The path of change, part 2: Automating the account current reconciliation process

Background
A pioneer of alternative risk management programs, Meadowbrook Insurance Group is a full-service risk management company with a reputation for achieving its goals. Accomplishments such as being recognized as a leader in alternative risk management result from Meadowbrook’s history of unparalleled service, innovation, and visionary thinking. The company excels at overcoming challenges, and recently it conquered yet another thorny business issue – a labor-intensive, monthly account current task.

Meadowbrook Insurance Group does business with many managing general agencies (MGAs). For non-workers’ compensation property and casualty lines, the MGAs were billing policies through their systems on an account current basis. Since the premium collection had to be reconciled to the premiums due in Meadowbrook’s system, a monthly reconciliation had to be performed. Some carriers would push this back on their agencies, forcing them to pay premiums from a company statement, but Meadowbrook prides itself on customer satisfaction. Thus, it sought a way to automate this repetitive process. The company established an “account current project,” and soon its visionary thinking led it to Adeptia’s Business Process Management (BPM) solution.

Challenge
Jim Lee, Meadowbrook’s IS manager, is most familiar with the challenge his company faced. “Meadowbrook receives account current data from its agents on a monthly basis,” said Lee. “The data came to us in various formats (usually non-standardized Excel spreadsheets) via email. That data had to be manually entered into our Advantage system, a Microsoft .NET-based system accessed through the web with an Microsoft SQL database on the backend.”

Data entry involved manual data look-ups to ensure incoming data was correct and applied to the correct policies. This created a “held-batch” that was later released to Meadowbrook’s master policy tracking system once the actual check was received. “The processing time for the creation of the ‘held-batch’ for our four largest agents was approximately 27 hours per month,” said Lee.

A (1)

Business objectives
The project team first identified clear goals marking success for this initiative.

  • Establish an Excel file format template that will be used as a means for agents to render account current reports to Meadowbrook.
  • Reduce manual entry and improve accuracy by providing an automated import of agent account current reports for about a half-dozen large MGAs.
  • Provide an automated mechanism for processing account current reports rendered by other agents doing business with Meadowbrook, regardless of the agency management system the agencies utilize.

Solution approach
Adeptia proposed a solution that would consist of an automated upload of the agency premium and payment data into the Meadowbrook system. However, before that could be accomplished several validations had to take place:

  • The policy must exist in the system;
  • The payment must be assigned to the correct policy period;
  • The payments must be aggregated as the policy system takes only one transaction per cycle; and
  • The payment must match the carrier system premium due.

The project team first documented the current “as-is” process to fully model and document the existing business workflow (refer to diagram on page 81).

The project team then documented the new “to-be” process to fully reflect the new requirements and business objectives as defined above (refer to diagram on page 82).

B1

C

The process also had to access Meadowbrook’s AS/400-based POINT system to validate the incoming data against its policy database. As well, the solution had to let the Meadowbrook user intercede and add missing data as necessary and approve items falling outside generally acceptable parameters.

With the requirements in place, Meadowbrook found a solution in Adeptia’s BPM tool because it could integrate data and automate business workflow, which was something other vendors were unable to do. “The installation went fairly easily,” said Lee, “but there was a significant ramp up time from a technological standpoint because this was a new technology for us. Adeptia is Java-and XML-based, and we are mostly an AS/400 shop.” Adeptia trained a select group of Meadowbrook IS personnel and worked as part of the account current project team to provide solution delivery and on-the-job training.

“Under our Adeptia-based solution, incoming files are now created by our agents using a standardized format on an Excel spreadsheet and are FTP’d to our servers,” said Lee. “Adeptia takes the incoming data files and confirms that the information received matches valid policies in our system. The Adeptia server then performs data mapping and editing before creating the “held-batches.”

If a data error is discovered on an incoming file, a given batch’s processing goes on hold until the data error is resolved. A user task is created and a message is sent to the accounting department that a batch has one or more data issues needing resolution. The user goes to the specific task, resolves the data error(s), and releases the remainder of the batch for processing.

Technical description
The overall solution was designed using the Adeptia Business Process Management technology called BPM Server. In this product, process flows are created to represent specific workflow and data flow steps that overall combine to create the full business solution. In the case of this account current project, the flows depicted below were created in Adeptia BPM Server.

D

  1. The Stage 1 Import process flow is setup through an FTP trigger that polls the entire set of agent inbound folders for incoming files. The incoming files are then scanned for multiple worksheets and the Stage1 Import activities are performed for each batch with each worksheet being treated as a batch.
  2. The ACURR_PFManager (DB Wrapper) simulates database triggers. It checks the batch control statuses and triggers the appropriate process flow.
  3. The Stage2 Validations process flow validates the policy number and the presence of policy effective date or transaction effective date and creates an Excel file with a list of error records. If there are errors, it updates the batch control status to trigger the Stage2 Workflow process flow.
  4. The Stage2 Workflow process flow picks up the Excel file for the batch and creates a workflow event for the IS Business Analyst to correct issues and upload the file back again. The uploaded file is updated back into the Stage1 table. The batch control status is updated to trigger the Stage2 Validations process flow again.
  5. The Business Rules Processing process flow creates the formats specified in the mapping document and the business requirements document using the imported records in the Agent Data table. The formats generally include looking up POINT and getting the missing information needed for the Advantage back-end application such as MCO, LOC, Symbol etc. It also does the validations specified in the business requirements document and flags the error records.
  6. The Validations Workflow presents a set of custom user interface screens that facilitate making the necessary corrections to the error records. After the business user has made the necessary corrections and the corrections have been validated successfully, then the batch is ready for Aggregation and FTP.
  7. The Aggregate and Finalize process flow is a time-triggered process flow that runs 3 times a day. It checks if the previous transmission has completed successfully (confirmation received). If Yes, it creates a new Microsoft Access database containing certain tables, totals the records in the Agent Data table (SQL Server) belonging to the same policy (based on policy number and effective date), imports them into two new tables, inserts a new row in the FTP Transmission table with the correct status, updates Batch Control status, calls the next FTP-to-Advantage process flow, and updates FTP Transmission Status to TRANSMISSION_COMPLETE or TRANSMISSION_ FAILED depending on the return code from the call.
  8. The FTP-to-Advantage process flow FTPs the Access file in the outbound folder of the app share location to the Advantage back-end application. There is a “retry logic” that retries to the count of 2 if the initial transmission fails. If all retries fail, an email notification is sent to the application distribution list.
  9. The Confirmation Processing Archive and Purge process flow is set up to be triggered by the confirmation file from Advantage. The process flow updates the Transmission Status in the Transmission Control Table.
  10. The Business Activity Reporting process flow creates Excel reports for all the batches in the Transmitted Access database. The Excel reports have two tabs for each batch. The first tab shows the header information from the first new table with the overall total and subtotals as detailed by the requirement above. The second tab shows the different transactions from the other new table. In addition, some fields need to be looked up from POINT as determined from the expected format (hardcopy) of the reports.
  11. TheCut-off Notification process flowiterates though the batch control and generates two reports. The first report is a list of agents that have not sent their account reports for the current month and the second report is a list of batches that have not completed processing.

Rapid timeline to automation
A Business Process Management Suite (BPMS) is an enterprise software product designed to manage, automate, and optimize business processes. It combines process management with application and partner integration. BPM software easily and quickly automates business processes using industry-specific standards. This project was completed in record time because the BPM technology minimized the need for complex, time-consuming coding. A good BPMS takes a “configuration, not code” approach to creating business solutions; some of the better products have pre-built sets of process templates, application adapters, and rules-based mapping capabilities that allow developers and business analysts to collaborate and take a project from requirements to deployment very rapidly. Overall, at the project’s conclusion, Meadowbrook had cleared yet another business hurdle.

Results
Using Adeptia’s BPM for Insurance tool, Meadowbrook imported files received from MGA’s systems. The file format provided was a simple Excel file with multiple worksheets. Once the file is imported, business rules are applied, errors noted and routed to the appropriate individuals for handling. All the human workflow steps are monitored and are escalated, if necessary, to finalize resolution. After the human intervention is complete, the file is run through the validation process again. Once it passes all the validation points, the file is loaded into the policy management system.

“Within the first week of launch, we were able to process two months’ worth of data from our largest agent in just over one hour,” said Lee, “and that included the time required to resolve a few data issues.”

It’s no secret that insurance companies face intense pressure to improve performance, increase profitability, deliver superior customer service, and increase shareholder returns. Business Process Management – a proven technology – helps insurers meet these and other business objectives while delivering a competitive advantage. That’s certainly the case with Adeptia’s BPM solution, which integrated data and automated Meadowbrook’s account workflow. Meadowbrook’s customer satisfaction continues to receive high marks, the company’s cash flow is much better, and certain annoying manual processes belong to the past. And the future? It looks a lot simpler, and a lot more efficient.

Inside the technology
BPM Suites combine business process management with application and partner integration capabilities. They let business users and IT staff collaborate and automate and optimize complex business processes. A good BPMS offers a powerful business tool for managers to document, control, and monitor critical processes and then improve them. Many BPMS offer a graphical process design and modeling interface. Process engines are runtime components that execute the process flows that are defined in the graphical process designer. The engine should offer highly scalable and robust performance, support clustering of multiple BPM server nodes for load balancing and redundancy and include the capability to automatically restart and recover processes that were interrupted by any software, hardware, or network failure.


Becky Barnette is Vice President of Sales for Adeptia, Inc. She has more than 20 years of experience in the insurance industry, having worked for industry-leading companies including American International Group, Reliance National, Kemper Insurance and Meadowbrook Insurance Group. Becky was a founding member of CyberComp (a division of Reliance National), a company that sold the first commercial insurance product offered solely through an Internet portal. She later joined Kemper Insurance and founded their eSource division, which again offered a commercial insurance product online to Kemper agencies. Her most recent position has been with Meadowbrook Insurance Group as Senior Vice President of their Agents Edge division. As the insurance industry began to look beyond the web front end to solve process inefficiencies, Becky led efforts at Meadowbrook to adopt leading technologies, including Adeptia’s BPM for Insurance product.

Deepak Singh is Chief Technology Officer and President of Adeptia, Inc. Prior to Adeptia,  he Director of Product Management at 3Com Corporation, where he was responsible for the cable modem systems business line with $40 million in annual revenue and a team of over 60 employees. He led 3Com’s cable modem business development efforts and successfully negotiated a number of partnerships and a major strategic investment. Deepak also worked at Netscape Communications as a product manager for a knowledgebase application. Earlier, Deepak worked at Advanced Micro Devices, where he designed a Fast Ethernet controller chip and led the engineering team from design through production. Deepak holds a BS in Electrical Engineering and Computer Science from the University of California at Berkeley, an MS in Engineering Economic Systems from Stanford University and an MM from the J.L. Kellogg Graduate School of Management at Northwestern University.