2006 General Meeting

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Canadian Institute of Actuaries
LInstitut canadien des actuaires

• 2006 General Meeting
• Assemblée générale 2006
• Chicago, Illinois

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Canadian Institute of ActuariesNew Business
Process EfficienciesJym Barnes
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Introduction

• 1986 became very interested in the Internet
• Seamless integration system to system device to
  device
• Saw the Internet as a power grid
• Every business process possible connected through
  the power grid
• Purchasing an item online and tracking the
  shipping
• Scheduling a trip
• Later known as Straight Through Processing or STP
• Digital thread
• Holy grail of workflow
• 1996 came to the insurance industry by accident
• Infatuated with STP
• Underwriting in the family blood

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Straight Through Processing (STP)

• Data passing from one business process to another
  independent of computer system, organization,
  country, etc.
• A digital thread through intermediate business
  transactions to complete some overall transaction

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UW Unusual Characteristics

• Perfect example of the power grid concept
• Many independent stakeholders involved in an
  underwriting decision (transaction)
• Distributors
• Outsource providers
• Paramedical companies
• MIB
• Labs
• MVR Providers other evidence providers
• APS Providers
• Physicians
• Reinsurers
• Carriers

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Underwriting Issues

• Shortage of underwriters
• Completely disconnected processes
• Expensive
• Long
• Same data captured multiple times
• Limited management information

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STP in the new business process is a difficult
problem with huge upside if solved!
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What is needed?

• Faster cycle times
• Lower cost of processing a case
• Provide as good or better assessment of the risk
• Provide ability to better understand the risk
• Real-time
• Historic management information

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Two concepts to solve this problem

• Digital thread from app entry through issue into
  historic risk analysis
• Structured data (information) passed
• Enriched during each step along the way
• Extensive underwriting rules available at every
  point throughout the process

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Digital thread

• Structured data
• eXtensible Markup Language (XML)
• Metadata
• Information

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Information, defined as knowledge in communicable
form
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What is XML?

• XML is the language for data on the Internet
• What does that mean for a life carrier?
• Also known as Meta-data or structured data
• Provides the opportunity to turn data into
  information

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James Robinson Barnes111 Clear Meadow
DrBallwin, MO 63011
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• ltNameAndAddressgtltfirstgtJameslt/firstgtltmiddlegtRob
  insonlt/middlegtltlastgtBarneslt/lastgtltstreetgt111
  Clear Meadowslt/streetgtltcitygtBallwinlt/citygtltstate
  gtMOlt/stategtltzipgt63011lt/zipgtlt/NameAndAddressgt

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XML Value

• Simple yet an incredibly important building block
• Easier connectivity becomes possible
• Plug-n-play becomes possible
• Internet is what makes XML even more valuable

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Partial solution

• XML is only part of the solution
• How do we know what to tag the information with?

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Underwriting rules are the key to generating
meaningful XML!!
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Underwriting Rules

• Questions and reflexive questions
• Scripts
• Extensive data dictionaries
• Impairments, medicines, occupations, aliases
• Decisions ratings flat extras
• Requirements ordering
• Workflow logic
• Build age/coverage
• Labs, MIB, MVR analysis

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If you dont have a rule for the data entered
significant value is lost!
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Example

• Do you have asthma
• How many attacks do you have per month
• 0 3
• Do you use tobacco
• 4 7
• Do you use tobacco
• 8 9999
• Do you use tobacco

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XML Generated

• ltdisclosuregt
• ltimpairmentgt
• ltimpairmentTypegtAsthmalt/impairmentTypegt
• ltbodySystemgtRespiratorylt/bodySystemgt
• ltmedicalgtyeslt/medicalgt
• ltmaterialgtyeslt/materialgt
• ltseveritygtseverelt/severegt
• lt/impairmentgt
• lt/disclosuregt

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Enrichment

• Rules turn data into information
• Rules then turn the information into actions and
  more information
• And so on and so on

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XML Generated

• ltdisclosuregt
• ltimpairmentgt
• ltimpairmentTypegtAsthmalt/impairmentTypegt
• ltbodySystemgtRespiratorylt/bodySystemgt
• ltmedicalgtyeslt/medicalgt
• ltmaterialgtyeslt/materialgt
• ltseveritygtseverelt/severegt
• lt/impairmentgt
• lt/disclosuregt

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XML Enriched

• ltriskAssessmentgt
• ltdecisiongtRUWlt/decisiongt
• ltrequirementsgtAPS (Pulmonary Function
  Testlt/requirementsgt
• lt/riskAssessmentgt

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XML Enriched

• ltworkflowgt
• ltpushCasegtSeniorUWlt/pushCasegt
• ltwaitgt5 dayslt/waitgt
• ltalarmgt1 daygtlt/alarmgt
• lt/workflowgt

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Rules are involved everywhere

UW Rules
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Historic Management Information

• All XML stored for later reporting
• Demographics
• Impairment analysis
• Requirement analysis
• Decision analysis
• Trend analysis
• Ability to combine with claims
• What if scenarios

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Components of the solution

• Digital thread through the new business process
• XML is the key ingredient to make a digital
  thread possible
• Extensive underwriting rules necessary to create
  meaningful XML

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Where are we at today?

• MIB supports XML
• LabOne supports XML
• Several administration system vendors support XML
• Several illustration system vendors support XML
• Underwriting system vendors support XML

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Tomorrow?

• The opportunity exists today to connect a
  majority of the new business components and
  stakeholders using XML
• A digital thread throughout the new business
  process is within sight
• Some companies are further along than others in
  implementing STP
• A vast majority are moving in this direction

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Every new solution must connectto every other
solutionorit will be your next problem!
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Q A
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Contact Info

• Jym Barnes
• jbarnes_at_rgatp.com
• 636-736-7208