Sponsored: Delphi Technology Inc.

Digitization and Automation: Bringing Speed Where it’s Needed

The Delphi Accelerator product workbench provides an automated approach that can give carriers a significant competitive advantage.
By: | October 25, 2016 • 6 min read

thinkstockphotos-125558951_700x525Technology offers advantages of speed, efficiency and accessibility, but it can also be a disruptive force. Insurance has struggled to keep up with the pace of advancing technology. As an industry, it manages vast amounts of data but also contends with bulky legacy systems that make it difficult to implement new solutions.

On the other side of the coin, technology acts as an equalizer for newer, smaller carriers that are better positioned to implement the latest tools, allowing them to compete on the same playing field as larger players.

When speed to market offers a critical competitive advantage, large carriers have to find ways to update old processes and harness technology’s benefits.

Product managers in particular shoulder the largely manual process of importing industry-standard updates, analyzing them, and implementing any changes needed to existing coverages. The multi-step process is both time-consuming and expensive.

“According to Novarica research commissioned by the ISO, any carrier performing this in a manual way without any electronic means to do the analysis and evaluation are about half as current and are spending twice as much money as carriers using some automation,” said John Flavin, Senior Vice President and Chief Business Development Officer, Delphi Technology, a provider of business software solutions to the insurance industry.

Large carriers with many product lines in multiple territories could be receiving circulars from The Insurance Services Office (ISO) on a weekly basis. Each one contains product definition updates that the carrier may have to implement either to stay compliant or simply to stay competitive.

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John Flavin, Senior Vice President and Chief Business Development Officer

Product managers have to compare the updates to their current product and examine what underwriting rules, rating algorithms and forms may need to change if the update is implemented — and how those changes will impact their book of business. They need input from internal stakeholders, including underwriting, legal, marketing, IT and actuarial representatives. And don’t forget external approval from regulators. All this before policy administration systems can be updated with the correct product information.

Completing each step of this process manually can take months, and a lot of dollars.

“On average, based on industry research performed for ISO, implementing an ISO circular completely manually costs about $45,000,” Flavin said.

In the meantime, companies with digitized methods are getting to the market sooner and nibbling away at market share.

Accelerating Product Management

Delphi Accelerator helps to digitize and automate this process.

Delphi Accelerator product workbench allows imports of ISO ERC and AAIS product data and rate tables into a central dashboard — a self-contained area where product managers have easy access to the information and tools they need to configure and maintain insurance products. Importing industry standard or proprietary content digitizes the content, making it easy to analyze and manipulate.

Key product processes can then be carried out in the dashboard: comparison and analysis of product definition changes for rate maintenance, configuration of product definitions to carrier-specific conditions, sharing with stakeholders and obtaining approvals.

Finally, updated definitions can be deployed from one central dashboard to many policy admin or point-of-sale systems. When done manually, there is no way to mass export new information to many systems from one source. Using Delphi Accelerator cuts down on the time it takes to make new product definitions available for the market.

This digitized process not only cuts months of work down into just weeks or days, but also yields significant cost savings.

“Using electronic means, ISO circular implementation costs 60 to 85 percent less than the manual method, according to research done for ISO by Novarica,” Flavin said.

Any new or updated products of course need both internal and external approval before they can be deployed. The sheer number of stakeholders involved in decisions to implement ISO changes, or launch or consolidate products, is perhaps the biggest speedbump for the insurance industry.

Delphi Accelerator’s dashboard packages new ISO, AAIS or proprietary content, product comparisons and impact analyses into a centralized and easy-to-navigate space where internal stakeholders can review proposed changes easily and deploy and maintain products. Without Delphi Accelerator, product managers have to configure carrier-specific product definitions separately on each policy admin system for different parties to see.

Quick Comparison

While there are many benefits of this technology, one of its most impactful features is its comparison tool.

“If ISO publishes a circular with rate changes, product managers can quickly compare the proposed changes to the policy definition that’s in place already,” Flavin said. “They’re able to see key pieces of information that make up the product definition, including coverages, rates, algorithms and domains.”

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Figure 1 – Rate Table Comparison Details – shows Deductible Factor differences between the Product Manager’s override in the “Factor” column and the industry standard table in column “A”.

The comparison tool helps product managers determine quickly whether or not a change needs to be implemented, but it also expedites the process of launching new products or consolidating existing ones.

“If a product manager is debating launching into a new territory, they could easily pull down that state’s industry standard product definition, layer on their own carrier-specific configurations, and start to run test quotes within Delphi Accelerator,” Flavin said.

Without automation, gathering ISO data and assembling test quotes to share with stakeholders would require a large chunk of IT resources, and a lot of time. Delphi Accelerator allows decision-makers to see proposed quotes in a test environment before publishing those quotes to a network of policy admin systems.

Improving the Bottom Line

Delphi Accelerator’s analysis features also help carriers capitalize on business opportunities by facilitating product consolidation.

More carriers are looking for ways to deliver the same coverages in a more efficient way in order to reduce expenses. In the current low interest rate environment, insurers can’t rely on investment income to bolster their expense ratios. Merging product lines offers a way to trim overhead expenses without compromising coverage or sacrificing premium dollars.

Take for example a business owner’s policy. Traditionally, this policy covers all the exposures that a small- to medium-sized Main Street storefront businesses might face — general liability, property, crime, business interruption, etc. Over time, though, the product has expanded in the market to cover independent contractors and various business services. Many BOPs now resemble a commercial package policy that is geared more towards more complex and specialized risks.

“Rather than maintain both a business owner’s and a commercial package policy, product managers may look into joining the two into a single product. This would cut down overall expenses while meeting the needs of both target markets,” Flavin said.

Delphi Accelerator’ s rating impact analysis tool allows product manager to create benchmark pricing for the new product and compare it to the books of business for the two original products.

“The rating impact analysis will help users to understand what the true premium change will be and how that impacts the overall book of business,” Flavin said.

“The gains in efficiency offered by automation are clear. The old paper processes simply won’t cut it anymore,” Flavin said. “Any carrier that can maintain, manipulate and share their content efficiently in a cost-effective manner will win the day.”

To learn more about Delphi Technology, visit http://delphi-tech.com/.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Delphi Technology Inc. The editorial staff of Risk & Insurance had no role in its preparation.




Delphi Technology is the recognized leader in technology solutions for medical professional liability insurance and an emerging provider of technology solutions for property and casualty insurance.

Lead Story

Improving the Claims Experience

Insureds and carriers agree that more communication can address common claims complaints.
By: | January 10, 2018 • 7 min read

Carriers today often argue that buying their insurance product is about much more than financial indemnity and peace of mind.

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Many insurers include a variety of risk management services and resources in their packages to position themselves as true risk partners who help clients build resiliency and prevent losses in the first place.

That’s all well and good. No company wants to experience a loss, after all. But even with the added value of all those services, the core purpose of insurance is to reimburse loss, and policyholders pay premiums because they expect delivery on that promise.

At the end of the day, nothing else matters if your insurer can’t or won’t pay your claim, and the quality of the claims experience is ultimately the barometer by which insureds will judge their insurer.

Why, then, is the process not smoother? Insureds want more transparency and faster claims payment, but claims examiners are often overburdened and disconnected from the original policy. Where does the disconnect come from, and how can it be bridged?

Both sides of the insurer-insured equation may be responsible.

Susan Hiteshew, senior manager of global insurance and risk management, Under Armor Inc.

“One of the difficult things in our industry is that oftentimes insureds don’t call their insurer until they have a claim,” said Susan Hiteshew, senior manager of global insurance and risk management for Under Armour Inc.

“It’s important to leverage all of the other value that insurers offer through mid-term touchpoints and open communication. This can help build the insurer-insured partnership so that when a claim materializes, the relationships are already established and the claim can be resolved quickly and fairly.”

“My experience has been that claims executives are often in the background until there is an issue that needs addressing with the policyholder,” said Dan Holden, manager of corporate risk and insurance for Daimler Trucks North America.

“This is unfortunate because the claims department essentially writes the checks and they should certainly be involved in the day to day operations of the policyholders in designing polices that mitigate claims.

“By being in the shadows they often miss the opportunity to strengthen the relationship with policyholders.”

Communication Breakdown

Communication barriers may stem from internal separation between claims and underwriting teams. Prior to signing a contract and throughout a policy cycle, underwriters are often in contact with insureds to keep tabs on any changes in their risk profile and to help connect clients with risk engineering resources. Claims professionals are often left out of the loop, as if they have no proactive role to play in the insured-insurer relationship.

“Claims operates on their side of the house, ready to jump in, assist and manage when the loss occurs, and underwriting operates in their silo assessing the risk story,” Hiteshew said.
“Claims and underwriting need to be in lock-step to collectively provide maximum value to insureds, whether or not losses occur.”

Both insureds and claims professionals agree that most disputes could be solved faster or avoided completely if claims decision-makers interacted with policyholders early and often — not just when a loss occurs.

“Claims and underwriting need to be in lock-step to collectively provide maximum value to insureds, whether or not losses occur.” – Susan Hiteshew, senior manager of global insurance and risk management for Under Armour Inc.

“Communication is critically important and in my opinion, should take place prior to binding business and well before a claim comes in the door,” said David Crowe, senior vice president, claims, Berkshire Hathaway Specialty Insurance.

“In my experience, the vast majority of disputes boil down to lack of communication and most disputes ultimately are resolved when the claim decision-maker gets involved directly.”

Talent and Resource Shortage

Another contributing factor to fractured communication could be claims adjuster workload and turnover. Claims adjusting is stressful work to begin with.

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Adjusters normally deal with a high volume of cases, and each case can be emotionally draining. The customer on the other side is, after all, dealing with a loss and struggling to return to business as usual. At some TPAs, adjuster turnover can exceed 25 percent.

“This is a difficult time for claims organizations to find talent who want to be in this business long-term, and claims organizations need to invest in their employees if they’re going to have any success in retaining them,” said Patrick Walsh, executive vice president of York Risk Services Group.

The claims field — like the insurance industry as a whole — is also strained by a talent crunch. There may not be enough qualified candidates to take the place of examiners looking to retire in the next ten years.

“One of the biggest challenges facing the claims industry is a growing shortage of talent,” said Scott Rogers, president, National Accounts, Sedgwick. “This shortage is due to a combination of the number of claims professionals expected to retire in the coming years and an underdeveloped pipeline of talent in our marketplace.

“The lack of investment in ensuring a positive work environment, training, and technology for claims professionals is finally catching up to the industry.”

The pool of adjusters gets stretched even thinner in the aftermath of catastrophes — especially when a string of catastrophes occurs, as they did in the U.S in the third quarter of 2017.

“From an industry perspective, Harvey, Irma and Maria reminded us of the limitations on resources available when multiple catastrophes occur in close succession,” said Crowe.

“From independent and/or CAT adjusters to building consultants, restoration companies and contractors, resources became thin once Irma made landfall.”

Is Tech the Solution?

This is where Insurtech may help things. Automation of some processes could free up time for claims professionals, resulting in faster deployment of adjusters where they’re needed most and, ultimately, speedier claims payment.

“There is some really exciting work being done with artificial intelligence and blockchain technologies that could yield a meaningful ROI to both insureds and insurers,” Hiteshew said.

“The claim set-up process and coverage validation on some claims could be automated, which could allow adjusters to focus their work on more complex losses, expedite claim resolution and payment as well.”

Dan Holden, manager, Corporate Risk & Insurance, Daimler Trucks North America

Predictive modeling and analytics can also help claims examiners prioritize tasks and maximize productivity by flagging high-risk claims.

“We use our data to identify claims with the possibility of exceeding a specified high dollar amount in total incurred costs,” Rogers said. “If the model predicts that a claim will become a large loss, the claim is redirected to our complex claims unit. This allows us to focus appropriate resources that impact key areas like return to work.”

“York has implemented a number of models that are focused on helping the claims professional take action when it’s really required and that will have a positive impact on the claim experience,” Walsh said.

“We’ve implemented centers of excellence where our experts provide additional support and direction so claim professionals aren’t getting deluged with a bunch of predictive model alerts that they don’t understand.”

“Technology can certainly expedite the claims process, but that could also lead to even more cases being heaped on examiners.” — Dan Holden, manager, Corporate Risk & Insurance, Daimler Trucks North America

Many technology platforms focused on claims management include client portals meant to improve the customer experience by facilitating claim submission and communication with examiners.

“With convenient, easy-to-use applications, claimants can send important documents and photos to their claims professionals, thereby accelerating the claims process. They can designate their communication preferences, whether it’s email, text message, etc.,” Sedgwick’s Rogers said. “Additionally, rules can be established that direct workflow and send real time notifications when triggered by specific claim events.”

However, many in the industry don’t expect technology to revolutionize claims management any time soon, and are quick to point out its downsides. Those include even less personal interaction and deteriorating customer service.

While they acknowledge that Insurtech has the potential to simplify and speed up the claims workflow, they emphasize that insurance is a “people business” and the key to improving the claims process lies in better, more proactive communication and strengthening of the insurer-insured relationship.

Additionally, automation is often a double-edged sword in terms of making work easier for the claims examiner.

“Technology can certainly expedite the claims process, but that could also lead to even more cases being heaped on examiners,” Holden said.

“So while the intent is to make things more streamlined for claims staff, the byproduct is that management assumes that examiners can now handle more files. If management carries that assumption too far, you risk diminishing returns and examiner burnout.”

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By further taking real people out of the equation and reducing personal interaction, Holden says technology also contributes to deteriorating customer service.

“When I started more than 30 years ago as a claims examiner, I asked a few of the seasoned examiners what they felt had changed since they began their own careers 30 year earlier. Their answer was unanimous: a decline in customer service,” Holden said.

“It fell to the wayside to be replaced by faster, more impersonal methodologies.”

Insurtech may improve customer satisfaction for simpler claims, allowing policyholders to upload images with the click of a button, automating claim valuation and fast-tracking payment. But for complex claims, where the value of an insurance policy really comes into play, tech may do more harm than good.

“Technology is an important tool and allows for more timely payment and processing of claims, but it is not THE answer,” BHSI’s Crowe said. “Behind all of the technology is people.” &

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]