Insurance giant Aflac transforms people and systems to pay claims in just one day
- Aflac is the US’ largest supplement insurance provider and it is using Pegasystems to automate and rethink some of its more complex processes.
Anyone that has dealt with an insurance company of this scale will know that this is no small feat. And Julia Davis, CIO at Aflac, explained to delegates at Pegasystems’ annual user event in Las Vegas this week how she has had to align the business and IT functions closely in order to make it happen.
Aflac is deploying Pegasystems to support this transformation and is making use of its robotics and automation capabilities to reduce manual steps that relied heavily on paper and spreadsheets.
However, Davis explained that the insurance industry in general has been slow to catch up and this means companies like Aflac are now struggling with difficult to manage platforms. She said:
Insurance was one of the first groups to start automation. We developed a lot of technology to make it faster to process policies and pay claims. But we did that in the 70s. One of our core platforms that we run today is called Life70 - because it was built in the 70s. So imagine how hard it is to find people to code that. That helped us to understand that we need to focus a little bit more on our transformation.
How do we deal with the fact that our regulatory environment is changing faster than we can keep up with? We have seen more changes in the last 10 years than we have seen in the last 60. We also have to recognise that the customer’s expectations are changing. There is a need for speed to market. Insurance products seem like they’re the same products they were 60 years ago.
That whole market has changed and the way that we sell has completely changed. So that means that we have to look at different technology to facilitate that speed to market.
Trust was broken
Davis said that when she joined Aflac, one of the first things she noticed was that the trust between the IT organisation and the business organisation was broken. Business’ perception was that IT was difficult to deal with, requests took too long and the results were not what the users expected.
As a result, she spent a lot of time sitting down with the business and trying to understand what they wanted and needed. Davis soon realised that she needed to convince people that Aflac needed to approach development in a different way, and that IT had to interact differently with the business.
Her opportunity came when the CEO of the company called her one day and said that he wanted to reduce the claims processing and payment time from four days to just one. However, Davis needed something from him too. She explained:
We had been advertising that we could process claims in four days, but our CEO called me and said he wanted to do it in one. What’s it going to take? I said, I’ve got twenty number one priorities, it’s going to take 18 months. That’s not what he wanted to hear. So I had to change with how I interacted with him and said I can do this, but what I need from you is nothing else on my plate. I wanted only number one priority. That’s it. And I want everyone in business and IT taken out of their jobs, locked in a room, following the agile process.
Sure enough, we delivered it in 5 and a half months. That was our win. That’s all it took. We watched our customer satisfaction ratings go from 39% in 2013 to over 79% in just three years. All from agile. What a shift in how the business perceived us.
They were thrilled to have the opportunity to understand for once what the minimum product was. And they realised that they now had control and understanding of what they could invest in and how the resources would work towards that. It made all the difference in the world for us.
The next steps
Having changed the perception of IT through working closely with the business function, using agile processes, Davis was able to think about where else Pega could be used successfully within the business. She wanted to future proof some of the systems, in a bid to get away from those ageing platforms built in the 70s.
Davis’ focus fell on Aflac’s Enterprise Proposal System. The proposal process used to be that when sales agents worked with brokers, they developed multiple sets of proposals for each broker, and each broker would have a different combination of products and prices. As you can imagine, this was largely done through Excel spreadsheets and agents were carrying around boxes of files that they had to rifle through. And when it came to winning a deal, they had to go to the processing unit and say ‘I think this is the proposal with the right products and prices’.
Davis wanted to change this. She explained:
That whole cycle time to set it up could take weeks and was a huge nightmare from a quality perspective. It drove everybody nuts.
We have a hockey puck sales cycle, so everything hits in the fourth quarter. We had to hire a tonne of additional people to come in and process that just to make the deadlines. Well, we leveraged Pega and developed a tool that helped automate a lot of that, track a lot of the different versioning and controls, and provide better integration to our policy admin system, so that we could automatically feed the information between the proposal system and the policy admin system. In order to drive more efficiency and quality control of the whole process.
We watched that cycle time go from weeks to minutes. We watched the approval ratings between our sales organisation and our processing organisation go way up. Everybody was a lot happier with this process. They loved it. We got really strong feedback.
Making better use of people
Having reduced these processing times through automation, Aflac suddenly found itself in the privileged position of having more people power than it had previously. Resources had been freed up. As such, Davis took the opportunity to understand where they could be placed to deliver more value-add to the business. She explained:
We were able to free up resources from doing more of the mundane work and relocate them on to more value add capabilities
We recognised that we needed to provide more professional development, because we’re changing the way that they work, the way that they interact, the way that they talk to each other. We knew we needed to be able to provide them training. Not only within the IT organisation, but within the business.
We needed to transform our people along with the systems. We needed to make sure that we understood our skill gaps. We went through an immense evaluation, looking at all the new skills we were going into, as well as the skills we had - and we tried to match to make sure we had the gaps filled. We did identify a lot of gaps, and a lot of that was in the Pega space as we’d grown more into Pega.
So we realised we had to find a different way of working, and part of that was some of the free training that Pega offers, encouraging our employees to do that. Encouraging our business partners to do that. As we shifted to agile, we were not only training IT, we were also training the business. We had to open up and share with everyone. The only way you’re going to go on this journey is together. And you both have to learn during that process.