Service-oriented architecture (SOA) and Web services are facilitating the evolution of policy management systems. But it is customer expectations that are driving the change. Consumers are rapidly coming to expect all facets of their lives to be available 24/7, in real time and on their terms.
Today, insurers use the information from policy management systems to initiate and conclude transactions. Sometimes the process is automatic, based on built-in business rules. But more often, it requires hands-on human involvement and is done in batch processing rather than real time. A consumer or an agent looking to obtain an immediate final response is disappointed.
For many insurers, knowledge of the customer is not individualized. Rather, it is derived from generalized data and is maintained at a class level. Rating reflects this generalized data. But while this type of processing previously managed vast quantities of data in the most efficient manner available, consumers' expectations have changed, largely due to their familiarity with the Internet. In response, creating value and discernible difference in the delivery of products and services now is a driving force in insurance.
So what can we look forward to in the insurance industry?
A MORE-DETAILED VIEW OF THE CUSTOMER
Policy management systems will exist as modules, with each module representing a business function: information ordering, data capture, rating, underwriting and so on. In combination, these modules will enable company systems to "learn" about the customer. Data entering the policy management system modules will "educate" the system. Information from claim history reports, credit-based data, motor vehicle reports, financial reports and more will become part of the risk record along with product-specific information, creating a more robust view of the individual customer. Because the data will be obtained via the Web in real time, it will facilitate real-time decisions. Later in the policy life cycle, the insurer will add billing behavior and claims data to the mix, further expanding the view of the customer.
All of these data points then will flow to decisioning and pricing models used in conjunction with the policy management components. Not only will users be able to obtain a detailed view of the customer from the policy management components, but they will be able to measure policy performance by means of predictive analytics. Customers will benefit from rating, product and decisioning that reflects their individual circumstances.
REUSABILITY OF FUNCTIONAL COMPONENTS
An exciting and fundamental benefit of using SOA for policy processing is the reusability of functional components across multiple product lines. Today, policy processing systems remain siloed by product line in many companies. Every new development initiative, therefore, starts from scratch. Being able to reuse functional components to develop new products will clearly improve speed to market, a top priority of insurance executives. Reusability also will improve efficiency and thus contribute to corporate profit goals.
Policy processing modules based on SOA and Web services also will facilitate policy self-service. This flexibility will meet the expectations of Internet-savvy customers.
Policy self-service also will be extended to employees utilizing mobile technology. Claims adjusters, premium auditors, loss control reps and production underwriters all will be able to access customer information via their mobile devices. The convenience of mobile access to data and mobile reporting will facilitate "once and done" work on the part of these employees, contributing further to efficiency and profit goals.
A WORKABLE SOLUTION
While the business imperatives may be compelling, many insurers find the prospect of replacing their policy processing systems with business components to be daunting. But, just as Hercules defeated the many-headed Hydra by chopping off one snake head at a time, migrating policy processing functionality one component at a time can be a workable solution for many organizations.