Straight-through Processing: Using Workflow to Push Information through the Communications Labyrinth at Break-neck Speed

By Laurel B. Sanders, Director of Marketing, Optical Image Technology, Inc.

Insurance companies today continue to aspire to reach many of the same goals as they did one hundred years ago, but the opportunities for achieving them are greater than ever before. Quick access to reliable data is still a requirement, enabling the right decisions to be made the first time and helping insurers to avoid costly penalties and lawsuits. Serving customers promptly with accurate information and timely decisions is still vital, and helps to build customer loyalty. Detailed, efficient record keeping is a prerequisite to ensure smooth operations and comply with audits and regulations. What has changed considerably is the ability to tap into technologies that communicate seamlessly and help all of this to happen at break-neck speed.

Any reader can identify with two separate scenarios that demonstrate the diverse ways information travels. In the first situation, data is pushed forward relentlessly to its intended destination, as swiftly as possible and with no barriers, like water gushing toward its destiny through a narrow canyon after a storm. In the second scene, a mouse races through a maze, searching frantically for each treat along the way and racing toward the big piece of cheese at the end. He pauses occasionally to reassess his direction, or to correct a wrong turn. His goal is to make sure that none of the treats are missed, and he expends considerable energy with each mistake. While the mouse may not overlook many turns, he still has to search, and there are unwanted delays. Both the water and the mouse reach their goals, but one more efficiently than the other.

In the competitive marketplace today, insurers do not have the luxury of waiting for information or decisions, yet they need to be certain that the rush does not compromise the integrity of data or judgments. Mistakes and slowdowns are expensive, and can result in penalties if service level agreements are not met or customers are not served as quickly as they expect. Insurers can gain an edge over their competition by providing instant access to complete and reliable information, enabling them to provide better, faster service than their peers. Careful, thorough project planning, with the right combination of technologies, leverages the value of the investments they already own and helps make true efficiency possible.

Straight-through Processing: Background

Straight-through processing (STP) is exactly what the name implies: a means of channeling information straight through its routine procedures sans barriers, and without delay, making the walls of the information labyrinth transparent. In the prior scenario, the mouse would simply know where the cheese is and consistently fly like the crow to find it, picking up all of the tidbits along the way in the most efficient and logical order.

Today, integration tools such as Web services and digital workflow enable communication between multiple line-of-business systems, databases, legacy systems, and other technologies. Systems administrators have access to tools that ensure each authorized person has access to the right pieces of information, at any time and from any location it is needed. Interoperability of systems makes it possible for communications and processes that previously required days, or even weeks, to be propelled forward toward completion, ensuring consistency, improving service, and lowering costs.

Expediting Underwriting of New Business

Many underwriters today enable policies to be completed online. When the applicant hits the ‘submit’ button, it automatically generates a response to the customer, perhaps thanking him for completing the application and choosing to do business with the company. The ability to submit online applications is just a step toward efficiency, but it is not true STP.

With STP, the ‘submit’ button could simultaneously instruct the system to transfer pertinent data to a policy or other document, forward the document to the appropriate person for review, and solicit needed signatures. The urgency of the document could be automatically catalogued so that forms requiring the most urgent review would appear first on the list of items in a person’s queue that require a response. When signatures are given, this could automatically generate a customized letter and a printed copy of the document to be sent in the mail to comply with regulations. Rather than taking days to complete, the entire process could take place in a fraction of the time previously required, perhaps in a day, or even in a matter of hours. From pre-sales through policy issue, communications take place quickly, and both risk assessment and decision making are dramatically improved.

Automating Policy Updates and Other Change Requests

Like any contract, policies have a stated term of validity that eventually results in an opportunity to upgrade, renew, or terminate the agreement. When a new policy is eligible for review, the customer is notified that he has an opportunity to make a decision, and the options are presented to him. Assuming the customer provides a timely response, additional data may need to be collected, especially if there is a change in the policy. Address changes, new names resulting from divorce or death, and other data may be supplied and may need to be changed in multiple systems. The modifications may result in customized letters that need to be sent, along with updated or cancelled policies, each requiring additional signatures or supporting documentation. Each required step must be done in sequence, and in some cases, steps have to be repeated when information is incomplete. In addition, staff actions have to be clearly documented in the event of an audit or potential lawsuit. The insurer has to be prepared, and preparation requires time.Straight-through processing enables all of these steps, and more, to flow naturally. As a stepping stone to STP, all policy review, renewal, and termination dates would be stored in a database, along with other pertinent customer data. As the date for a review or other action approaches, the system would generate a letter notifying the policyholder of opportunities for renewal, upgrades, or other options. Forms pre-coded with bar codes would enable returned documents to be scanned and indexed automatically from each bar code, and the pertinent data could be pulled to generate an updated policy in accordance with the customer’s wishes. Bar codes from returned mail could automatically generate a follow-up call to land lines or cell phones, requesting notification of a new address. Address changes and other changes would also be automatically updated and reflected in the new policy, and all changes would be noted and tracked electronically for compliance purposes. As in the prior scenario, documents would be pushed forward for review, signatures, and other prerequisite actions, completing each transaction far more quickly, while eliminating redundancy and errors by removing the need to re-key data.

Settling Claims: Faster Service Benefits Everyone

When an insurance claim is made, the insured is eager for settlement, and the insurer needs to make sure all of the information is available to make a timely and accurate decision. Even when a claim is filed electronically with supporting documentation, a medical review, photos of damaged property, or other materials may be needed by third parties. When all of the material is generated on paper, forms have to be collected and then sent through the appropriate channels in sequence for review and decisions. Even when materials are collected digitally, often the claims data, images, related emails, and other information reside in diverse systems, and inefficient ‘sidewinder’ processing becomes the order of the day. It can still take days, or even weeks, to provide a sure answer to customers.

A claims office that employs STP has a distinct advantage, enabling faster service, while facilitating risk assessment and enabling quicker decisions to be made. Document management technology enables data from paper claim forms to be indexed and stored electronically from bar codes, while online forms and faxes can be captured and indexed automatically into the same system. Depending on the type of claim, new data in the system can instruct the collection of specific, routine items, such as photos of damage in a property and casualty claim, and the data can be sent to the appropriate adjusters for action. Digital photos can be returned to the electronic storage system and filed with other claim information, and receipts can be matched electronically to the claim within seconds.

When all of the required items are completed or received in the digital storage repository, the complete package can be sent to the appropriate person for review. All of the data collection, matching of receipts, reviews, signatures and approvals that previously required weeks, or even a month to be completed, can happen quickly. Some transactions can even take place in real time. Claims that might increase in cost to the insurer by delayed decisions, such as an untreated medical condition or invasive mold, can be avoided by prompt handling. Even if the claim results in a denial of funding, at least the decision can be made quickly, eliminating costs for the insurer and frustrating waiting times for the policyholder.

Financial Transactions

Since insurance involves the equitable transfer of the risk of a loss from one entity to another in exchange for a premium, prompt and accurate tracking of premium payments is crucial. Understanding the conditions where the insurer is not bound to pay out, including lapsed coverage that no longer binds the company, is vital. Mistakes are costly.

Reducing cycle times and making judgements quickly are an important goal of companies that want to compete in the marketplace. Accurate analysis of a customer’s financial status, ability to pay, and payment history are vital prior to underwriting new business, adding coverage, or paying a claim. As part of their service to customers, insurers are legally responsible for timely customer notification of payments that are due, as well as alerts when the protection period is past and coverage may be terminated. Policy coverage data, claims data, billing information, and payment data all are interrelated, and help authorized staff to gain the oversight they need to act wisely. Time is of the essence, and slowdowns can result in poor cash flow, claims that are paid out unnecessarily, or other problems.

When technologies are optimally integrated, communication is seamless, expediting the collection of payment and positive cash flow. Newly underwritten policies result in automatic instructions to the system to send invoices. Late payments, or policies in jeopardy of being cancelled, can result in customized letters and automated calls to request action. Claims data can be compared digitally with payment of premiums, as the system looks for people who have submitted claims but are delinquent with payments. STP pushes information to the right places at the right time, enabling behind-thescenes analysis and procedures that are followed consistently. This results in quicker actions and a stronger financial position. Furthermore, if a delinquent customer issues a lawsuit against the insurer, digital systems leave a clear record of each transaction, who initiated it, and when. This expedites the legal review and keeps costs to a minimum.

The Driving Force Behind STP: Digital Workflow and Business Process Management

Just as a gushing river has the force of nature propelling it forward, and the mouse has an instinctive need for food that results in frantic movement toward the goal, STP is enabled by the powerful engine of electronic workflow. Behind the scenes, Web services enable seamless integration that connects diverse systems for automation, letting the workflow engine do its work. Together, they embark on the insurer’s mission and ensure each item is completed as quickly as possible.

Automated workflow pushes and pulls data from legacy systems; electronic document management systems; policy administration, underwriting, and claims systems; financial applications; emails and electronically stored fax data; and telecommunications systems. Workflow takes the data from online forms, portals, and other sources to launch and carry through pre-authorized actions, in accordance with each insurer’s standard business rules. The system is taught routine sequences, hierarchies of decisionmaking, rules for exception handling, and is shown where it can find specific types of data. This eliminates the tedious search for information. It also enables the system to handle staff changes appropriately, as well as sick employees and other challenges, based on pre-set rules that can be changed securely and quickly at any time. Workflow enables true STP, and ensures that deadlines are met and priorities are handled in the right order.

Summary

With digital workflow, straight-through processing is no longer a pipe dream. Events that require multiple reviews and actions can be directed to take place in quick succession or even simultaneously, yet a smooth, correct, and consistent process is assured. Like the gushing water in the narrow canyon, the mouse in our original scenario would be able to move through the labyrinth walls as if they were removed. He would never miss a nibble, (and might nibble from separate corners at the same time), never take a wrong turn, and would reach the end destination quickly, feeling less tired and more satisfied. So it is with STP. With a few wellchosen tools and careful planning, true efficiency can be reached with less human effort in the endless chase for information, leaving you more time for the things that really matter.

For information about how you can achieve straight-through processing in your insurance office by integrating your applications with electronic workflow, please contact us or email us at info@docfinity.com. We can help you get connected to all of your information so you can make better, smarter, faster decisions.

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