The birth of insurance started in Babylonian times, when the Code of Hammurabi had sailors paying lenders extra to guarantee they would cancel the debt if the shipment was stolen or destroyed. Back then, risk was assessed by the lender – nothing more than a lightly researched gamble and a handshake. Insurers now utilize risk assessment tools to distribute risk across re-insurers and re-re-insurers, and the days of insurance generalists have given way to a market fragmented by industry specialists, such as fraud management and claims management experts.
With the advent of enterprise SOA, SAP has created a universal platform enabling communication in and out of SAP services, opening the doors to these specialists instead of locking them out (once a common practice among insurance companies). “If I want to do a fraud check on my internal claims process, and a specialist down the road has a fraud analysis tool, it can be done without having to worry about programming and customization,” says Craig Himmelberger, Solution Manager for SAP for Insurance.
Enterprise SOA opens the door to innovation
The entire SAP for Insurance portfolio builds atop the enterprise SOA and includes SAP Claims Management, SAP Financial Asset Management, SAP Insurance Collections and Disbursements, SAP Incentive and Commission Management and SAP Reinsurance Management. All of these stand-alone applications work to provide insurance companies specialized solutions and services. SAP Claims Management for example supports Insurance Claim Notification Processing, Insurance Claim Processing, Commission Processing, Credential Processing and Insurance Receivables and Payables Processing. This bundle of services offers a way for insurance companies to automatically send or receive a First Notice of Loss (FNOL) or First Report of Injury (FROI) from most notice-of-loss service providers or agency management systems and seamlessly transform it into a claim notification.
The business of insurance revolves around the potential for loss. From the insurance companies perspective operational excellence keeps costs down, from the customer’s perspective, superior customer service and coverage, at a fair price is paramount. Enterprise SOA is as much a philosophy as it is vehicle for linking third-party vendors, insurance agents, and claims managers, providing the ability to share information and build on one another’s expertise.
As enterprise SOA holds open the doors to innovation, the SAP NetWeaver platform acts as the red carpet. The open integration of SAP NetWeaver is crucial in promoting the reusability of core code and application infrastructure for internal and external connections. With this technology, SAP for Insurance portfolio lowers costs, shortens customer response time, and eliminates data entry errors. Insurance companies have a unique product to market – policies are whatever the software says they are, in value, cost, and coverage. So if a company’s IT infrastructure allows for a broader offering, then the lizards and cavemen sell more policies. Simple as dollars and rocks.
Smaller blocks build stability
The strength of the bricks beneath enterprise SOA is the mortar – the XML code base. By utilizing the flexibility of XML, SAP has deconstructed its application architecture into more useful blocks. Older solutions were originally designed as one monolithic application: code was built together, tested together but had broad functions and operational responsibilities that proved difficult to isolate. Enterprise SOA turned that concept on its head and broke each function into smaller blocks with specific functionalities. With enterprise SOA, applications communicate on a semantic level and agree on what information passes back and forth, and how.
Claims ACORDing to SAP
SAP utilizes the ACORD standards certification (ACORD XML Notification of Loss) for the entire SAP for Insurance portfolio. The ACORD standards and enterprise SOA assist insurers by introducing and servicing a common communication method throughout the insurance marketplace, thereby increasing the efficiency of the entire industry. This partnership of processes helps lower costs, shorten customer response time, and eliminate data entry errors. “The first and most important concept to understand about the way SAP approaches things is to identify that pieces of paper are the real problem,” Himmelberger says. With manual data entry, there is no single version of the truth – numbers are transposed, policy type boxes are checked incorrectly, and files are lost. The only way to guarantee accuracy of data and files is to handle claims electronically from end-to-end.
Capita, the UK insurance claims management specialist, has been using SAP Claims Management since 2005. By utilizing enterprise SOA, SAP NetWeaver and the ACORD standards, Capita has become one of the leading outsourcing agents for insurance claims management. When a customer calls one of Capita’s clients, the back-end of the insurance claims management is handled by Capita, and then pushed back to the insurance company – all while utilizing ACORD standards and all facilitated by the open architecture of enterprise SOA. The Insurance Claims Handling Enterprise Service Bundle leverages enterprise SOA by extending the functionality of SAP Claims Management with the following business objects: Maintain Insurance Claim Notification, Confirm Insurance Claim Notification Creation, Notify of Insurance Claim Notification Processes, Create Insurance Claim Notification, Maintain Insurance Claim, and Confirm Insurance Claim Creation.
“When you create universal communications capability, you enable call center applications, agency automation systems, and other third party systems to tap into one single source of truth,” Himmelberger says.
The SAP for Insurance solution portfolio continues its commitment to customers by making more business options available to insurers seeking to enhance the efficiency of their claims processes. Insurance agencies are paid to be stable in good times and in bad. With more than 600 leading insurance carriers running systems from the SAP for Insurance portfolio, rest assured it’s an extremely safe investment.