Commerce West Uses CleverPath™ Aion® Business Rules Expert to Ensure Policy Accuracy
A Thought Leadership Article, submitted by Kim Burbules,VP Area Field Marketing, Computer Associates
The insurance industry is filled with rules. Every aspect of the process of promoting, selling and writing policies is detailed in thousands of pages of laws and regulations, for example, failing to file the right information with the right agency at the right time. In addition, the insurance carrier may be liable for the cost of an auto accident, whether or not the customer ever paid the insurance premiums.
Unfortunately, human beings just aren’t good at the task of scanning through tens of thousands of documents and making sure all the rules are followed. To do a better job, Commerce West Insurance Company (Commerce West) in Pleasanton, California, turned to CleverPath Aion Business Rules Expert (CleverPath Aion BRE) from Computer Associates International, Inc. (CA) to automate processes, allowing faster service and freeing up its employees to perform higher level tasks.
Commerce West was formerly known as Western Pioneer Insurance Company until The Commerce Group, Inc. acquired the firm in 1995. With 80 employees and 600 independent agents, Commerce West provides automobile insurance to customers in California and Oregon.
Although the company had an insurance policy processing application, it lacked the flexibility to address business requirements. Employees wasted time manually processing routine policy renewals with no way to identify customers needing to receive specific notices or questionnaires. Mailings had to be issued broadly rather than just to the percentage who actually needed to receive them. Inefficiencies in determining which reports to order from the Department of Motor Vehicles alone cost Commerce West US$50,000 annually in unnecessary report fees.
“Our state of automation was antiquated,” says George Jeffers, Director of Information Technology. Luckily, he knew of a simple way to modernize company processes. He had been using CleverPath Aion BRE since 1993 at a previous employer and knew it would solve Commerce West’s difficulties. “CleverPath Aion BRE is unlike any tool I have ever seen as far as implementing a business rule change in very little time,” Jeffers explains.
He purchased and deployed the product in January 2002, a process that took less than a month without hiring a consultant. The results were immediate. “I can honestly say that CleverPath Aion BRE has paid for itself within three months of implementing it at Commerce West,” says Jeffers.
Following the Rules
Initially, Jeffers tackled five areas of inefficiency in the company, either where manual processing dominated or where necessary actions just weren’t being done. After establishing one hundred rules for the underwriting application, CleverPath Aion BRE automated 2,500 to 3,000 transactions weekly. CleverPath Aion BRE also allowed Commerce West to automate its renewal process. Employees no longer must personally inspect each and every policy produced annually. Routine renewals go through without human intervention. When CleverPath Aion BRE identifies an exception to the rules, staff reviews only those policies which actually need individual attention. The results speak for themselves. Where two full-time employees used to be required to process renewals, one person can now comfortably take care of this traffic on a part-time basis.
Ordering Motor Vehicle Reports is another place where the company is saving money. Insurance companies order these reports from the state to see what tickets the customers received. Further reports can be ordered from outside investigative firms to locate accidents not covered in DMV reports. Before installing CleverPath Aion BRE, underwriters manually requested such reports.
Now, report ordering is fully automated. In addition, the software uses detailed customer profiles to identify which reports should be requested, rather than the previous practice of blanket report ordering. This alone saves Commerce West US$50,000 annually. “We were spending a fortune for reports we didn’t need,” says Jeffers. “The fact that we could fine tune it and start saving money from day one was a big criterion for success. That one application alone more than paid for the CleverPath Aion BRE software.”
Commerce West also saves money in sending out questionnaires to policyholders as a means of reducing insurance fraud. To do this, CleverPath Aion BRE looks for specific profiles on applications to determine where the company needs to obtain additional data, either because the application is incomplete or the information provided may not be totally truthful. “We want to make sure we know exactly what we are insuring in order to charge proper rates,” says Jeffers.
A common situation, for example, is an undisclosed driver for the vehicle. For instance, one driver in the household has a conviction for driving while intoxicated on his or her record. As this fact would drive up the premium, this individual may not be listed on the application. When the business rules indicate that such a scenario is likely, CleverPath Aion BRE sends out questionnaires asking applicants to list all drivers.
Finally, there is the matter of notifying banks and finance companies if an insurance policy is cancelled. When someone takes out a loan to finance the purchase of a vehicle, for instance, the bank or finance company must be listed on the insurance policy. The insurance provider then has an obligation to notify not only the policyholder, but also the financial institution when a policy is cancelled. If the insurance company fails to send the required notice, it remains liable for any damages in an accident just as it would be if the policy was still in effect. To ensure that all the required notices are sent, Jeffers automated these actions using CleverPath Aion BRE.
“This is a preventative action to make sure we don’t have to pay out money unnecessarily,” he explains. “For every loss claim that CleverPath Aion eliminates, the company saves twenty to thirty thousand dollars.”
More to Come
Jeffers is already working on automating the financial responsibility notification process. For example, in some states when a person is convicted of driving while intoxicated, the judge can require that they maintain an auto insurance policy showing financial responsibility for the next three years. The policyholder must inform the insurance company of this requirement, and when the policy is activated the company sends notice to the state. If the policy is later cancelled, the company must also send notice to the state, or else it continues to be liable for future accident damages.
Later this year, Commerce West will conduct a full review of all its workflows company wide to find out where else CleverPath Aion BRE can be utilized in automation. Additionally, Jeffers is continually modifying rules as needed to better meet the needs of underwriters. “We are actively looking at other places to use the product,” he says. “Once you know how to use this tool, the speed of development and the flexibility of what you can do with it is incredible.”
For the complete Whitepaper contact Kim Burbules at Computer Associates