1.

Introduction
1.1 Insurance Industry
Insurance is one of the oldest and most wide spread financial services across the globe. In 200, global insurance premiums exceeded $4 trillion. With the advent of information technology and high speed communication, the insurance products are being sold almost everywhere in the world. Increasing affluence, especially in developing countries, and a rising understanding of the need to protect wealth and human capital has led to significant growth in the insurance industry. Given the evolving and growing socio-economic conditions worldwide, insurance companies are increasingly reaching out across borders and are offering more competitive and customized products than ever before. Over the past ten years, global insurance premiums have risen by more than 50%, with annual growth rates ranging between 2 and 10%. The majority of insurance comes from developed nations such as most of Europe, the US, and Japan. In 2007, premiums in North American amounted to $1,330 billion, while the European Union generated $1,681 billion, and Asia produced $814 billion. Emerging markets accounted for over 85% of the worlds population but generated only around 10% of premiums.

1.2 Claims Processing Management

Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for, though one hopes it will never need to be used. Claims management is the most important client interaction and business process for the insurance industry. It has huge impact on profitability and financial health of the organization. Claims expenditure is the biggest cost head for any insurance provider and is used in most of the business health indicators. With nearly 80 percent of premium income spent on claims and claims related processing costs, insurers seek ways to streamline processes while improving customer service. Speedy and hassle free claims settlement is not only desired but is essential for survival in todays highly competitive business environment. But, this is restricted by the requirement of fraud detection to keep premiums competitive. Thus, in managing the claims handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome. Disputes between insurers and insureds over the validity of claims or claims handling practices occasionally escalate into litigation; see insurance bad faith.

2. Claims Processes
Claims may be filed by insureds directly with the insurer or through brokers or agents. The insurer may require that the claim be filed on its own proprietary forms, or may accept claims on a standard industry form such as those produced by ACORD. Insurance company claim departments employ a large number of claims adjusters supported by a staff of records management and data entry clerks. Incoming claims are classified based on severity and are assigned to adjusters whose settlement authority varies with their knowledge and experience. The adjuster undertakes a thorough investigation of each claim, usually in close cooperation with the insured, determines its reasonable monetary value, and authorizes payment. Adjusting liability insurance claims is particularly difficult because there is a third party involved (the plaintiff who is suing the insured) who is under no contractual obligation to cooperate with the insurer and in fact may regard the insurer as a deep pocket. The adjuster must obtain legal counsel for the insured (either inside "house" counsel or outside "panel" counsel), monitor litigation that may take years to complete, and appear in person or over the telephone with settlement authority at a mandatory settlement conference when requested by the judge.

2.1 Actors in Claims Processes

The claim process management will involve many actors from within the insurers organization and few players from outside the organization as well.

Underwriter

Claims Administrator

Account Manager

Adjuster

Claimant / Customer

Independant Adjuster

Contact Center Executive

Claims management System

Broker

Contact center executive: Contact center executive is contact point for the customer and is used when the loss is reported and claim is registered. Claims Executive/Adjuster: Claims executive is an insurer employee who investigates and assesses the claim. Independent Adjuster: Independent adjuster is a third party adjuster who is not on insurers payroll.

Claims Manager: Claims manager is the manager for the claims process and approves/disapproves the select actions of claims executive. Underwriter: Underwriter is the representative from the actuarial department who gathers inputs relevant to his department from claim processes. Accounts Executive: Accounts executive is the accounts department representative and gathers inputs for various accounts such as IBNR, loss reserve, claims payment, etc. Claimant: The claimant is the client who files the claim; he requires status updates and is actively involved during negotiations. Broker: He is an intermediary between client and insurance companies. Operations administrator: Representative of Operations administration department who coordinates between various actors in claims management process.

2.2 Process Chart

For the purpose of this document the insurance claim processes have been sub-grouped in to eleven groups and have been individually discussed in details in the subsequent chapters. The process chart below lists in order of occurrence the eleven process sub-groups indicating the involvement of various actors.
Process Contact center executive
Involved Involved Involved Involved Involved Involved Involved Involved Involved Involved Involved Involved Involved Involved

Adjuster

Operations Admin
Involved Involved Involved Involved

Claimant
Involved

Broker
Involved

Accounts Executive

Notice of Loss and Claim Registration Claim Validation and Assignment Investigation and Assessment Fraud Management Negotiations Litigation Management Settlement of Claim Salvage Recovery Subrogation

Involved Involved

2.3 Process Flow

2.4 Product Hierarchy

A hierarchical view of all the prevalent insurance products in property and claims is shown below. Among these, the popular products from personal line of insurance will be picked up for the proposed solution; these are indicated by blue color below, Product Business Unit Property & Casualty Lines
Product Type

Life Insurance Whole Life Annuity Term Life Endowment

Home Owners
Policy Type

Automobiles

4 Wheeler 2 Wheeler Heavy Vehicle

Commercial Lines Group health Group travel Marine Hull Workers compensation Professional Liability

Personal Accident Health Insurance Travel Valuable Articles Yachts Collector Car Insurance Consumer credit GAP Insurance Extended Insurance

2.5 Organizational Structure

Care Insurance Ltd. Insurer Organization

Life Insurance Business Unit

Property & Casualty Business Unit

Commercial Insurance Business Unit

Organization
Auto Insurance Sub Business Unit Home Owners Insurance Sub Business Unit

Huang Lu 2 Wheeler Auto Insurance Head

Peter Zu 4 Wheeler Auto Insurance Head

Robert Austin Claims Manager (USA)

Jane Oscar Accounts Manager (USA)

John Rice Underwriting Manager (USA)

Cindy Allen Operations Head (USA)

Chris Anthony Claims Executive/Adjuster (California)

Jim White Accounts Executive (California)

Jim White Underwriting Executive (California)

Celina Dion Claims Executive/Adjuster (California)

Chris Anthony Claims Executive/Adjuster (San Jose)

Chris Conway Contact Center Executive (San Jose)

Independent Actors
Victor Alonto Broker George Marsh Independent Adjuster Bill Wong Claimant Rob Bird Service Provider (North West)

2.6 Story Board

Background Bill Wong is a well regarded receptionist at Sierra Suites hotel, Santa Clara, California for past 15 years. Six years ago, he bought a new BMW 525i for his daily conveyance needs. Along with the car he bought 10 year car insurance from Care Insurance Ltd. This insurance plan covers repairs and part replacements in case of a road accident or natural calamity but not body injury, regular maintenance and repairs. The annual premium was fixed at USD 1120 according to Mr. Wongs driving history. Accident On May 3, 2009, on his way back from office Mr. Wong lost control of the car on Montague Expressway and hit the sideway wall. The vehicle was speeding at 50 mph and thus the impact of the hit was significant. Visibly the vehicle sides were scratched, body was dented. Moreover, the locking system had gone jammed. But, thankfully Mr. Wong were unharmed and had saved the helpline number of Care Insurance in his phone book. First Notice of Loss He calls the call center of Care Insurance is greeted by Cris Conway on the other side of the phone. Mr. Conway takes the policy details and loss details from Mr. Wong. He must first check that the policy holder has a valid policy and that there is appropriate coverage. To report the first notice of loss, Mr. Conway opens a claims file in Siebel Insurance by navigating to the Claims screen and creating a new Claims record. He enters the loss date and selects a policy that was effective at the time of the loss. He then moves to the Loss Description view to capture some details about the damage to the vehicle. The call center agent then navigates to the Involved Parties view to capture the contact and account information. He then goes to the Insured Property view to capture more information about the

damaged vehicle and the damage that occurred. Using this information he files an Auto insurance claim for Mr. Wong. Assignment and Claim Validation As soon as the claim is filed in the system, an automatic assignment engine assigns an adjuster Chris Anthony to this claim and this goes for approval from claims manager Robert Austin. As part of the evaluation, Mr. Anthony navigates to the ISO Database Search view to check whether the policy holder has already made a claim for the same vehicle with another insurance company. Investigation and assessment The adjuster creates an activities plan based on the appropriate loss code in the Activities Plan view, and then assigns an activity to George Marsh who appraises the damage. He creates claim elements and assigns them as necessary to third-party vendors, such as a repair shop to fix the damage, or a glass vendor to replace the car windshield. Chris Austin leaves his San Jose office for accident scene on Montague Expressway. After reaching there, Mr. Austin takes required photographs, collects a copy of Police report and takes statement of Mr. Wong. Settlement Completing these initial investigations, Chris gets the car towed away to a Cares partnering garage. The garage engineer Mr. Rob Bird reports the required repair and part replacement. Overall replacing Front light, repainting, body repairs and lock replacing would cost USD 450. Chris the adjuster whose has reviewed the documents, coverage and other evidences. He found the case to admissible and genuine. Thus without escalating this to his boss as the loss amount is lower than USD 1000 (his reserve limit), he approves the repairs. Mr. Bird after receiving the approval goes ahead with the repairs and car is released to Mr. Wong as good as new, well almost as good. In due course, the adjuster receives the invoices associated with the claim and creates a record for each invoice in the Claims screen > Invoices view. In the Claims screen > Invoices view, he clicks the Generate Payment button to create a payment record for the invoices. He navigates to the Payments view and clicks the Submit Payment button to make the necessary payment and settle the claim. Mr. Jane Oscar from accounts is apprised of the amount approved and he updates his accounts for the loss incurred.

2.7 Key Differentiators of this Offering

Integration with ISO database Hailey rule based engine for establishing business rules Notification to SIU for investigation of claims Calculation of subrogation possibility with indicator on the UI In built claims based automated workflows

3. Claims Processing management Sub Processes

3. 1 First Notice of Loss (FNOL) and Claim registration
3.1.1 Description The claims management process begins with loss or damage being reported by the policy holder. He might report this through his broker or directly. An insurer usually provides one or more contact channels like face to face, telephone helpline, mail, e-mail or online. The notice of loss through any of the above channels ends in registration of a claim. 3.1.2 Process Chart
Process Loss report by Claimant Collate inputs from various sources/channels and log claim Check for existence of a valid policy with admissible claim Stop If invalid and inform claimant Send Claim Acknowledgement Involved Involved Involved Involved Contact center executive Claim Adjuster Operations Admin Claimant/ Broker Involved Accounts Executive

3.1.3 Process Flow

3.1.4 Actors Claimant Broker Contact Center Executive Operations administrator 3.1.5 Pre-Condition None 3.1.6 Expected Outcome A claim will be registered in the system or claimant would be informed of the claim rejection

3.1.7 Business Rules Check for existence of a valid policy with admissible claim before filing a claim 3.1.8 Requirements covered: Ability to capture details of the loss incident Ability to validate the claim against a policy Ability to generate a unique identifier for every claim Ability to report claim through different mediums like call centre, email, fax 3.1.9 Important Fields Field Group Claim Identification Policy Details Loss Description

Insured Property Claimant Details

Individual Fields Claim Number Policy Number Loss Date Reported By Location Involved Parties License Number Vehicle Identification Name Address Phone No.

3.1.10 Siebel screen flow

User - Contact Center Executive

2. Create a new Claims record

1. Navigate to Claims screen

4a. Drill down to Loss details view

3a. Enter Policy # and check for policy validity

3b. Capture Loss date

User - Contact Center Executive

4b. Navigate to Loss Description View

5. Capture details about the damage to the vehicle and whether there were injuries or Fatalities

User - Contact Center Executive

6. Navigate to Involved parties view and Capture the contact and account information

User - Contact Center Executive

7. Navigate to the Insured Property view to capture more information about the damaged vehicle and the damage that occurred

3. 2 Claim Validation & Assignment

3.2.1 Description Claim is validated for the completion of information required. Valid Claims are assigned to claim specialist employed by the insurer called adjusters for assessment and investigation. Based on past experience, capability and availability of a particular adjuster is assigned for the new claim. The adjuster then divides the claim in to sub tasks and assign part of tasks to third party service providers. 3.2.2 Process Chart
Process Check the form for irregularities or insufficiency Segment the claim by nature of policy, location, claim size Based on availability assign an adjuster with required expertise Share current information about the claim with adjuster Assign part of claim process to third party service providers Involved Involved Contact center executive Claim Adjuster Claims Admin Involved Involved Involved Claims Manager Accounts Executive

3.2.3 Process Flow

3.2.4 Actors Operations administrator Claims Adjuster Claims Manager