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Automation in insurance underwriting processes


Underwriting is one of quite operations in insurance operations. The applicant's information, including various varieties of medical information, must be assessed before the insurance provider can decide to accept the application. These activities are usually recognized by process automation service. However, the support of exception handling mechanism and the monitoring of turnaround time in those process automation solutions are usually inadequate. This ends in a low efficiency of the underwriting functions or even loss of business opportunities. To address the issue, this paper reveals an Alert-enhanced Underwriting System (AUS), which deals with the exception occurrences and displays the turnaround time with the idea of notifications. We further illustrate how Web services help in workflow integration and process marketing communications.

1. Introduction

Life insurance provides safety against the monetary loss brought on by the loss of life of the person whose life is insured [1]. Due to its popularity, this is a business where many insurance firms allocate many resources to be able to gain more market show. A life insurance policy defines the conditions and conditions for the possible client, specially the situations under which the insurance company guarantees to pay a benefit upon fatality [2]. Since life insurance coverage products can provide a stable "cash inflow" for an insurance company, there is a trend that insurance companies market various life products, such as investment-linked life products, cost savings life products and critical disorder protection, to be able to appeal to more customers with different needs.

Although life insurance coverage business can make financial advantages to the insurance company, the business still needs to keep financial responsibility to pay the covered by insurance under some agreed conditions, e. g. , the insured dies during a given period. The insurance will face the result of financial loss if the company accepts possible clients, who present extremely high dangers and when a few of these insured persons perish soon after policy issuance. High quality processes are necessary to assess the amount of dangers associated with each application of life insurance. Underwriting (which is also called "home based business") is an activity of assessing and classifying the amount of risk represented by a potential client and making a decision to simply accept or decrease the covered by insurance.

The world of digital collaboration is growing rapidly, adding new technology and new means of cooperation. The success of cooperation often depends on the ability of any firm not only to make certain that their applications are active, but also to keep up a high amount of interoperability with cooperation partners.

In this newspaper, we present an Alert-enhanced Underwriting System (AUS) as a cooperation platform for streamlining the workflow of insurance underwriting operations. AUS makes use of an Event-Condition-Action (ECA) cooperation model [13] to control event handling, process integration, and alert/exception management for the process movement of the underwriting businesses.

The rest of the paper is structured as follows. Section 2 talks about some related work and record requirements. Section 3 describes system design and execution for our AUS. Section 4 concludes our paper with this continue research work that look forwards to possible enhancements.

2. Qualifications and Related Work

Electronic Data Interchange (EDI) essentially identified the technology of electric collaboration before. However, EDI is an expensive solution, due to its high cost of network infrastructure and system integration. In addition, security issues of EDI also limited organizations from directly being able to access the computing resources of its trading lovers, which used "firewall-unfriendly" protocols. Therefore, coders begin to find other technology which have a low cost, flexible software solution that allows corporations to develop new applications in response to changing business needs while following a defined electronic business standard [10].

Recently, numerous distributors have offered solutions to support both XML (eXtensible Markup Language) and EDI forms for collaboration. One of the solutions is the transformation of information between companies: XML-to-EDI. Transformation is critical to the "advantage" integration strategy that includes B2B cooperation and enterprise software at the boundary of an enterprise to be able to allow the back-end connectivity and workflow required to support a complete business process [11].

In the XML world, e-Business XML (ebXML) [12] is a modular collection of specifications that are initiatively created for electronic interoperability. The effectiveness of the ebXML structures is that it offers a platform for electronic digital business collaboration. The architecture allows businesses to work together to designate business process, discover each other, negotiate collaboration contracts, and execute business techniques. However, although ebXML implementations already are being announced, the speed of deployment of ebXML is not quickly accelerated. Many companies are taking a "wait-and-see" tackle until ebXML becomes a mainstream on the market.

2. 1. Key Procedures and Integration

Figure 1 illustrates an average underwriting process, which usually consists of the following four key activities:

  1. Performing field underwriting,
  2. Reviewing the application for insurance,
  3. Gathering additional information to produce a sensible decision, and
  4. Making an underwriting decision on the case [3]

However, before a new case is delivered to an underwriter for processing, there are alternative activities involved:

  1. Packing applications and other documents from the agent
  2. Initial premium payment through the cashier entry system
  3. Data entry of new software in a branch or area office
  4. Scanning documents into images for workflow processing
  5. Quality Check (QC) and Indexing on the scanned documents
  6. Release of the validated and scanned documents images into workflow engine unit for further processing

In the traditional way of carrying out the activities 1 to 5 without any automation procedures, it incurs high cost in individual resource, safe-keeping cost, and paper work, together with a high turnaround time. That means it causes the underwriter to invest a long time to handle a new application. This affects the insurance company's reputation and may further induces financial losses or even legal fines.

With the arrival of information technology, most of these activities are connected collectively to streamline the workflow for producing a new business, starting from getting documents from an agent, ending at the underwriter getting the truth from workflow system and issuing new insurance policy if approved.

Some benefits accrued to the business enterprise for automating the whole underwriting operations:

  • Improvement of the service quality (such as turnaround time)
  • Reduce of the risk of losing posted documents during delivery
  • Transfer of applications to the next step of the procedure immediately
  • Better control of risk management in a way that some instances (i. e. , excess of coverage limit) can only just be approved by mature underwriters

The key integration of the processes between the real estate agents and the underwriters are as follows.

Images and Data Transfer Process - This activity can be an robotic process and will not require any manual procedure unless the sub-system is down or errors / inconsistency took place during the copy. The goal of this technique is to copy the scanned images and indexed data from a branch or area office to the central office for importing in to the workflow system. In the event the network linkage between a branch or zone office and the central office is a private interconnection (i. e. , leased brand), the procedure is just a straightforward transfer of report images in to the file server in the central office with an XML document including all the indexed data. When the network interconnection between both factors is open public (i. e. , the web) which is not a Virtual Private Network (VPN) interconnection, then the connections require other security methods as identified in later portions.

Import Automatic robot and Workflow Engine unit - They are located at the central office of any insurance provider. The engine unit waits for the image data and XML data to be submitted from the branch or zone office and check the XML data integrity with the appropriate XML Schema. The imported report images and indexed data are installed in to the existing workflow routing engine for case task to appropriate underwriters for even more case authorization.

2. 2. Requirements Summary of Stakeholders

In robotic underwriting processes architecture, a workflow engine motor (e. g. , eistream [9]) is deployed at the central office. This engine unit can efficiently route job assignments to appropriate underwriters. The processing performed with the workflow engine unit is usually referred to as post-processing of the workflow. There are various pre-processing activities, which must be completed before those new insurance applications can be imported into the workflow engine for even more underwriting. Physique 2 depicts a use case diagram of the underwriting process. The key stakeholders involved are discussed the following.

Agent - He/she is an authorized representative to market insurance products with respect to an insurance provider. The agents contain the responsibilities to do a simple check first by gathering primary information about prospective clients and screening applications who have requested coverage [4]. They need to accumulate required documents (such as health license) from the potential client to be able to increase the underwriting process. Email gain access to or Internet site are the quick means for real estate agents to talk to an insurance provider.

Cashier Accessibility - For a new application of life insurance coverage, the prospect consumer must pay the original premium by means of cash or check. The quantity of prime is also dependent on the payment method of the proposed insurance policy. The agent has to submit the original premium with the application form. The cashier access will collect the initial superior and put a premium receipt record in a "Premium Collection System. " The Cashier Entrance also files the application varieties and documents for data entrance.

Data Admittance - A customer in branch/zone office enters the info recorded on the application form form, like the coverage owner information, proposed insured information or medical information, etc. , in to the underwriting front-end insight system.

Scanning Officer - Whenever a scanning officer gets the documents, including form, from an agent, he/she will try to type and classify the documents into different record types (such as health certificates, personal information proofs), and then check them into images for auditable backup as well as indexing and quality check (QC). The application form is scanned just for auditable backup because the data was already entered.

Index and QC Officer - After the submitted documents have been scanned into images, the index and QC officers (it may entail two individuals) will attempt to index the areas on several regions of a scanned image and save the indexed data into the database, so that the indexed data can be adhered with the equivalent images and imported in to the workflow system. In the event the index officer discovers that the image quality of scanned record is not good, the report must be rescanned until the image quality of the record is suitable for indexing.

Underwriter - An underwriter is assigned with a case (new or pending circumstance) by the workflow engine. The underwriter holds out an evaluation process by taking into consideration the submitted documentations, medical information, other personal factors like era, driving history, tobacco use, career dynamics, and financial factors of the customer, etc. Then, the underwriter will determine whether the program is approved, pended for additional proofs or records, counter-offered to the applicant, or rejected.

2. 3. Alert and Exception Handling

Although the majority of the activities starting from submitting documents in branch or area office to the back-end underwriting processes are automated, you may still find many happenings, both business-oriented and technology-oriented, must be managed in order to streamline and increase the entire underwriting process.

Exceptions are happenings that can drive not only reactions performed by business celebrations [6], but also information exchanged in a business, across physical boundaries (e. g. , departments located in different physical areas) or within (e. g. , underwriting team and producing service department positioned in the same building) specific organizational boundary. To be able to handle the exceptions and keep an eye on the exception managing process, (especially those important and with urgency requirements), Chiu et al. [6] proposed the utilization of notifications to model and put into action this. The main element differences between alerts and exceptions are that alerts represents information delivered to a focus on, usually with time and urgency constraints, and that alerts are supervised and tracked. That means, to take care of an exception, an Alert Management System (AMS) transmits an alert subject matter to a handler (real human or system) and monitors the process before handling job is completed.

In this application, the main goal of applying notifications is the matter about the turnaround amount of time in the insurance request process. Some key exceptions and notifications generated by the main stakeholders are shown the following.

Agent - Cancellation of an insurance software can induce an aware of the central office so the workflow system can change the application status (if it has been brought in into workflow engine) into pending position and no more human source will be lost on this application. The application form will finally be cancelled following the cancellation form is scanned and brought in in to the workflow system. The AMS can therefore ensure that the case is sealed within a reasonable time limit.

Cashier Accessibility - An alert can be made when the agent submits an initial premium repayment for the new applicant but only part of preliminary high quality has been resolved. The alert can inform the central office underwriter to resolve the application circumstance if the situation has been pended for the reason of insufficient top quality.

Scanning Official - Exceptions can be produced if the agent submits anonymous type of documents or varieties. In the event the workflow automation system will not know how to handle the unidentified type documents or varieties, then "unknown file" alert can notify the related agent concerning this issue and need him/her to fix this inside a certain period.

Index and QC Officer - A "Doc Rescan" alert can be generated to the scanning official if the index official finds the record image quality is too poor to be indexed. A QC official can also generate a "Reindex" alert if he/she found that an index official did not effectively index the domains on record images. QC officer can also trigger "Document Rescan" alert if he/she found the grade of doc image is undesirable even the index officer has accepted the grade of record image.

Underwriter - An "Insufficient Preliminary Prime" alert can be produced so that the agent can be notified that the initial top quality must be settled before the policy can be issued even all the underwriting investigations are handed down for the case. This situation might occur when your client paid the original superior with check but the check could not be cleared.

On the other hands, exceptions and alerts can be produced by automated operations, such as the following:

Images and Data Copy Process - A "Transfer" exception can be triggered if the copy process of images and XML data to the central office document server is not completed or failed/aborted at some tips (because of the steadiness of network connection). An alert may then notify the MIS personnel in the branch or area office to investigate the primary cause of transfer failure and continue the transfer process at the earliest opportunity. An alert can be prompted after the copy process of the branch or area office is completed effectively, so the import robot resided on the workflow engine can start the data verification process and import the images and data into workflow system. This helps to shorten the full total time for handling of new applications and keep an eye on pending situations.

Import Robot and Workflow Engine - A "Data Inconsistency" alert is delivered to the agent if the import robot checks that the XML data uploaded from the branch or area office is made up of inconsistency after validating with XML schema. This alert urges the agent to do it again or fix the images and data upload process.

Workflow Engine unit - An "Program Pending" alert is brought about to the agent who published a credit card applicatoin for his/her customer when the underwriter changes the new software status to "pending" because additional documentation is necessary. This alert urges the agent to contact its customer for the relevant documents before he receives the official "document request" letter from the insurance company, as applicants might need time to present documents, like health certificates or financial statements issued by lenders.

2. 4. Romance management requirements

Alerts and exceptions are not only dedicated to handling unnatural or unexpected happenings. These may be used to enhance the relationship between insurance company and potential prospects (B2C). For instance:

Applicants can be notified by email with the progress of its life insurance application. Alternatively, the agent can contact his candidates quickly after he gets an acknowledgement email. Reminder alerts can be delivered to the agent by means of Text to remind him/her to contact his/her applicant to collect required additional documents to process a "pending" application. This helps slow up the threat of insurance application being cancelled after a credit card applicatoin has been pending for quite a while. It is because the customer may well not know that insurance company requests more additional documents from him in the event the agent does not contact him. This also reduces the chance of giving a negative image to the customers of poor services.

3. System Design and Implementation

In this section, we present the system design and implementation for our AUS, which include the system structures, various system components, Web services security, and a good example scenario.

3. 1. System Architecture

Figure 3 shows the entire system structures for our AUS. We add on the surface of the existing organization information systems four main components in the backend AUS: Web Services Agent, Subject matter Server, Alert Management System (AMS), and Event-Condition-Action (ECA) guidelines database that identifies the activities to be induced under some predefined conditions. We discuss the functionalities of these components in the next subsections.

One of the primary problems in the current process automation is the effectiveness of communication among different stakeholders and systems involved with the entire procedure for underwriting. Based on the above conversations, we design an AUS predicated on exceptions and notifications as the unifying communication system within the entire underwriting processes. On this platform, we choose to use Web Services with Cleaning soap standard protocol for the communication and Meaning Server (such as Microsoft MSMQ [8]) for the main note (exceptions and notifications) processing. The reasons why we choose Web services with Cleaning soap protocol in our platform are the following:

  • Web services can be invoked over the Internet or intranet, within or beyond your firewall. For example, some processes like file scanning or image indexing may be positioned in the central office or outsourced to other providers.
  • Less development time is required to deploy Web service features from existing request, especially with the various tools and libraries provided.
  • It facilitates synchronous (RPC) and asynchronous messaging.
  • SOAP has been carried out on many different hardware and software platforms.
  • SOAP can be secured under the Web Service security [7] standard.

3. 2. Web Services Agent

In our bodies, Web services technology is chosen to aid the communication between your AUS backend systems and other front-end, sub-systems in branches and zone offices, as well as external agencies and clients. THE NET Services Agent changes the incoming information, which are by means of XML data embedded in SOAP (Simple Object Access Standard protocol) [14], into indigenous message formats that may be sent into the queues of the central note server. THE NET Services Agent also changes the alerts and exceptions from the form of native message format in to the XML/SOAP format and uses HTTP protocol to send the XML meaning to the branch/zone office buildings systems through individual Web services.

A test SOAP messages from a client system is shown in Amount 4. This concept describes the indexed data and images to be uploaded to the document server in the insurance headquarter after scanning businesses have been performed on the submitted documents in branch and zone offices. Number 5 shows a response message from the AUS that explains an alert from the Copy Component in a branch or zone office and notifies the MIS staff to take care of the exception.

3. 3. Note Server

The note server comprises of program queues and system queues and the server manages the received data (i. e. , incoming XML/SOAP messages, internal MSMQ emails from other organization systems, and alert communications from the AMS and routes the messages to the target (subscribed) parties. For example, when the Copy Module sends an online service meaning to the AUS, the note is put into two ready queues: one for the Transfer Automatic robot and another for the AMS (so the AMS can monitor the progress of the Transfer Robot). When the Import Automatic robot has confirmed the integrity of uploaded data and images, it transmits a message to inform the AMS of job completion, or a "Data Inconsistency" alert in case there is data inconsistency. These emails triggers events so that the AMS issues new alert/exception information upon on the conditions in the event repository database to related people for further activities (as talked about in Section 2. 3) based on the ECA guidelines described by the administrators.

The reasons why we choose the Subject matter Server as a core component in controlling data communication are the following:

  • Most of the message servers support Web service operation.
  • Message servers support guaranteed concept delivery.
  • Asynchronous subject matter communication as well as publish-and-subscribe can be recognized.

3. 4. Alert Management System (AMS)

The main role of the AMS is to manage the alerts. In addition, it captures the events and exceptions (i. e. , MSMQ indigenous message format) published by other celebrations. Alerts are produced predicated on the ECA guidelines specified in databases to the correct people. It further changes the alerts into a MSMQ meaning and put it on the longing queue for Web Services Agent for the delivery. Further information on the device of the AMS, including descriptions of the ECA rules, can be found in our earlier newspaper [6]. We apply the same AMS component except that people include a meaning server element of further boost the messaging reliability.

3. 5. Example Scenario

In this subsection, we use a scenario to illustrate the machine flow inside our AUS. Number 6 depicts the process flow for this scenario. First, a Check out Stop prepares a XML data record which contains the policy number and other indexed data for the scanned documents. Once the XML file is ready, the Copy Module uploads the XML data file and doc image files into the central data file server. Upon conclusion, the Transfer Component produces a SOAP note, which details the uploaded data to Web Services Agent in order to inform the Import Automatic robot to check the integrity of uploaded data and images.

After the confirmation, the Import Automatic robot generates the confirmation effect event and the AMS captures the "data submitted" event from the Copy Module together with the event generated by the Transfer Robot, and profits the appropriate occasions back again to the Scan Stop and Scan Official based on ECA rules control.

3. 6. Web Service Security

Web services integrate applications outside and inside the organization. However, distributed computing always has a challenging group of security issues. Identities and announcements are two of the best security challenges brought on by Web services. Web services carry potential unknown entities into your company and messages are transported from one spot to another place through an unsecured channel, the Internet. Therefore, actions must be studied to safeguard the info exchanged among the authenticated gatherings. XML Encryption and XML Signature are used to handle the safeguard of hypersensitive data and the id of personal information of data sender respectively [15]. Physique 7 shows an unprotected SOAP subject matter that contains repayment information for an insurance policy. Shape 8 shows how encrypted text messages and signature are put in a Cleaning soap envelop.

The element block provides the encrypted form of payment information. The component contains the XML personal for repayment data. In general, a distributed key must be provided so that recipient of the text messages can decrypt the guarded data. However, this can be a bad idea to add the main element in the SOAP communication (i. e. , the component block) because unauthorized get-togethers could just get the main element and decrypt the secured data. AgreementMethod is a standard protocol for safely communicating a magic formula key. This key arrangement process, like the SSL magic formula key agreement process, is used to create the encryption key along with the key material necessary to duplicate the encryption key technology on the recipient's part [15].

4. Debate and Summary

Process automation by integrating existing venture information systems with workflow software has proven to boost the staff efficiency, thus turns out to create more business values in terms of more earnings and less costs. However, if the procedure flow within the business workflow from one step to next step is not smoothly carried out (e. g. , inability of transferring complete XML data to workflow engine and servers but no more "resend" action is done), then your next step may not be able to proceed until the problem is diagnosed and fixed. This sort of situations significantly wastes human being resource and time and really should are not likely to occur in robotic processes. Therefore, by integrating the AUS with the prevailing workflow infra-structures may bring the workflow automation into full play because the problems or unexpected incidents can be detected and relevant celebrations or techniques are notified with alerts to rectify the issues. The next tangible benefits can be achieved with the AUS, mainly through the improved monitoring and monitoring through the AMS with a service-oriented structures.

For example, the turnaround time taken up to rescan documents, which have been identified as inadequately scanned, is shortened. In case the scanning official is not notified properly, the improperly scanned document will probably be rescanned following the scanning officer triggers to print a written report on list those doc rescan requests, thus leading to longer processing amount of time in some conditions. This advantage is also appropriate to the procedure of "Document Reindex" for the index officials.

Moreover, the AUS helps maintain data integrity in uploading data into the centralized document server. In the event the XML data is inconsistent and the import robot still proceeds to import the inconsistent data into workflow engine, it will bring about unexpected or serious results. The results may be considered a delay in control applications or perhaps a wrongly underwritten insurance application that can put financial risk to insurance provider.

On the other hand, more traits can be put into measure staff performance. Because the alerts made to officials and real estate agents are supervised by the AMS, the time spent on handling the exceptions and notifications can be determined based on the time recorded in database. For example, if the scanning officer receives a "document rescan" alert, then he must rescan the wanted documents and relevant data within the "document update time. " The performance is logged into repository and accounts for staff range from this type of qualities to measure the staff performance. So, the workload on investigating problems related to the entire operation stream can be reduced as complete information about the problems can be found from the exceptions and alerts well managed by the AMS of the AUS.

In addition, the following intangible benefit may be accomplished with the AUS. Customer satisfaction can be improved upon. The document processing and circulation are smoothly controlled and executed. This may shorten the whole processing time for new circumstance applications and thus result in issuing and mailing policy to policy owner in a shorter period of time. This can improve the insurance company's professional image as well because the brief control time of new insurance application can make an impression its customers and improve the customers' self-confidence in insurance company. This might led to more business opportunities in the foreseeable future.

This newspaper has presented an overview of underwriting process in an insurance provider and the programmed facilities incorporated in to the underwriting process to drive the whole underwriting. A Web-service structured alert-enhanced underwriting system has been offered in this newspaper to overcome the majority of the existing problems of the underwriting process workflow execution. We expect this process is suitable to other business functions that involve real human approval alongside the need for retaining documents for auditing and legal purposes, such as loan and credit card approval.

After finishing the AUS program prototype, we will then check out study the great things about adopting the program in existing workflow infra-structures in the insurance company's perspective through questionnaires to gather user feedback. However the proposed platform naturally helps the handling of all problems or occurrences in the process flow of underwriting, there are still some unexpected incidents that are scarcely to be diagnosed or monitored. Further studies should be carried out on this topic. Future works include the expansion of AUS program to support artificial intelligence in handling the exception happenings as well as agent-based assist with internal staff and external users. We are also enthusiastic about empirical measurements of the improvement of staff performance and customer satisfaction.


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  14. SOAP (Simple Object Access Process), http://www. w3. org/TR/SOAP
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