It is crucial companies use new tools and technologies to improve, automate, enable, streamline, and measure their core business processes–such as new business and policy issuance, claims handling, billing and payment processing, and underwriting. Through the use of BPM solutions, insurers can support activities such as skills-based routing in the call center, exception-based underwriting, claims processing, online event triggers to help avoid channel conflict and inform agents of changes their customers make online, and generation of billing and payment notifications.

While many companies think "workflow and imaging" when they think BPM, enterprise content management (ECM) is an important component of a BPM foundation. The ability to store, manage, archive, and retrieve content is an essential part of running an operationally sound business.

The Role and Need for ECM in Insurance

One of the hurdles of the insurance industry is the ongoing reliance on paper-based communication and documentation. Companies continue to generate paper for policy issuance and receive paper from external partners and distributors they need to image and archive. While it will be difficult to push partners to new and electronic forms of transaction to reduce inbound paper, it is imperative insurers craft new strategies to reduce the amount of internal paper used and retained. Benefits achievable are reduced paper distribution costs, empowering of customers and distributors, reduced paper storage costs, faster information retrieval, and greater management reporting and tracking capability. Continued reliance on paper-based processing and storage also will put insurers at risk of being labeled as environmentally unfriendly and seen as going against global policies to protect the environment. Brands could be injured and customers lost as a result.

The problem, however, goes beyond insufficient management of paper and documents. Insurers must tackle new forms of content and have effective strategies targeted at ECM to be able to meet new business objectives. Content management ultimately has three main roles in the insurance industry:

o Supporting the "smart" enterprise where insurers can deliver appropriate and timely content to the enterprise in real time that is consistent and accurate. This will enable effective and accurate "decisioning" in areas such as claims processing, customer service, and underwriting.

o Supporting marketing and product sales where insurers can deliver marketing collateral to customers and distributors consistently and manage all corporate marketing and sales information centrally. This will enable increased revenue generation, improved customer satisfaction, enhanced distributor loyalty, reduced marketing costs, and improved marketing return rates.

o Supporting policy and claims functions where all customer correspondence, customer service, and claims and regulatory reporting documents and content are centrally managed and accessible. This will enable improved customer satisfaction, claims processing accuracy and outcomes, faster customer service processes, organizational efficiency, regulatory compliance, and operational cost reduction.

The ability to have easily accessible content as needed will help companies support today's and tomorrow's business objectives. As a result, insurers already are starting to adopt ECM. For example, a Gartner study conducted in 2006 with U.S.-based P&C insurers found 53 percent of P&C companies to be investing in ECM in 2007. While adoption is projected to be less among life insurers, companies in both lines of business are expected to increase their investment in ECM in the next year.

ECM has numerous application areas in which it can be deployed, such as:

o Claims handling, including access to all electronic content (such as voice files from call centers, digital photos of past damage, and e-mails coming in from Web sites).

o Customer correspondence.

o Underwriting for personal and commercial lines.

o Web site and portal use for delivering information and sharing content with users, including distributors and policyholders.

o Regulatory reporting and auditability.

o Marketing initiatives and campaign management.

o Fraud detection and support of fraud investigation.

o Product development, including competitive intelligence such as feedback from sales on lost prospects and customer satisfaction.

o Product approval processes and regulatory reporting for new products.

ECM is a powerful tool to be used among P&C and life insurers. The value across the enterprise is obvious; however, companies often are challenged by line-of-business buying decisions and IT procurement. It is highly possible large insurers already have invested in content management within their organization; however, it is siloed and not enterprisewide. Just as with other IT systems, redundancy in content management systems drives inefficient processing, duplicate IT costs, and increased integration costs. While we are starting to see some insurers build business cases on consolidating their content management systems, redundancy still is expected among most companies in the next few years.

ECM in Action: Role in Multichannel Integration

One strategy that is becoming popular among leading insurers in both P&C and life insurance lines of business is multichannel integration (MCI). It is based on improving customer experience across all channels to provide consistent interactions that match customer needs. To do this, insurers must have heightened customer intelligence to determine transactional needs and content to be delivered to each channel; an integrated channel platform where customer information, content, and documents are centralized for all channels; and the use of a BPM solution to manage cross-channel workflow, processes, and rules. ECM is an important element of fulfilling MCI.

Today's channel architecture is problematic for insurers, and this problem will only escalate as more channels are added. Companies are finding today's channel architecture is unable to support cross-channel needs. The problems caused by single-channel architectures include siloed channel structure; high costs due to technology duplication, process inconsistencies, customer dissatisfaction due to bad experiences and inconsistent process and content; and an inability to support emerging business strategies.

Each channel has been built out independently and has its own strategy, process, metrics for performance, and organizational structure, with the business manager typically measured based on that channel's profitability, sales revenue, or utilization.

Channel boundaries must be broken. Insurers must have more collaborative channels that work toward the common goal of customer experience improvements and are measured on their role in a larger strategy rather than an independent entity. The new enterprise channel management structure will enable shared information and systems along with standardized processes across all channels.

Insurers must start making the investment today to build an integrated channel architecture. The lack of channel integration will be detrimental to insurers, leading to agent dissatisfaction, customer attrition, and brand injury. It is imperative insurers start to address this issue and develop a new approach to sales and service delivery.

To support MCI, new investments are being made to establish a common transactional process, centralize all content and documents across the channels, and build a new channel architecture and infrastructure. This will create a new mid-office platform to leverage past IT investments and support channel requirements. ECM will be positioned in the mid-office to enable business transformation, reduce processing costs, improve knowledge across the organization, improve customers' experiences regardless of channel, and control IT costs.

Next Steps

ECM will play a strong role in market evolution and is becoming an important tool among insurers. Managing enterprise content for all functional areas and lines of business helps companies support strategies of efficiency and differentiation. Benefits are numerous, including reducing regulatory risks, improving decision accuracy, and assisting in revenue generation. Therefore, insurers must stop investing in channel-centric strategies and focus on integrating all the channels into a common architecture and under a common strategy targeted at improving customer experiences.

For success in insurance, it is imperative to have control, flexibility, agility, and be customer-centric. New processes and the use of technology are needed to support these requirements, including BPM and ECM. Choose targeted objectives for the ECM program, and map out ways in which individual and team productivity can be tied to the overall organizational goals.

It is imperative insurers start to:

o Identify the risks of ineffective and siloed document and content management.

o Understand and document the content needs of core business processes, and ensure content is available to employees for their job roles.

o Consolidate all content management systems to eliminate redundancy, reduce IT costs, and leverage content across the enterprise.

o Consider enterprise content management requirements to ensure line-of-business or departmental projects integrate or will support enterprise requirements of the future.

o Understand how ECM empowers BPM projects.

Effective use of ECM will be a critical success factor among P&C and life insurers. ECM increasingly will become a component of the mid-office foundation and an enabler of business projects such as exception-based underwriting, improved claims processing, and improved compliance. Investment in ECM projects, including new solution acquisition and solution consolidation, will increase starting in 2008 among Tier I and II insurers as a result.

Kimberly Harris-Ferrante is a research vice president at Gartner, Inc., where she is responsible for monitoring the business and technology trends within the global property/casualty and life insurance industries. She can be reached at [email protected].

The content of "Inside Track" is the responsibility of each column's author. The views and opinions are those of the author and do not necessarily represent those of Tech Decisions.