AAA Auto Club Group Modernizes Its Claims Platform

After 30 years of growth and acquisitions, the AAA Auto Club Group's (ACG) three legacy claims systems were reaching the end of their lives. "We needed a modern claims system with flexible workflows," comments George Onofrio, ACG's VP of claims technology. "Existing systems required our claims representatives to obtain information in a predetermined order, regardless of the way customers explained their situations. To compensate, representatives took written notes, which created inefficiencies and kept customers on the phone for unacceptable lengths of time."

In early 2007, Dearborn, Mich.-based ACG, a member of the Auto Club Insurance Association ($3.5 billion in total assets), staged a series of "demo days" at which four claims system vendors demonstrated their solutions to claims, IT and administrative end users. Each vendor also completed a brief proof of concept. "From a business perspective, users scored the SAP Claims Management solution higher for meeting their needs," explains Onofrio, who declines to name the competitors. "SAP's offer also included systems integration, which was more attractive than bringing in a third party."

In early 2008 construction began on the system's new hardware environment, a Palo Alto, Calif.-based VMware-virtualized Dell (Round Rock, Texas) server farm running the Red Hat (Raleigh, N.C.) Linux OS. The SAP solution was added during the balance of 2008, and in early 2009 ACG's implementation team initiated testing and training. "Aside from managing organizational change, a significant challenge has been building SAP knowledge within IT," acknowledges Onofrio. "We're still in the process of acquiring those skills."

ACG began systematically rolling out the new system to its 700 claims processors in February 2010, starting with claims involving Minnesota policyholders. "We [conducted] thorough testing during every phase," Onofrio asserts. "For the rollout, we used a trickle approach. We took three claims with the new system on the first day and then shut it down to evaluate. That process continued for several weeks, then we opened it up to handling all Minnesota claims."

Three more states will go live on the new system by year-end with the balance migrating in 2011, according to Onofrio. Then new integration will be built to external vendors, along with automating tasks such as ordering police reports, he adds.

Despite the partial launch, benefits already are considerable, Onofrio relates. "Task automation reduced the steps for issuing a payment by 80 percent," he reports. "And first notice of loss went from 44 sequential screens to 11 that can be accessed in any order, depending upon the flow of the customer's conversation. This alone is cutting in half the time our customers spend on the phone."

As the multiple legacy systems begin sunsetting, ACG expects further rewards. "Since new initiatives will only require integrating with one claims system, our speed to market will be faster and at a reduced cost," Onofrio notes.

CASE STUDY SNAPSHOT

Company: AAA Auto Club Group (Dearborn, MI); Member of the Auto Club Insurance Association ($3.5 billion in total assets).

Lines of Business: P&C.

Vendor/Technology: SAP Americas' (Chesterbrook, Pa.) Claims Management solution.

Challenge: Streamline claims by replacing legacy systems with modern architecture.

Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio