SMA LT Claims Perspective 02-11-15 FINAL

Claims Transformation: New Benefits via New Paths

© 2015 SMA All Rights Reserved www.strategymeetsaction.com An SMA Perspective

Claims Transformation:

New Benefits via New Paths

Featuring as an example:

L&T Infotech

An SMA Perspective

Author: Denise Garth, Partner

Published Date: February, 2015

This perspective is based on SMA’s ongoing research

on transformation and modernization in insurance. L&T Infotech has purchased distribution rights.



Table of Contents

The Changing Face of Claims Transformation 3

Required Business Capabilities 4

Modernization 4

Optimization 4

Innovation 4

Required Technology Capabilities 6

Modern Architectural Foundation 6

Capabilities for Claims Transformation 7

About L&T Infotech 8

L&T Infotech Company Overview 8

Breadth and Capability 9

Strategy Meets Action Commentary 10

About Strategy Meets Action 10

About This

Perspective

This SMA Perspective is

a summary of SMA’s

ongoing research on

transformation and

modernization in

insurance.

L&T Infotech has

purchased distribution

rights for summary

results of selected

research and opinion.

This is not paid-for

research.



The Changing Face of Claims Transformation

The digital revolution is driving transformation in every industry and having major impact

on every process and every interaction. Insurance is no exception. The implications for

the industry are profound, opening the door to new possibilities for success, creating new

opportunities to engage and delight the customer, providing new options for collaboration

and partnership, enabling new products and services, and even offering new concepts for

and approaches to risk management. Digitalization and emerging technologies are

changing the game. And, there are major implications for the claims arena – the area of

the business that represents the moment of truth for the customer, the point where the

insurance company’s promise is experienced.

Embracing new technology is no longer a choice. It is a business imperative. For most

insurers, tangible and far-reaching transformation is required – a shift in traditions and

thinking. Transformation takes a holistic approach, involving a reevaluation of traditional

claims business assumptions and models, identification of new ways to deliver an

exceptional customer experience, the definition of innovative and optimal ways to manage

risk, and consideration of the supporting IT systems and delivery mode.

It is no longer enough to implement a modern claims system that just speeds up existing

processes, streamlines existing transactions, supports existing products, and automates

current behaviors. Leading insurers must find inventive ways to extend modern claims

operations. Hence, they are capitalizing on new tools, technologies, and data using

mobile, cloud, collaboration, smart analytics, third-party data, geospatial intelligence,

Internet of Things (IoT), drones, aerial imagery, and more – all with the mission of

optimizing today’s business and innovating for tomorrow’s advantage.

This shift empowers changes in fundamental business assumptions and behaviors that

create substantial and meaningful changes in outcomes. The basic management focus of

claims moves from a reactive response to proactive care and avoidance of loss. The claims

mindset shifts from pay-the-claim fast to mitigate and/or prevent the risk and eliminate

and/or reduce potential damages. Emphasis shifts to engaging and providing real value

to the customer with new services by helping manage, reduce, or eliminate their overall

risk. Response to catastrophic events is proactive, with overt actions that save lives,

secure properties, minimize damage, and comfort customers.

Insurers investing in claims modernization are creating a transformational foundation with

the future in mind. It is an investment in creating greater business value and competitive

differentiation. By providing a platform for capitalizing on the possibilities, it becomes

feasible to incorporate maturing and emerging technologies that help insurers make

essential changes in the way they interact with their partners and customers. The

integration of advanced analytics to improve and gain new insights is made easier. These

insights can then be used to manage the risk portfolio proactively while servicing claims

in innovative and engaging ways.

The result … insurers are positioned to transform their business models to predict rather

than detect, to alert rather than react, and to prevent rather than restore. Modernization

and transformation enable the delivery of new value propositions and leading-edge, value-

added services that encompass safety, security, protection, mitigation, prevention, and

more.

Digitalization and

emerging technologies

are changing the game

in insurance – opening

up new possibilities for

success. Insurers are

creating greater business

value and competitive

differentiation with

investments in claims

modernization,

optimization, and

innovation.



Required Business Capabilities

Transformation of claims requires a comprehensive understanding of the business and

technology trends that are influencing the evolution of business capabilities for the entire

claims value chain. Insurance companies should view and assess their claims processes

and operations with both an inward and an outward focus. This requires extending the

historical focus on internal operational efficiency to claims effectiveness across the entire

claims value chain, including interactions with supply chain vendors, business partners,

data providers, and customers. These comprise the very connections that play an

increasingly important role in redefining claims outcomes.

Modernization

Today’s digital reality demands that legacy business assumptions, processes, and

information points, as well as systems, technologies, infrastructure, and IT delivery

methodologies must be upgraded or replaced. Claims transformation is much more than

just replacing legacy with a modern core claims system.

Transformation requires establishing a flexible, agile, and scalable foundation that enables

business capabilities to be quickly updated or extended, positioning claims for optimization

and innovation. In today’s competitive environment, claims modernization has become a

table-stakes business requirement.

Optimization

Once a foundational modern claims environment is established, insurers can begin the

optimization of the environment, moving beyond basic efficiencies to notably improved

effectiveness. In an optimized environment, internal and external claims workflows are

enhanced and streamlined. Mobile and self-service capabilities are created. Portals for

collaboration of all parties are implemented. New data sources and analytics are

integrated into the business processes to enable enriched decision making. Together

these new capabilities redefine customer engagement.

Optimization accelerates the insurer’s progress along their transformation journey. It

gives them the ability to reach higher levels of excellence. It gives them the power to

optimize the business in many varied ways, from how decisions are made to how work

gets done, how services are delivered, and how interactions are managed. An optimized

claims environment positions for innovation.

Innovation

An optimized claims operation facilitates the integration of maturing and emerging

technologies to create an environment that radically transforms claims. Leveraging the

Internet of Things (IoT) can help with risk mitigation and even eliminate risk while

creating new services that generate new revenue. Drones and aerial imagery can provide

real-time data for faster alerts and claims assessments. Advanced analytics can decrease

fraud, enhance risk management, speed claims assessments, and maximize supply chain

efficiencies. Innovation is the game changer – creating competitive differentiation,

Transformation of claims

requires a focus on

effectiveness across the

entire claims value chain

using both an inward

and an outward view.



eliminating or reducing losses and risks, and establishing customer excellence that

together position an insurer as a market leader.

Transformation is a crucial undertaking in today’s increasingly competitive environment.

Claims transformation, the journey from modernization through optimization and

innovation, impacts every aspect of the business, internally and externally. Trans-

formation enhances and redefines interactions and relationships with the customer,

product and service offerings, risk models, pricing, and business and revenue models.

Figure 1. Claims Transformation Business Capabilities

As shown in Figure 1, the critical, required business capabilities for far-reaching claims

transformation impact many areas:

Mature claims management processes across the value chain create efficiency,

effectiveness, and ultimately competitive differentiation. Capabilities extend beyond

modernization to embrace collaboration with partners and customers, to enhance

overall risk management, and to deliver expanded value to the customer.

Excellence in repair management combined with broader capabilities helps mitigate

and prevent loss occurrences. Requirements include the ability to integrate and

incorporate maturing and emerging technologies to better assess, manage, and

eliminate claims and risk; improve fraud detection and management; effectively

manage subrogation; and maximize salvage.

Exceptional, compelling customer service that is personalized extends care and

concern beyond just a response. Excellence requires the ability to offer proactive

service and anticipative, value-added action.

Source: Strategy Meets Action 2015



An expansion of the customer experience provides channel choice through an omni-

channel environment. Customers expect more than multiple channels; they want a

consistent, compelling engagement through any channel they choose – from self-

service portals to mobile, call centers, agents, and more.

Advancing from rules-based workflow management to analytics-driven intelligent

workflow management yields results in optimum workload balancing, smart routing,

collaboration, superior case management, and insightful decision-making.

Maximized operations deliver efficiency through straight-through-processing,

effectiveness with optimized operations, and differentiation through embedded

analytics-based intelligence.

Robust CAT management (the ability to proactively prepare for, assess, and respond

to both the predictable and unpredictable catastrophe situations) is augmented by

technologies such as geo-analysis, visualization through drones and aerial imagery,

and advanced analytics-driven intelligence.

Required Technology Capabilities

The modern claims solution is not a standalone system. It must integrate with other core

systems, as well as maturing and emerging technologies, to create a differentiated and

competitive claims environment. The technology environment requires a foundation that

will allow insurers to expand and extend claims capabilities as their businesses evolve and

new technologies emerge – a foundation that will help them respond to today’s rapidly

changing environment.

Modern Architectural Foundation

The claims technological foundation must be architecturally robust, with an expansive

configuration that is able to provide flexibility and adaptability to address new or changing

demands, technologies, and expectations. The foundation must also provide a robust

platform for integrating new and emerging technologies, like the Internet of Things (IoT),

mobile, aerial imagery, geocoding, collaboration, and advanced analytics.

Some of the results will be realized through improved capabilities that capitalize on the

benefits of the digitalization of claims, while creating more innovative ways to optimize

claims adjustments, detect fraud and recoveries, and collaborate with providers in the

supply chain. Other results will be apparent in the ability to better contain losses, mitigate

or eliminate risk, and gain deeper and more useful insights to enhance the customer

experience across the process.

The underlying foundation will enable claims thinking and action to transition from

reactive to proactive and from restoration to mitigation and prevention – and at the same

time create more frequent and value-added customer interactions that drive value and

loyalty.

A modern claims solution

must integrate easily

with existing and new

systems as well as

maturing and emerging

technologies to create a

differentiated and

competitive claims

environment.



Capabilities for Claims Transformation

As depicted in Figure 2, the technology capabilities required for far-reaching claims

transformation include a variety of critical elements. Many of these involve technology

enablers that create a flexible, adaptable, and scalable environment for building,

augmenting, and expanding the foundational modern claims solution.

Figure 2. Claims Transformation Technology Capabilities

Insurers need the following technology capabilities for claims transformation:

Modern technical architectures leveraging SOA principles accommodate plug-

and-play solutions that can be quickly integrated and deployed. These flexible

architectures facilitate the easy exchange of data from a wide variety of sources.

Dynamic configuration capabilities enable the agility needed to manage future

demands and needs for personalized claims management, proactive FNOL, and digital

claims management.

Platforms for easy integration of maturing and emerging technologies let

insurers capitalize on existing and rapidly emerging technologies. The ease of

integration facilitates the ability to experiment, pilot, and implement new technologies

that create highly optimized and differentiated business capabilities. For example, the

use of technology-aided collaboration allows insurers to readily and effectively interact

with agents, brokers, adjusters, and customers jointly in a real-time environment –

creating a personalized and customized experience. Another example – integration

with IoT technologies (such as sensors embedded in machinery, farm equipment,

crops, vehicles, clothing, and wearables) gathers new data and information that

opens the door to new offerings, new services, and new revenue while helping to

manage risk, loss, and customer expectations.

Scalable infrastructures prepare insurers for quick responses and adroit reactions

to unexpected claims situations and new opportunities, and in doing so create

competitive advantage. The elasticity and agility that is required to respond or grow

with the needs of the business will be there when it is needed.

Source: Strategy Meets Action 2015



Dynamic integration of new and real-time data, as well as big data, will help

insurers differentiate and compete. This is a major difference-maker – one that

reshapes claims outcomes.

Flexibility to integrate advanced analytics into the claims processes makes it

possible to significantly improve decision-making and capabilities in the area of loss

prediction, mitigation, and prevention.

Intelligent and intuitive workflows augment rules-based workflow management

with analytics and intelligence, making the management of workflows much more

dynamic. The routing of work and the assignment of cases can be automatically

orchestrated based on accurate knowledge and even system-generated wisdom.

All of these critical technology enablers furnish a platform for creating, leveraging, and

deploying innovative approaches for the management of claims. Visualization tools,

embedded advanced analytics, automated workflows and rules, emerging technologies,

and others contribute to decision-making excellence that impacts all areas of claims at

the macro and micro levels. With change happening so fast, new options for accelerating

the claims transformation journey are essential.

Fortunately, there are new ways to make major progress on the journey in a shorter

timeframe. Some of these options are possible thanks to powerful frameworks and

blueprints that define foundational capabilities, help pinpoint requirements, and lay out a

customized transformation roadmap. Jumpstart capabilities are available in the form of

kits and solution accelerators that can help fast-track the journey.

Because the industry is rapidly maturing and gaining experience, claims expertise and

best practice insights are emerging and available to help others on their journey. Forward

thinking solution providers can offer partnership environments for achieving

transformation, with some even offering facilities that can be used as an innovation

incubator – an opportunity to experiment with, prepare for, and respond to emerging

trends and technologies.

About L&T Infotech

L&T Infotech is a fully-owned subsidiary of Larsen & Toubro (L&T), a US $14B engineering

and technology conglomerate that is one of India’s oldest and most respected companies.

L&T was founded over 75 years ago by two Danish engineers – Henning H. Larsen &

Soren K. Toubro. Over the seven decades of its existence, L&T has built a reputation for

being an organization that is financially sound, possessing a strong engineering culture,

driven by world-class process and quality standards, and governed by a values-based

management style.

L&T Infotech Company Overview

In concert with its parent’s values and culture, L&T Infotech has focused its energies on

providing premier technology services to its chosen market. With annual revenues of

about US $850M and over 18,000 employees globally, L&T Infotech is ranked by

NASSCOM (association of Indian IT and BPO industry) as the 8th largest software and

There are critical

technology enablers that

provide a platform for

creating, leveraging, and

deploying new

approaches for the

management of claims,

offering new ways to

make major transforma-

tion and modernization

progress in a shorter

timeframe.



services exporter from India. Headquartered in Mumbai, India, L&T Infotech operates

through 14 delivery centers and 22 sales offices around the globe.

L&T Infotech is organized along industry verticals. The dedicated insurance business unit

offers a wide range of IT solutions and services across the insurance value chain. The

insurance business unit is the fastest growing vertical within L&T, experiencing a CAGR

of over 30% for the last ten years, with over 90% repeat business. With a pool of over

3000 associates serving more than 20 leading insurance players globally, L&T Infotech is

focused on the P&C, Life & Pensions, and Health market segments, delivering over 15,000

person years of work for various customers over the last 12 years.

Breadth and Capability

L&T Infotech offers a comprehensive set of services for the claims life cycle ranging from

assessment through modernization, optimization, and innovation – all grounded by a deep

knowledge of and expertise in claims capabilities across the value chain. Their claims

transformation framework provides a broad structure that includes assessment, planning,

blueprinting, realization, and optimization, underpinned by organization change

management. This framework supports their focus on four critical claims capability pillars:

customer experience, operational efficiency, loss containment, and CAT response

management. L&T’s partner network, toolkits, competency center, and innovation lab fuel

and enhance the breadth of their experience and capabilities, ensuring that the claims

transformation journey evolves to meet new business and technology trends, while

balancing efficiencies and effectiveness to redefine claims outcomes.

Figure 3. L&T Infotech Claims Transformation Framework

L&T Infotech helps insurers progress on their claims transformation journey from

modernization to optimization and innovation, enabling the delivery of new value

propositions and leading-edge, value-added services.

Source: Larsen & Toubro Infotech Ltd



Strategy Meets Action Commentary

The claims transformation journey, from modernization through optimization, is an

increasingly crucial undertaking in today’s fast-paced, rapidly changing, and highly

competitive environment. Tomorrow’s leading insurers are implementing a modern claims

system foundation that can be extended by capitalizing on new tools, technologies, and

data to optimize today’s business while innovating for tomorrow’s leadership advantage.

L&T continues to deepen their claims expertise and capabilities, positioning them to help

insurers accelerate their pursuit of claims transformation. SMA observes an expanding

and evolving trend where insurance companies capitalize on the strengths of partners like

L&T, finding them critical for incubating and piloting new capabilities and new

technologies. These new capabilities and technologies can then quickly be brought to

market to offer value to both the customer and the insurer. Insurers that are serious

about defining and pursuing a claims transformation strategy should consider L&T

Infotech and their expertise and offerings – a framework of transformation capabilities

that can be used to guide and power their claims modernization, optimization, and

innovation journey.

About Strategy Meets Action

Strategy Meets Action (SMA) is dedicated to helping the business of insurance modernize,

optimize, and innovate for competitive advantage. Exclusively serving the insurance

industry, SMA blends unbiased research findings with expertise and experience to deliver

business and technology insights, research, and advice to insurers and IT solution

providers. By leveraging best practices from both the management consulting and

research advisory disciplines, we take a unique approach – offering an unrivaled set of

services, including retainers, research, consulting, events, and innovation offerings.

This SMA Perspective is a summary of SMA’s ongoing research on transformation and

modernization. L&T Infotech has purchased distribution rights for summary results of

selected research and opinion.

Additional information on SMA can be found at www.strategymeetsaction.com.

Contact the author Denise Garth, SMA Partner at 402.963.0198 or

[email protected].

Tomorrow’s leading

insurers are

implementing a modern

claims system

foundation that can be

extended by capitalizing

on new tools,

technologies, and data

to optimize today’s

business while

innovating for

tomorrow’s leadership

advantage.

http://www.strategymeetsaction.com/

mailto:[email protected]

SMA LT Claims Perspective 02-11-15 FINAL

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