, eventually resulted in several changes related to new-business processing. Most significant, the company revamped the way it handled application entry for its more than 300 different annuity products. Before, staff would handle applications end to end; today, the company uses an assembly-line process. Therefore, newly hired or less experienced staff can be assigned easier application entry or information look-up tasks, while more complicated or product-specific tasks are passed automatically to more experienced staff to complete.

Other areas were impacted, as well. For example, the carrier reevaluated the way it handled image scanning. Pre-viously, the same number of imaging staff members would work the entire day. However, workflow data showed spikes in volume in the second half of the day, after mail arrived. Therefore, Lincoln National shifted work hours in the imaging center to keep staff operating at full capacity.

“We went from more than 400 hours of overtime a pay period to 65 hours, with six fewer people,” Chin reports.

“If [an insurer] becomes the best in the world at issuing paychecks, that doesn't make much of an impact on its strategy. What makes a difference are processes that develop new products and sell to and service customers,” Burlton says.

Harris-Ferrante asserts insurers actually have done a good job of identifying high-value processes. “For life insurers, the biggest pain point is in the new-business policy issuance. In property/casualty, it's claims. Some of the biggest gains I've seen in BPM have been in claims,” she says.

Merastar Insurance Company, which writes employer-sponsored personal automobile and homeowner's insurance, found the perfect opportunity to revamp its claims processes when the company was sold from Prudential P&C Holdings to Haverford (Bermuda) Ltd. in 2003. Essentially, the company was working from a blank slate, because it didn't take Prudential's claims system in the sale, only a green-screen, COBOL-based application that hadn't been used in five years, which it was forced to resuscitate in the short term just to do business.

“We literally started from [deciding] where the adjusters' mailboxes were going to be, how many cubicles we would need, even how many people we would need,” says Scott D. Harris, who was hired at the time of Merastar's sale as its vice president of claims. “Our philosophy was a high-tech approach to claims processing with accuracy first, speed second.”

Merastar selected Guidewire's Web-based ClaimCenter system. The system, fully deployed in mid-2005, automates the flow of all claims tasks from first notice of loss through investigation, evaluation, settlement, and recovery. The company sources the loss-reporting function to First Notice Systems, which after verifying an in-force policy and collecting claim information, uploads a loss notice to Merastar. ClaimCenter automatically assigns and routes new claims to the appropriate adjuster using a rules-based approach that considers the expertise level needed on a claim and existing adjuster workloads. Manager dashboards also allow claim managers to view the companywide claim process and make adjustments to flows and workloads as needed.

While not having had a claim system that supported a high level of automation before doesn't give a benchmark for comparison, Harris contends the benefits of the system are clear. “It's made us a more accurate claims operation by requiring adjusters to gather more information and to follow a specific claim-handling process every time,” he says. The company also can monitor more easily service standards, such as 24-hour contact. “And we have more than one set of eyes on a file, which lessens the chance we'll pay what we don't owe,” Harris reports.

Finally, process excellence is a journey, not a destination. “It's done by people who stay, not just by consultants who come in, change everything, and disappear,” Lachal says.

At ANICO, “we change processes almost monthly as we discover new ways of doing things,” Kirkham indicates. For instance, he explains, a three-person team used to handle unearned premium reimbursements when a policyholder died. “The [customer-service action] team determined we could eliminate that manual process by creating an automated business process. Now, when we know an insured has passed away, the [Pegasystems] system passes the data automatically to initiate those refunds, and we've redeployed those three people.”

Focusing on continual improvement vs. a one-time effort can be a change in mindset for project-focused staff and technology-centric IT departments. But it's a change in mindset Lachal says in some ways is being driven, perhaps paradoxically, by the technology industry itself. “As a whole, software is becoming more process-centric,” he claims. “And since people use software, people will use it from an increasingly process-centric point of view. That's a good thing.”