SAP For Insurance – A focus
on Billing and Collections
Robert Schwartz
Industry Principal
SAP – 32 Years of Making Businesses Successful
SAP AG in 2004 revenues: $ 10 billion
ν 67,500 installations
ν 20,000 companies run SAP
ν Providing 23 Industry Solutions ν 38,000 SAP employees
ν 1000+ installations in the Insurance industry
12 million users in 120+ countries team with us to
ν Integrate their business processes ν Extend their competitive capabilities
ν Get a better return on information at a lower total cost of ownership
♣
Industry Leaderν Leading provider of business process industry solutions ν 350+ insurance customers; 20 plus in North America ν $1B in Research and Development per year
SAP for Insurance
Business Partner
Policy
Management General Ledger
Controlling Supplier Relationship Mgmt Claims Management
Financial Asset Management Procurement Commissions
Collections & Disbursements
Product Management Claims Handling Customer Service Acquisition and sales Marketing Management Reinsurance Projects, etc Human Capital Management
Strategic Enterprise Management Business Information Warehouse
Financial
Strategy
Operational
Billing &
Collections
Governance
Change
Management
Capabilities
What billing and collection issues are insurers
facing?
Billing and Collections - Current State
Other Products
Product
Customer Broker/Agent Individual/Group Other BusinessPartners
Billing and Receivables
System
Customer
System 1 System 2 System 3 System 4 System 5 System 6 Manual System n Retro Plans
P&C Comp.Work BusinessLife Fleet CreditLife DeductibleClaims SalvageClaims PremiumAudit
P&C Retro Plans
Policy and Contract
System
P&C Life Fleet Credit Life Manual Other
Products WorkComp
Risk Assessment / Retention
Revenue Lift
Working Capital Improvement
Operational Efficiency
Improvements
Policy Services & Billing Customer Acquisition / Retention Accounts Receivable CollectionsThere are four significant benefit opportunities for billing
& collections across the “application to cash” life cycle….
C D
Policy Claims Insureds Broker/Agents Vendors Claimants External Adjusters Litigation Vendors Service Providers Service ProvidersSAP Collections and Disbursements (CD) controls
cash flow to all parties in the entire insurance cycle
Central view of all cashflow and expenditures Minimize expenses associated with managing payments/collectio n s Improve cashflow AND customer satisfaction Central view of all parties Reinsurance Commission. . . .
Reinsurers RetrocessionairesFS-CD creates an efficient environment that enables
continuous improvement
Risk Assessment / Retention
Revenue Lift
Working Capital Improvement
Operational Efficiency
Policy Services & Billing Customer Acquisition / Retention Accounts Receivable Collections Automated Workflow • Task Creation • Task Management • Task Assignment • Management Control Automated Clearing • User Defined • Hierarchy Based • Criteria Based • Configurable • Defined by Rules Access To Information• Centralized View of All Data
• Manage processing
without interrupting work Reduced Environment Costs
• Shared Services • Common Platform
Increase the amount collected and decrease the time
required to collect it
Risk Assessment / Retention
Revenue Lift
Working Capital Improvement
Operational Efficiency
Policy Services & Billing Customer Acquisition / Retention Accounts Receivable Collections Reduce DPO• All payment types supported • Electronic bill presentment
and payment
• Reduce reconciliation
periods/workload through on-line reconciliation or EDI
• Receive cash faster • Release cash faster Improved GL reconciliation
How has billing/payments affected your ability to grow
organically or through acquisition?
Risk Assessment / Retention
Revenue Lift
Working Capital Improvement
Operational Efficiency
Policy Services & Billing Customer Acquisition / Retention Accounts Receivable CollectionsIncrease Speed to Market
• Tailor billing to Market/Product/State
• Quickly implement changes to support new markets (configuration vs. customization)
• Support payment requirements for new markets – claims, vendors, etc
Increase Value of Acquisitions
• Quickly fold acquired business into account structure • Minimize disruption to acquired customers
Billing may not be a differentiator but it generates the
most complaints
Risk Assessment / Retention
Revenue Lift
Working Capital Improvement
Operational Efficiency
Policy Services & Billing Customer Acquisition / Retention Accounts Receivable Collections Interaction • Call Center • On-line • EDI Billing Support• Account Current (Broker/MGA) • Account Receivable (Agent) • Direct
• Account Level Billing
Payment Support • EFT • ACH • Check • Credit Card • Account Sweeps
Reduce Negative Equity Risk
• State Sensitive Billing Structures
Reducing Negative Equity
CD
Late or Uncollectible Premium Claims Payments Net Account ProcessingCD helps insurers manage cashflow from a single
source ….
Other Products
Product
Customer Broker/Agent Individual/Group Other BusinessPartners
FS-CD
Customer
Loss Sensitive
P&C Comp.Work BusinessLife ContractsVehicle
Credit
Life DeductibleClaims SalvageClaims PremiumAudit
P&C Loss Sensitive
Policy and Contract
System
P&C Life Vehicle Credit Life Manual Other
Products WorkComp
Accommodates ALL billing & collections requirements
in a single solution
Provides a single source for ALL premium information
Provides a policy / premium sub ledger in coordination with the GL Removes constraints with
the batch windows
Consolidates processing of
Portal
Fully Integrated
… And enables a flexible environment
Insured Group Agent/Broker Third Party
Call Center …
SAP Collections & Disbursements
Personal
Lines CommercialLines SpecialtyLines Financials …
Fully Integrated Distribution & Access Core Processing Systems User Selected Channel Mail EDI
Collections Offerings Solution Set (priorities)
X X
X Combined insurance & technology
partner experience X X X Scalability X X
Leverage SAP’s technology capabilities
X X
Reduce amount of interfaces
X X
Leverage other investments
X X
Support regulatory requirements
X X
X Enable continuous improvement
X Support new market growth
X X
Reduce negative equity
X Enable cross selling / retention
activities
X X
Account processing – consolidated bill
X X
Support shared services
Mitigate Risk Lower Expenses Business Strategy
Performance
λ 14,200,000 per hour for transfer of posting data (20 apps, 320 jobs)
λ 3,600,000 per hour for posting run (7 apps, 112 jobs) λ 8,900,000 per hour for correspondence (6 apps, 96 jobs)
Austria and Switzerland (9): λ Generali, A λ Wiener St_dtische, A λ WGKK λ Mobiliar, CH λ Swiss Life, CH λ Zuerich FS, CH λ Winterthur, CH λ SUVA, CH λ PAX, CH Americas (9): λ Allstate
λ ADP Tax Services λ Great West Life λ American Re λ Cincinnati Financials λ OSDE, Argentina λ MONY Life λ Employers Re
λAIG Rest of Europe (15):
λ Cesk_ poji_tovna, CES λ Vseobecna zdravotna poistovna λ BNL Vita, Italy λ INA, Italy λ ITAS, Italy λ Assimoco, Italy
λ Toro Assicurazioni, Italy λ AXA, Portugal λ Folksam, Sweden λ Generali, Netherlands λ ING, Netherlands λ Interpolis, Netherlands λ KBC, Belgium λ Mapfre, Spain λ Generali, France UK (2): λStandard Life International λ AA Centrica Germany (26): λ Berlinische Leben λ Zusatzversorgungskasse λ MLP Finanzdienstleistung λ Generali M_nchen λ Provinzial Kiel λ Versicherungskammer Bayern λ Bruderhilfe λ Condor Versicherung λ Sparkassenvers. BW λ Sparkassenvers. Wiesbaden λAOK, Bonn λ Karlsruher Versicherungen λ Barmer Ersatzkasse λ Inter Versicherungen λ Gerling Konzern λDeutscher Ring λ Mannheimer Versicherung λ Munich Re λ VBL λBVV λ VW Financial Services λ _VB λ ARAG λ Hannover R_ckversicherung λ Alte Leipziger λ TDS Informationstechnologie
FS-CD: Customers Worldwide - live
Total: 75, live 30
Australia:
Mercantile Mutual Holding
SAP solutions are designed for international use
Arabic
Bulgarian
Chinese (Simplified)
Chinese (Traditional)
Croatian
Czech
Danish
Dutch
English
Finnish
French
German
Greek
Hebrew
Hungarian
Italian
Japanese
Korean
Norwegian
Polish
Portuguese
Romanian
Russian
Serbian
Slovak
Slovenian
Spanish
Swedish
Thai
Turkish
CD ImplementationsTime
Capability
Carrier decisions have produced a climate that fosters the continued creation of systems akin to the old "legacy" systems.
They create systems that behave as if they were created years ago, being inflexible or dealing only with the "siloed" system of which they are part.
Carriers need to curtail the creation of future
generations of systems that rapidly lose their ability to adapt to new conditions. This means placing
emphasis on the development and execution of flexible and open architectures for both IT infrastructure and development methodologies.
Source: TowerGroup 2/8/2004
NetWeaver delivers significant ROI and TCO Reductions:
• BG Group: 281% ROI; 43% TCO Reduction (5 yrs)
• Goodyear/Dunlop: 308% ROI; 25% TCO Reduction Source: IDC Case Studies
SAP Claims SAP Claims Collections/ Disb SAP Claims Collections/ Disb SAP Claims Collections/ Disb Reinsurance Reinsurance Policy / UW
SAP Business Warehouse, NetWeaver / .NET Integration
Legacy Capabilities (e.g., Policy, UW) Legacy Capabilities Legacy Capabilities (e.g., Policy, UW) Legacy Capabilities Legacy Technology Stack
Point Solutions Point Solutions Point Solutions Point Solutions TCO
According to Gartner Research study of TCO - December 12, 2002:
ν Productivity of bought applications tends to exceed that of built
applications by more than 3:1
ν Bought Applications cost 40% less than built applications
Individual SAP products improve effectiveness and reduce
costs. Multiple SAP products dramatically improves TCO
Implementation Approach – ASAP Driven
Define customer solution based on SAP processes ProjectPreparation BusinessBlueprint Configuration
ASAP Driven Project Management Project Administration Customer Development Configure
processes Test processes
Training Define project Set up system landscape Final Preparation and Go Live
Project Preparation Final Preparation SAP Quality Review Project Preparation Project Preparation SAP Quality Review Blueprint Blueprint Realization Realization Final Preparation Final
Preparation Go Live &
Support
Go Live & Support
Realization Go Live &Support
Business Blueprint
Continuous Change
Implementation Monitoring – SAP Services
SAP Quality Review SAP Quality Review SAP GoingLive Checks SAP GoingLive Checks SAP Early Watch Alert SAP Solution Manager
Schedules & Tasks
Project Preparation
¬ Define project team and roles
¬ Project Charter and Standards
¬ High-level blueprint and technical requirements document
¬ Training plan
Proof of Concept
¬ Install hardware and software
¬ Bring up “sandbox”
¬ Limited proof of concept configuration
¬ Limited interfaces to policy and other systems
Business Blueprint
¬ Complete planning and design
¬ Define business processes, master data, org structure, reports, forms, etc.
Schedules & Tasks
Realization
¬ Bring up develop, testing, QA, production environments
¬ Configuration and unit testing
¬ Documented BPPs
¬ Interface development and testing
¬ Formal transport procedures
Final Preparation
¬ Production plan
¬ Cutover plan
¬ System testing
¬ End user training
¬ Documentation
Go-Live & Support
¬ Help desk