140408 loma life insurance conference: stp more than just a tweak to your operations

Presented by:Presented to:

THE NOLAN COMPANY

3.2 Straight-Through Processing:

More Than Just A Tweak To Your Operations

People, Process, and Technology

Steven M. Callahan, CMC, ChFC, CLU, FFSI, FLMI

March 28, 2014

Insurance Practice Director2014 LOMA Life Insurance Conference

Stop Tweaking ! Start Recalibrating!

2 LOMA Life Insurance Conference: April 7 - 9, 2014

3.2 Straight-Through Processing: More Than Just A Tweak To Your Operation

Agenda

• Introductions• Straight Through Processing Today and Into the Future• AXA Case Study• Questions

Session Summary:• Overview and details of what may be achieved through the digitalization of

new business processing and the implementation of straight-through processing including the digital delivery of life insurance policies.

• Insight from an insurance company representative on their successful implementation of a digital solution.



Introduction

• Steven Callahan, CMC, ChFC, CLU, FFSI, FLHC, FLMI/MØ The Nolan Company is a Management Consulting Company helping insurance

companies with strategy, operations, and technology challenges for over 40 years.Ø I’ve been In insurance 30+ years, former Admin (NB, POS) and IT exec for AXP,

GE, FFAL.Ø As Practice Director at The Nolan Company, split time between research, papers,

and helping clients address service and operational issues.Ø Lately biggest client focus has been inflight system project problems and smoothly

integrating technologies that have been rushed to delivery.

• Let’s connect on LinkedIn – send invite to www.linkedin.com/in/stevencallahanØ Follow my very rare tweets @stevenmcallahanØ Traditional email: [email protected]

• HousekeepingØ The entire presentation will be posted shortly after the conference.Ø The flow is informal, open to questions, meant to be relaxed and informative.Ø Please be sure to fill out the survey at the end – or when you leave if earlier

www.linkedin.com/in/stevencallahan

mailto:[email protected]



Customer Diversity and Knowledge is Rapidly GrowingEthnic Diversity

2014 Social Networking ResourcesCourtesy of : wearesocial.ng slideshare.net

Workforce Generational Diversity & Shift



Web & Social Media

Communications Methods have come a long way

Simple:

Complex:

Phone

PaperService Delivery ResolutionPhone

PaperService Delivery Process Resolution

Phone

Paper

Email

Text

IVR

Service Delivery Process

Self-Service

ResolutionChat Video

Transfer Vendors

Fax

Fax



Customer Service Old News: Future is Customer Engagement

The “Big 3” measures of Customer Retention and EV?- Will they come back / stay- Will they recommend you (Net Promoter basis)- Do they feel the got value that exceeds price



Customer Awareness and Empowerment is Significant

Tens of thousands of positive service touchpointsa day, and yet one bad interaction…

And suddenly your company is at the top of the tweets list telling thousands followed quickly by a Facebook “Unlike” Fan Page. Today’s Customer



Technology’s Adoption and Utilization Growth Rate Exponential

Every 60 seconds:

Ø168M Emails

Ø695k Searches

Ø370k Skype Minutes

Ø98k Tweets

Ø13k iPhone apps

ØThe current storage and processing capacity of the globally connected internet is currently roughly the equivalent of one human brain.

ØUnlike the human brain, this synthetic global “brain” is doubling its capacity every 18 months; by 2040, it will exceed the processing power of all 7 Billion human brains in existence.

------ Kevin Kelly on “The Technium”



Insurance has Growth Potential: Digital Companies have Advantage



What Does This Have to do with Straight-Through Processing?

0

10

20

30

40

50

60

70

80

Milli

ons

GI Swing Boomer Gen X Millennials

High TechLow Tech

Increasing Customers Demands• Immediacy / 24x7 access• Transparency• Personal service relationships• Language • Driven within and outside the

industry

The Market is a Diversity of Communication & Technology Expectations

Digitalization of Insurance = Competitive Differentiation = Market Share



Customer Buying Patterns are Shifting: “Recalibration” is Key

Copyright:



STP Approval and Implementation Faces Challenges

ü Streamline operationsü Customer centric processesü Elimination of paper processesü Automate process / Reduce errorsü Optimize process / Reduce costsü Cost effective scalabilityü Shift to near real timeü Expanded accessibility

ü Multiple legacy systemsü Data security concernsü Constant regulatory changeü Insufficient forms standardsü Still have manual stepsü Cycle time hard to reduceü Inadequate ROI to do right

Well Run Implementations are proving Hard to Get Approved



Doing it Right

Fix The Processes First:• Eliminate handoffs• Eliminate duplication of effort• Consolidate / simplify organization• Reengineer practices for desired target end state• Review STP parameters vs newly designed practices and processes; pick best• Develop a roadmap from current state to reengineered end state• Use Agile Sprints and Prototyping to implement in small steps• Make sure full integration with existing environment is part of Day 1• Start with greatest pain point / highest impact – usually New Business or Claims• Leverage what you bought, comply with industry standards – customization risk



Take Small but Complete Bites: Fully Integrated Steps



The Problem Is Partial Implementation and Partial Integration

LEGACYMOUNTAINS

E-signature

E-apps andState Forms

OutputSystem

PredictiveRisk Models

Image &Workflow

MedicalProviders

UW Review

Admin System

Sales Portals

Client Portals

Online Vaults

CRM / Illustrations



Elements of Straight-Through Processing for New Business

Client Data

CRM feed, Illustration link, Auto-fill / Reuse

SignatureMethod,

Confirmability,Lock

FormsChannel,Product,

State

IGOConsistency,

Completeness, Validity

Identity,Licensing, Suitability

UWInitial Review, Requirements, Approvability

MIB & MVR, Financials,

Script

SECURITY / ENCRYPTION

MULTI=PLATFORM COMPATABILITY

APP CAPTURE E-SIGNPACKAGEREVIEW

REQUIREMENTS ORDER

DATA TRANSFER

APP SERVICES and RULES

SECURITY / ENCRYPTION

REMOTE CONTROL & ACCESS

HQ

HQ



WHAT MIGHT BE POSSIBLE”

BEHAVIORALDATA

SOCIAL DATA

LIFESTYLE INFO

INSURANCE ADVISOR

HQ UNDERWRITING

INSURANCE BUYERS

PRIMARY PHYSICIAN

MEASUREMENTSCOGNITIVE TESTS



Straight-Through Processing is one Part of Future Business Model

Copyright:

STP



Future Success Depends Upon Digitally Transforming The Business



Shifting to a Customer-Centric Operation: Tailored & Transparent

“Reinvent customer relationships” was the top priority for the next 3 years given by 42% of respondents in a recent IBM Global C-Suite Study.



Characteristics of a Future Engaged Customer Relationship

• Desire for personal interaction – web only buying grew 1%• “Digitally enabled personal service” is expected

• Advice and recommendations remain important• Convenience and innovation are now expected, especially by younger buyers

• Younger buyers will switch carriers faster to get what they want• Characteristics and psychographics of consumer segments are shifing fast

• Fewer and fewer of the traditional loyal long term customers• Studies indicate the customer of the future is:

• Less price sensitive at market level but attentive to company differences• Desirous of advice from friends, family, and company representatives• Oriented towards personal interaction during the shopping process• Expecting omni-channel engagement and service methods• Interested in new and innovative product solutions• Require simple convenience with personal and digital service options



Digital Maturity based on Customer Awareness and Interaction

Organization Centered Individual Centered Everyone to Everyone

Connectivity AsymmetricInfo asymmetry restricts coordination

FlexibleAutomated value chain

OrchestratedCollaborative and seamless

Interactivity IncidentalOne-time transactions

IntegratedLinks individual and organization, digital and physical

SymbolicMutual interdependence

Awareness SegmentedIndividual unknown andassumed

TailoredIndividual is known and unique

ContextualExperience is calibrated and relevant to immediateactions and needs

Intelligence TransactionalPassive learning through direct relationship

ResponsiveData-supported learning and decision-making

CognitiveSelf-supported learning and predictive capabilities

Source: IBM Institute for Business Value Analysis



Tips for Implementation

Strategic Alignment Implementation Approach

Ø Transformational Ø Customer centric focus – outside in

Ø Phablet Point-of-Sale tools critical Ø Agile methodology with prototyping

Ø Comprehensive approved business case Ø Disciplined change management

Ø Dedicated Resources Ø Distribution champions program

Ø Clearly defined integrated roadmap Ø Structured like a product launch

Additional Digital Opportunities – and Challenges - are Fast Approaching:• Digitalized Underwriting Information• Formalized Social Networking Data Integration• Centrally available Behavioral Data Warehousing (lifestyle, shopping, travel)• Digital Medical Records (EHR)• Wearable Device Information Access (from Fitbits to Pacers)



Maybe Even Too Much Data…….

Toto's new Intelligence Toilet II monitors weight, blood sugar levels, and other vital signs, transferring data to your computer for analysis via WiFi.



Health Management is the Next Life Risk Management Opportunity



Remember: Integrated Steps Is Key to Least Cost Success

E-signature

E-apps andState Forms

CRM / Illustrations

OutputSystemPredictive

Risk Models

Image &Workflow

MedicalProviders

UW Review

Admin System

Sales Portals

Client Portals

Online Vaults

Steven M Callahan, CMC®, FFSI

Insurance Practice Director

[email protected]

www.linkedin.com/in/stevencallahan@stevenmcallahan

www.renolan.com

mailto:[email protected]

www.linkedin.com/in/stevencallahan

www.renolan.com