Collaboration is driving moves towards shared repositories in the insurance industry, says Alistair Lamb.
In an industry where information is the core component, and where disparate parties are required to collaborate, the discipline used to store, maintain, access and exchange that information becomes a key factor of the industry's performance. Each party could use its own system and share its contents by any number of methods - telephone, fax, post or email. When email attachments are used, the recipient must have either the same system or some means of reading the data electronically. The first party must also ensure that the second is continually updated as changes occur. It would clearly be preferable if all parties used the same, centrally organised system in the first place, which could be accessed by a common means, such as a web browser.
The insurance sector is exactly such an industry. There is a vast amount of documentation involved; insurance policies, claims advices, slips, cover notes, management reports, bordereaux and other supporting information. Insurers, reinsurers, brokers, cedants, loss adjusters, law firms and clients need to share this data on an almost daily basis, and although progress has been made in automating the storage and management of information, this has mainly been limited to systems that cater for each area of insurance, such as broking, claims management, underwriting and so forth. While each is necessary to the individual parties in the insurance supply chain, it does not necessarily facilitate the exchange of that data with other business partners.
A possible remedy could be to use repositories. Significant steps have already been taken by solutions suppliers, with active pilot projects testing the ground and moving towards market-wide viability. However, before market or community repositories become a reality, their benefits must be clearly understood by the industry as a whole.
Repositories - the science
So what exactly is a repository? Essentially, it is a document management system with sophisticated version management and search capabilities, providing a collaborative working environment for individuals and communities who need to share information. These `documents' may take the form of word-processing documents, spreadsheets, pictures, video clips or any other digital form of information - even blueprints of major construction projects.
Two types of repositories currently exist. They can be private, where they are owned by a specific organisation that grants access rights to relevant parties, or they can be public, where the information is held in a public domain. This latter can be a market or industry repository, or a special interest group, governed by mutually accepted regulations, with access rights predetermined by the owner of the repository.
In technical terms, a document repository is a mechanism, using IT systems to store and share electronic documents among interested parties. Its basic function is to store, search and retrieve documents, with an automatic function to implement audit trails. The standard components include a user interface, store/search/retrieve functions, a document storage index, an audit trail mechanism and, underpinning it all, the central document storage database (see figure on opposite page). The functionality and structure of the document storage database are hidden from the user to ensure ease of use and, of course, security, although users can be permitted to add their own keywords for easier and faster searches. The database must be stable and reliable for continued performance. It must also be scalable to accommodate growth and security, given the number of people regularly accessing the data.
User interface is very important. An interface should be tailored specifically to its vertical market and a good repository will not require special software to be loaded by its users. A prime candidate for access is a web browser, as it is both easy to use and universal.
Business processes within the insurance sector are unique, as is the terminology surrounding its business processes, but a vertical market repository will reflect these unique features.
It is already clear that central access and information exchange are two immediate benefits derived from repository systems. More specifically, they deliver process and administrative efficiencies, reduce internal administration costs and provide much better communication between customers, suppliers, partners and those involved in the process chain.
Collaboration is driving moves towards shared repositories in the insurance industry. Many companies are involved and it can be a time-consuming and labour-intensive task, for example, to deliver claims papers to 26 underwriters. Traditionally, this would require visiting each underwriter individually, however, repository systems enable `parallel processing'. Claims data would be published on a secure website, with the data made available to all 26 companies at once. The ensuing questions are dealt with sooner and the claims are, therefore, resolved faster.
Repositories also help with version control. There will only ever be just one copy of a file on the system, which will be shared among individuals who have been granted permission to view or update that data. If documents are updated, all parties will be viewing the same version, eliminating concerns that someone in the chain is working from an out-of-date document. Moreover, each company need not key data into two different systems. The idea behind shared repositories is that all information is permanently held in a central location; data is not entered into, say, a reinsurance back office system and a document management system, but stored once only.
Audit trails are another major benefit. Repositories throw the whole chain wide open and make all processes visible to all parties. Any risk can be reviewed and analysed at any point in time by management audit personnel. Those eager to protect E&O policies can rest assured that the receipt of documents is automatically logged and a record held centrally. No time is wasted in disputing document transactions, unnecessary delays are eradicated and processes become more efficient almost by force.
Market repositories are usually accessed via the internet. Despite much-publicised fears about security, such repositories would actually improve the safeguarding of the vital business documents they contain. New encryption and authentication techniques provide state-of-the-art security without impeding ease of use.
Other benefits include reduced costs for document distribution, storage and retrieval - there are no filing cabinets involved here. In the event of a disaster, documents are easily recovered, while access to critical data is no longer dependent on geographical presence, so staff can continue to operate without interruption from a different location.
Clearly, the realisation of a central repository shared by the entire insurance industry is not something that can be achieved overnight. In practice, there may well be various centrally available repositories, even within a specific market, such as the London market. In this sector, private repositories are the first step. It only takes one forward-looking manager - maybe an administrative director, chief operating officer or senior business manager - to act as an `evangelist', to look at which books of business might be suitable for a repository. Once, for example, a fire or personal accident book has been identified, the directory for internal colleagues and external business partners can be set up very quickly.
Internal fears for job losses will clearly need to be allayed. The savings in time and labour brought about by implementing a repository do not necessarily lead to redundancy. A skilled claims person, for example, is instead spared from the mundane task of data entry or `trudging' around the market, and is able to contribute more to the company by focusing on data analysis or complex claims management.
If a private repository is used internally at first, when the data is shared with other, outside parties, the benefits become increasingly apparent and the use of repositories is likely to spread.
Insurance organisations need not look too hard to identify suitable processes; there are many areas within the sector which lend themselves to the use of a shared repository. These include:
As the use of private repositories increases, organisations will start looking to link them together.
This, in turn, will lead to targeted, area-specific community repositories, such as the insurance sectors in London, New York and Bermuda. The benefits are indisputable. The technology is there, all it will take is some early adopters and the insurance industry will be well on its way to a universal collaborative environment in which everybody wins.
While the benefits, which apply to global market repositories, apply equally to the London market, there are some unique attributes that need to be taken into account. Unlike insurance companies in other markets, London market organisations have to contend with multiple lines within a subscription market. For this reason, bureau services are used for checking and signing. With so many more parties involved in the process, this makes the case for repositories even more significant.
The London market also uses unique referencing systems, which would need to be incorporated into a repository system, such as UMR for policies or UCR for claims. Cross-referencing these codes to their corresponding global references could integrate the London market to global repositories, unless, of course, the use of these key references spreads beyond London.
One major obstacle the market has to deal with, however, is cultural. London relies heavily on face-to-face visits and many professionals are reluctant to see that personal contact diminish. Yet as companies increasingly conduct business on a global scale, personal visits will lessen. In addition, the London Market Practice (LMP) reforms are a move towards reducing the number of time-consuming practices and greater automation. In fact, section 4 of the LMP2001 Claims Vision book (the `Blue Book') states under "Electronic storage and indexing" that "the requirements include the need to store information and documents . . .This store would include an index that would give structured access, complete version control and history... It is assumed at this stage that the store will most likely be a virtual store [repository], which may consist of many individual stores linked together. These may belong to [or be run by] the broker, the insurer, centrally or by a third party, but, through common standards and a co-ordinated index, any authorised party can achieve access."
Alistair Lamb is marketing director of Rebus iS. He can be contacted at email@example.com