In Focus: A Midsize Firm Follows the Beaten Path to BPM

Meadowbrook Insurance Group has followed the path from Sarbanes-Oxley process documentation to BPM-powered automation.

Like many of its competitors, Meadowbrook Insurance Group is embracing business process management (BPM) approaches and technologies to remain competitive with "mega insurers" that are gobbling up smaller players. A midsize firm with $300 million in revenue, Meadowbrook recently chose BPM software from Adeptia to help it automate processes that are bogged down in manual work steps. I recently chatted with Meadowbrook senior vice president Becky Adriaenssens-Colucci, who captures the competitive realities shared by many midsize companies as well as the now-classic path from Sarbanes-Oxley process documentation to BPM-powered automation.

Intelligent Enterprise (IE): Meadowbrook has just embarked on what's expected to be a three- to four-year BPM initiative. How did it all begin?

Becky Adriaenssens-Colucci (BAC): We were in a situation that's pretty typical for insurance companies of our size; we were faced with not the option, but the requirement to reduce our cost of doing business. We have [an insurance claim] loss ratio that we're very happy with, but we have to cut the expense ratio, and the same holds in our agency operations.

IE: Why do say it's a requirement rather that an option?

BAC: Because as the market continues to consolidate, we're facing bigger and bigger mega insurers, such as AIG and the Hartford, that can leverage their expense ratios just by their sheer size. We have to remain competitive in terms of what we charge for our product, so we have to work in a more efficient and nimble way.

IE: What are some of your key cost drivers?

BAC: Like many insurers we still have a lot of people costs tied to manual work steps in underwriting, claims handling and compliance reporting. We, and all of our competitors, are looking for new and better ways to handle these processes to become more efficient.

IE: So what "new and better ways" are being adopted?

BAC: A lot of insurers are automating processes, and most of them are looking at BPM and rules technologies. What pushed us toward BPM was not so much what others were doing but what we felt we needed to do. We concluded that we needed to make our processes more efficient and more customer-friendly. So we went to the CEO and laid out a three-year strategy to becoming a more efficient company. He agreed and signed off on the plan, but only after we did a pretty in-depth study of our organization. We identified millions of dollars in expenses we could eliminate by using BPM to make our processes more automated, more integrated and more intelligent.

IE: Where will you realize the biggest savings?

BAC: If I could put it into categories, I'd say the biggest chunk would be in movement of information. Today those steps are very manual, but it will require more than integration because just connecting one system to another won't automate the processes around that information. We're looking at how we automate those processes to reduce the labor required, but we're not looking to cut half our staff. We'd rather deploy our people in more fruitful endeavors.

IE: Can you offer an example of a process you'd like to automate?

BAC: Underwriting is all based on following rules. We want to ease the data flow from independent agents into our systems so we can automate the underwriting. The current approach isn't very friendly for our agent customers because they have to enter everything into their own systems and into our systems. We want to integrate and automate so they can just key in the required information and have it flow straight through so our systems can provide a "yes" or a "no." The next step is to automate the pricing in the same way so they can just move on.

IE: Is Meadowbrook prepared to look at processes in an end-to-end way, rather than as a series of application silos?

BAC: I'd say we started by looking at processes in an end-to-end way and then we chose a BPM system to help us smooth those processes out. What really led us to recognize that our processes needed streamlining was Sarbanes-Oxley compliance. That required a huge effort to document everything, using both Visio and written documentation, and we had to supply all that to our auditors. We knew we had manual processes before that, but until we documented them, we didn't realize the extent of those activities.