Bookies vs. Doctors: Who Makes Better Business Decisions & Why, & What Does It Have to Do with ACORD Implementations? is the intriguing title of a session at this year's ACORD LOMA Insurance Systems Forum.
Phebe Arouni, e-business program manager at PartnerRe, will provide an overview of how the introduction of Business Process Management (BPM) enabled a reinsurer to implement eAccounting in approximately half the time it would have taken using traditional development methods.
Arouni explains that the content of her presentation draws from an anecdote she heard while participating in the ACORD metrics initiative. To measure the value that BPM brings to a business, she says one way to think about it is how a doctor makes estimates, compared to a bookmaker.
“A doctor relies on prestige and status to make estimates, whereas a bookmaker is usually pretty accurate,” she says. “For example, a bookmaker who says that he is 90 percent confident that the weight of a pretzel is between two to three grams is correct almost 90 percent of the time, whereas a doctor who says they are 90 percent confident that weight of a pretzel is between two to three grams is less likely to be correct 90 percent of the time.”
The point of the story? It is important to calibrate estimations to give yourself the same level of accuracy as the bookmaker.
“Bookies learn from their mistakes. They document every single decision. That's what BPM allows you to do. It helps you to refine as you go,” she notes.
Prior to using BPM, PartnerRe was using a claims system with different technology that was inefficient to maintain. So about a year ago, PartnerRe started to introduce BPM. According to Arouni, some of the key advantages of BPM are that it helps the carrier to streamline the business process and it also offers much greater flexibility and a lower implementation cost.
“Aside from the technology, BPM also provides us with a more flexible digital platform because it is not all hard coded. It's a platform that's more point and click. We sat down with the business and mapped out their business process using that tool,” she says.
BPM also gives PartnerRe the metrics to evaluate the processing of a particular account.
“We can see where the bottlenecks are so we can actually refine the business process much better. If we see a lot of the work is being held up with a particular group or individual, then we know we need to look at how work is being assigned or route it more efficiently.”
As far as cost savings, Arouni estimates that BPM is about half the cost of the old system and ongoing maintenance costs also have been reduced by half because there's less coding involved when changes have to be made.
Another advantage of BPM is the ability to implement workflow. Workflow helps to automate the business process instead of relying on email and paper exchanges.
Arouni explains: “Workflow makes it more of a bulletin board approach. If a task is on your to-do list it shows up in your personalized view and it's on your manager's watch-list. It's all in the open, rather than buried in email. This makes the process more transparent and easier to keep track of.”
BPM also allows PartnerRe's accounting department to be more collaborative because the required auditing process is now automated, which means all information is shared and built into the system. “We automatically validate information now. You're not reliant on these fortresses of knowledge. There's no longer only one person who knows how to do a certain type of account.”
As of now, PartnerRe has introduced BPM in theU.S.only, but it is evaluating its use in other parts of the business. In addition to accounting, the carrier would also like to apply BPM in the settlement area which brings the claim and accounting piece together and performs the actual payment.
As to whether this digital business platform will take off in the wider reinsurance industry, Arouni says time will tell. “Traditionally a lot of reinsurance business activity is paper-bound. If you just rely on paper you have no idea how much work is on someone's desk or what is way overdue. E-business in general provides much greater visibility, allowing you to see where the work actually is.
PartnerRe is currently working with just two partners who are able to provide digital information, but it is hopeful that number will grow. “We're trying to engage with other brokers who are not digitized,” she says. “It's in our interests to get everyone moving ahead.
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