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Business Context Work Product

Individual Life- New Business Domain


Version 1.0a

XYZ Limited
_________________________________________________________________

Version 1.0

Effective: April 03, 2006

New Business Domain

Business Context Work Product


Life Domain Competency

Version 1.0a

Prepared By NAME: ROLE: SIGNATURE: DATE:

Inspected/Reviewed By

Approved By

VERSION HISTORY Version No. Date Changed By Changes Made

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Life Domain Competency Business Context Work Product

Table of Contents
Topic Page No.

INTRODUCTION ............................................................................................................................................................4 BACKGROUND INFORMATION .........................................................................................................................................4 PURPOSE...................................................................................................................................................................4 SCOPE .....................................................................................................................................................................4 DEFINITIONS AND ACRONYMS.......................................................................................................................................4 REFERENCES..............................................................................................................................................................4 BUSINESS CONTEXT MODEL.....................................................................................................................................4 DEFINITIONS OF KEY ROLES....................................................................................................................................7 INSURER...................................................................................................................................................................7 POLICY OWNER /PROPOSER ...........................................................................................................................................7 INSURED...................................................................................................................................................................7 BENEFICIARY.............................................................................................................................................................7 PRODUCER ................................................................................................................................................................7 UNDERWRITER...........................................................................................................................................................8 MEDICAL EXAMINER/PHYSICIAN....................................................................................................................................8 SERVICE PROVIDERS (LABORATORY, MIB, TPA ETC)......................................................................................................8 REINSURER................................................................................................................................................................8 REGULATOR..............................................................................................................................................................8

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Introduction
Background Information
To sustain profitability and competitiveness in today's marketplace, insurance carriers must seek robust, scaleable solutions that will dramatically reduce their operating costs. At the same time, customer expectations of better service and their willingness to shop around are driving a radical shift to truly customer centric products and processes. Insurance companies must compete in highly competitive, tightly regulated markets that reward efficient operations. Writing new business is one such operation in the insurance world which is going though radical shift in view of increased competition and customer expectation. This analysis aims to identify the key players who are engaged in value creation during a new business acquisition phase from a generic life insurance industry perspective. The depiction and elaboration are primarily dealt from an Insurers point of view. This analysis aims to provide the business context of the new business domain of a life insurer dealing with individual life business and subsequently accelerate further analysis and solution development work on the same domain.

Purpose

Scope

In New Business framework, New Business processing main functions include: Quote Process/Illustration Proposal Submission Good order check of the proposals received from producers. Underwriting of proposals Issue of policy Preparation & submission of various statements periodically. Reinsurance arrangements

Definitions and Acronyms


Acronyms NB UW RI Explanation New Business Underwriting Reinsurance

References

www.loma.org www.irdaindia.org www.acord.org

Business Context Model

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INSURED

PRODUCER

REGULATOR

UNDER WRITER

INSURER

SERVICE PROVIDER

REINSURER MEDICAL EXAMINER

BENEFICIARY

POLICY OWNER

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INSURER Creates Insurance Products Prices, Promotes and distributes products Identifies risk class and accepts insurable risks Issues policy Settles Claims as per policy provisions REGULATOR Promotes growth of Insurance Industry Regulate the Solvency of the company Training & Appointment of agent Licensing Protect Insured's Interest Handles complaints Resolves disputes Enforces Compliance

BENEFICIARY Beneficiary receives the proceeds of the policy benefits. Intimates the insurer when the claim arises

POLICY OWNER Applies for insurance as a proposer Legal Owner of the life insurance policy Does assignments, nominations. Raises policy servicing requests

MEDICAL EXAMINER Checks and provides medical information of the insured.

PRODUCER Distributes and sells insurance products Does need analysis Counsels & services insured Acts like a field underwriter Performance tracking of agents Provides market feed back to the Insurer

REINSURER Accepts risks from the insurance company Provides underwriting assistance May further transfer the risk to another reinsurer

INSURED Provides all the risk information Undergoes medical examination if needed

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UNDERWRITER Scrutiny of proposal Check for any adverse risk profile Identify the risk and classify the risk Decides the extent of coverage. Acts on underwriting guidelines

SERVICE PROVIDER Laboratory testing services BPO and Call center services Organization providing risk Information

Definitions of Key Roles


Insurer
The company offering protection through the sale of an insurance policy to an insured is known as the insurer. The insurer promises to pay a benefit if a specified event (as covered under contract provisions) occurs.

Policy Owner/Proposer
A person or party, who owns an individual insurance policy, the policy owner is not necessarily the person whose life is insured. The terms policy owner and policyholder are frequently used interchangeably. Proposer or applicant is the person or party that applies for an insurance policy and called as a proposer till the policy issuance. When a policy is issued, the proposer or applicant becomes the policy owner.

Insured
The insured is the person whose life is insured under the policy. The policy owner and the insured may be and often are the same persons. He or she is the person whose life is covered by the insurance policy and upon his or her death the insurer pays out a death benefit to a designated beneficiary.

Beneficiary
Life Insurance policy proceeds are usually paid to the policys beneficiary, the person or party the policy owner names to receive the policy benefits. Beneficiary can be the Insured in case of survival benefits and it would be another person or party nominated by the policy owner to receive the proceeds of death benefits.

Producer
A producer is a representative of an insurance company authorized to sell insurance policies. Producers identify the financial needs and future goals of their customers and recommend appropriate products to suit the need. Producer is a commissioned distributor who is under contract to receive a percentage of premiums generated and provides service to the policy owner on behalf of the insurance company.

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Underwriter
The employees of the life insurance company who are trained and responsible to identify and classify the degree of risk represented by a proposed insured are called underwriters. Underwriting consists of two primary phases, Identifying the risk the proposed insured represents Classifying the degree of risk the proposed insured represents

Medical Examiner/Physician
A physician appointed by the Insurance Company who produces primary medical report on the proposed insureds health basing on a physical examination and questioning of the proposed insured. Such a medical report serves as part of a medical information section of the proposal.

Service Providers (Laboratory, MIB, TPA etc)


In exchange for a fee, a number of service providers assist the new business processes of an insurance company. Laboratory or medical clinic provides laboratory services to help the underwriter evaluate the medical risk presented by the proposed insured. Organizations like Medical Insurance Bureau store and provide medical history information of proposed insured to insurers. Underwriters of insurance company refer to these organizations to collect and validate more medical information if required. Third Party Administrators provide supplementary processing services to the insurer like payment and collection services, call center support to the customers and producers etc.

Reinsurer
As part of risk transfer strategy, the insurance company transfers part or all the risks on its insurance policies to another insurance company called as Reinsurer. In other words insurance company purchases risk coverage from the reinsurance company in exchange of some premium amount.

Regulator
It is the apex body overseeing the insurance business in a particular territory. It protects the interests of the policyholders, promotes and ensures orderly growth of the insurance industry. The primary role of the regulator is to ensure that the insurance companies Remain solvent- that they are able to meet their debts and to pay policy benefits when they come due. Conduct their businesses fairly and ethically.

Business Processes:
The Business Processes of all the roles identified as per the Business context.

Insurer: 1. Appointment Licensing & Registration Process for channel Partners or Producers
2. Producer Performance tracking process 3. Producer Compensation Process 4. Product Development 5. Product Training Process 6. Proposal Scrutiny process 7. Underwriting process 8. Policy Issuance
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9. Policy Servicing Process 10. Claims Process 11. Reinsurance Arrangements Process 12. Financial Management Process 13. Reporting and Compliance Process

Producer: 1. Appointment, Registration, Licensing and license renewal process


2. 3. 4. 5. Product Training Process Lead Generation Process Illustration and Quotation Process Proposal Submission Process 6. Policy servicing process 7. Claim support process

Policy Owner:
1. Policy application process 2. Providing risk information to the insurer 3. Premium payment process 4. Policy servicing process

Insured: 1. Providing risk information to the insurer


2. Policy Servicing Process 3. Survival Claim Process

Beneficiary:
1. Claim intimation process 2. Claim document submission process 3. Change of beneficiary Authorization process

Regulator:
1. Licensing process for various entities 2. Regulation Process for ensuring Market Conduct 3. Regulates the maintenance of margin of solvency 4. Complaint handling & adjudication of conflicts between various entities

Underwriter:
1. Process of risk assessment (identification, eligibility check, classification, attaching decision, Rating process) 2. Process of obtaining reinsurance coverage

Medical Examiner 1. Tie-up with the Insurer


2. Process of Medical Examination 3. Compensation Process
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Service Providers Medical Information Providers


1. 2. 3. 4. Tie-up with the Insurer Process of Medical information collection Providing medical history to the insurer Compensation Process

Medical Clinics 1. Tie-up with the Insurer


2. Process of Laboratory Test 3. Compensation Process

Third Party Administrators


1. Tie-up/agreement process with the Insurer 2. Process of Knowledge Transfer from the Insurer 3. Performing the identified process(call center services, business process) 4. Compensation Process

Reinsurer:
1. 2. 3. 4. Treaty/FAC agreement process with the Insurer Risk acceptance process Billing Process Claims Process

The business processes in relation to the Insurer only are being considered for this exercise. The Business process model pertaining to Beneficiary & Service Providers are based on the information currently available and do not purport to be comprehensive.

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