Hi there! Do you know what is one of the fastest growing business analyst domain areas here in Asia, and in particular, Singapore?
Yes – it’s insurance. From what I observe, insurance companies large and small here in Singapore (and in the regional countries like Malaysia and Thailand) are hiring business analysts in droves.
Traditionally, banking business analysts have always been a hot segment in the job market. However, in recent years, the demand for business analysts in insurance is starting to match or even exceed that of banking.
In this article, I want to help you understand the role of the insurance business analyst in more detail – this will be useful to you if you’re thinking of taking up such a role.
I’ll discuss the role of the insurance business analyst from a system implementation point of view. By and large, the same concepts will apply to insurance business analysts who cover more strategic kind of work (e.g. competitive analysis, building of business cases).
I think that an insurance business analyst plays the following roles:
- Domain Expert
- Solution Expert
- Requirements Project Manager
- Test Manager
I’ll cover each of these roles in turn.
1. Domain Expert
First and foremost, the insurance business analyst is a domain knowledge expert. To help you understand what this means, particularly from the context of insurance, take a look at the following diagram.
A typical insurance value chain
The diagram above shows the “insurance value chain” in a typical insurance company. I’ll elaborate a little of the diagram because it’s useful for you to understand the business side of insurance as a BA in this domain.
This is where new “proposals” for insurance policies are registered, evaluated and approved by underwriters.
Take an example – when you buy a life insurance policy, your insurance agent will pass you a proposal form for you to fill up.
You’ll enter personal details like your demographics (name, address, identity card number, etc.) and very importantly your health details (e.g. whether you smoke, history of illnesses and diseases) and how much you are insured for (the sum assured).
This form is passed to an underwriter in the insurance company who will evaluate the risk of insuring you.
If you don’t have any particularly risky illness / condition that will cause the company to have an increased chance of having to make claims payments to you, then you’ll be charged a “standard premium” for the policy. If you’re a smoker, for example, you will attract a higher premium amount for the policy (called “loading” in the industry).
The premium is a monetary amount you pay to the insurance company on a regular basis to keep your policy in effect and ensure insurance coverage for yourself.
The New Business stage of the insurance value chain ends once your insurance policy is issued, the necessary documents mailed to you, and the actual premium you need to pay finalized.
The next critical stage of the insurance value chain is policy servicing. Some companies call this “customer service” and what this does is to maintain the customer’s details / transactions over the lifetime of his or her policy with the company.
A customer can choose to increase or decrease the sum assured in a policy, change the frequency at which he or she pays premium (annually, monthly, quarterly and so forth), change addresses or identity card numbers, etc. Basically anything that changes about a customer or his / her policy is handled by Policy Servicing.
In addition, if the customer is unable to pay premiums, the Policy Servicing department will take care of procedures (“automatic premium loans” in some jurisdictions) to ensure cash is made available to continue to service the customer’s policy.
If an insured event occurs (e.g. death), a claim is registered with the insurance company by the claimant. The company must review the case and determine what level of payout (if any) to make to the claimant.
This involves checking with the hospitals, doctors and other professionals involved in diagnosing the condition of the insured. If the claims criteria are passed, the insurance firm will pay out the sum assured (and other benefits if relevant) to the claimant.
The insurance business is mainly defined by New Business, Policy Servicing and Claims. There are a lot of other business units which we won’t delve into here – Products, Re-insurance, Billing & Collection, Accounting, etc.
There is usually a Product department to define new products in the company – e.g. life insurance, unit-linked insurance, universal life insurance.
Re-insurance allows an insurance company to “outsource” some of the risk associated with an insurance policy out to a third-party re-insurer.
Billing & Collection and Accounting deal with monies that are paid by customers to the firm, as well as disbursement of monies out to customers (e.g. cash bonuses).
As a domain expert in the above areas, an insurance business analyst is usually expected to be conversant in at least two areas of the insurance value chain, e.g. he or she may know New Business / Underwriting and also Claims processes very well.
With this knowledge, the BA can add a lot of value to the project (especially in the phases of insurance business process improvement, system requirements or testing) since he or she will be able to speak “insurance lingo” with users.
2. Solution Expert
So far, we’ve talked about “domain” knowledge of an insurance business analyst. What about “solution” knowledge?
Well, while domain knowledge talks about the functional areas of insurance (e.g. New Business, Policy Servicing and Claims), solution knowledge talks about what tools or systems can be used to support insurance operations in a company.
An insurance business analyst can also be a solution knowledge expert. Note that for this article, I will focus more on system solutions rather than other kinds of solutions.
There are many types of insurance system solutions out in the market:
Core insurance systems
Core insurance system solutions like CSC Integral and eBao LifeSystem target the entire insurance value chain and provide support for administering insurance policies. These systems tend to have a number of standard characteristics.
First of all, they are expensive. Very expensive. A solution roll-out for a core insurance system can easily cost upwards of USD10 million to USD20 million.
Secondly, the projects associated with these core insurance systems are HUGE projects – often involving scores of in-house and external resources who are skilled in the platform being rolled out.
Case Study: I once played the role of a Business Analyst in a large-scale core system rollout for an insurance company with operations in Singapore and Malaysia. I was but one of the thirty over BAs deployed by my company into the project.
If I add in the other staff (e.g. project managers, developers, testers) – the size of the implementation team was easily over 100 people. So you can imagine the magnitude of these core insurance system projects.
The third characteristic of core insurance systems is simply the breadth of functionality they provide. You see, a core insurance system is like the system “heart” of the company. It covers new business / underwriting, policy servicing, claims and other policy management functionalities.
Anything you can do with your insurance policy, the system must be able to handle it. Not to mention the fact that the core system can be hooked up to peripheral systems (e.g. CRM, document management, payment systems) to provide the full, all-round system support to the company.
An insurance business who understands core insurance systems is of tremendous value in the market and insurance companies will pay top dollar for them.
Why? Because these BAs (especially the senior ones who have done multiple projects using the same system solution) know the end-to-end modules of the software inside out. And they usually also have strong domain knowledge too.
When gathering requirements or testing the system, these BAs they will naturally have insights into many pitfalls and challenges the project team will face – and potentially save the project from disaster.
Claims management systems
Many insurance companies struggle with claims. Claims are filed from policyholders who have met with a tragedy or disaster and are usually very thin on patience.
They can be very unforgiving when it comes to turnaround times for processing claims. Some of the best insurance claim management systems out there come from providers such as Fineos (Claims for Life) and Guidewire (ClaimCenter).
Claims management software typically focuses on automating the manual claims filing process. Instead of manual claim forms, these systems make use of electronic ‘case records’, so that the user can access appropriate information involving doctors, hospitals and other third parties quickly and easily.
These systems also externalize claims processing rules (e.g. certain types of accidents pay out only up to $X in damages) into ‘claims checklists”. These can guide the user in assessing claims in a consistent and compliant manner, instead of having each user process them in their own way.
Claims management software projects tend to be smaller in scale compared to core insurance software. Some core insurance systems bundle claims management as a module in their overall solution.
However, claims business rules can get extremely complicated so insurance BAs who understand the intricacies of claims processing (in life or general insurance) are usually in demand in the job market.
In fact, just like in core insurance software implementations, an insurance BA who is knowledgeable in claims management systems will play key roles in any claims transformation project.
He or she will be important particularly in the business process re-engineering, system requirements gathering and testing phases of the project.
Expert Underwriting Systems
Another category of insurance system solutions is the expert underwriting system.
The underwriting department in insurance companies is staffed by very mathematically inclined, actuarial trained employees. They make decisions on the risks of insuring you as a policyholder using a set of rules.
Now, I’d say that 20% of underwriting workload is to deal with complex policy underwriting. This means that the underwriter has to process very complex rules or apply human judgment or subjective evaluation to arrive at a decision.
For the other 80% of simpler underwriting cases, an expert underwriting system can be used to automate decision making.
We’ve talked about insurance BAs playing roles in core insurance or claims management system implementations. What about BAs for expert underwriting system projects?
Well, in my experience, I find these BAs to be very rare.
It is VERY hard to find an insurance BA who is skilled in underwriting or trained as actuaries. Why? I suspect the reason is that insurance companies will pay VERY good money for them and often they’d rather work in the insurance firm as an underwriter rather than in a project as a BA.
3. Requirements Project Manager
The other role an insurance business analyst may play is what I call a “requirements project manager”.
You see, a project manager manages the ENTIRE project – looking out for milestones, deadlines and managing stakeholders across all work streams.
The BA, however, is usually in charge of requirements (and sometimes testing). Besides being a domain and solution expert, he or she must be conversant in managing requirements.
Management of requirements is no mean feat. Why? Well, there are a couple of reasons.
First up, for an insurance system implementation, there could be anywhere from hundreds to thousands of requirement documents that need to be written, revised, tracked and signed off by stakeholders. That is a LOT of documentation.
The second point is that requirements need to be CLEAR. Clarity in requirements can only be achieved if the insurance BA digs deep into business processes and rules – so often you will have a huge number of BAs on a project, especially if it is a core system replacement.
Third, requirements stakeholders need to be managed. In my experience, when you are a BA running the requirements work stream in a project, your stakeholders LOVE to change their minds about requirements.
After all, at the requirement stage, nothing is developed yet in the system and a change only results in a document update here and there. Management of these changes can be a tremendous effort in itself.
Do you see why I say a BA (not just an insurance BA but any BA in general) needs to be a “requirements project manager”?
The truth is, requirements is a mammoth work stream and in many cases a BA needs to become a project manager within that work stream to ensure all tasks are managed and executed.
We now move on to another important role of an insurance BA – that of a facilitator. A BA must have the necessary facilitation skills to run large workshops / meetings to gain agreement on requirements and issues.
What do I mean by facilitation skills? Well, let’s take some examples.
- If someone keeps quiet during a workshop, you need to know how to cajole the person to talk more.
- If someone hogs a meeting, you need to know how to shut him or her up.
- If the workshop is going nowhere, you need to put action items into a “parking lot” for offline follow-up.
All these are essential facilitation skills which are critical in all projects.
As a project manager, I always look out for facilitation skills in my BAs.
Why is that so? Well, because firstly, BAs run a LOT of workshops and meetings. More so than developers or testers. If a BA cannot facilitate a meeting, requirements will be hard to elicit and timelines are bound to get delayed.
Case Study: I was once a Lead Business Analyst for a public sector project here in Singapore. I was running requirement workshops for a new system everyday (Monday to Friday) for THREE months.
Can you imagine that? I practically lived with my laptop and even carried a portable projector around my client’s office. After you run so many workshops, your facilitation skills improve by leaps and bounds.
And that’s a good thing too – given that in the modern workplace, a core skill is the ability to get a group of people together and gain consensus.
5. Test Manager
One final role I’d like to discuss is that of an insurance BA playing the role of test manager. A BA, with his knowledge of the industry domain and solution knowledge is perfect for the role of test manager.
In most of my projects, I ensure there is continuity for my Lead BA to become a test manager. He or she knows the functionality of the system and can plan and design test cases with great efficiency, compared to a fresh face who has no background in the project.
Of course, those of you who have been involved in testing in system implementation projects will know that being a test manager is not for the faint of heart. You’ll be dealing with hundreds (or thousands) of system defects, chasing the software vendor to fix them, coordinating the update of fixes into the testing environment, and so forth.
Some insurance BAs I know HATE to do testing.
They just want to do process re-engineering or requirements and stop there. They don’t want to think of test plans or test cases. They don’t want to investigate system defects during testing. They don’t want to argue with the software vendor to prioritize fixes.
For me, that’s fine. You should always let your project manager know your preferences.
6. How to Build Up Domain / Solution Knowledge
Now that you understand the roles that an insurance BA plays, I’d like to touch on a topic that is of critical importance – domain and solution knowledge.
Those of you who have been reading my articles will know I put a premium on domain and solution knowledge.
Whilst these are important for a project manager, they absolutely CRITICAL for a BA.
It’s very tough indeed for a BA to survive in the marketplace without any domain or solution specific expertise. Gone are the days where a BA can just join a project based on generic BA skills like facilitation, knowledge of Microsoft Excel, etc. (unless you’re fresh out of school and command a very cheap man-day rate).
These have become commodity skills and are easily outsourced. To differentiate yourself, do yourself a favor and pick up domain / solution skills.
But how do you pick up domain / solution knowledge if you have no background? Here are a few ideas.
- Join an insurance firm. First, you can join an insurance firm and learn from the ground up. I’ve seen many good insurance BAs who started out working in the operations department of an insurance company.
- Join a consulting firms. Alternatively, you can join a consulting firm and build up a portfolio of insurance consulting projects.This path may not be so easy because (1) it’s not easy to get into consulting unless you’ve good academics or relevant experience; and (2) it’s not easy to get into a continuous stream of insurance projects unless consulting market demand is very good.
- Read widely about insurance. Next, you can read voraciously and learn about insurance. I know some folks will say reading and learning is all theoretical and is not equivalent to “real world” practical insurance experience.However, I beg to differ. I find that even those with industry experience sometimes lack the “end-to-end” view of the insurance value chain that is found only in books. The reason is that many practitioners tend to have expertise in say, one or two areas of insurance (e.g. say New Business and Claims) but may not know other areas in-depth, e.g. policy servicing and reinsurance.
- Join a society for insurers. Besides books in the library (university libraries are the best for picking up industry knowledge), there is a dedicated society for insurance professionals called LOMA which runs many educational courses.If you’re serious about getting insurance industry knowledge, this is the best place to go. There are exams to take and fees to pay, but you gain a LOT of knowledge on how insurance works. In fact, many of the insurance BAs I know must pass these exams as part of their on-the-job training in their insurance employers.
I’ve also written an article about ways to pick up domain knowledge – you may want to check it out here.
Wrapping Up …
I hope the above has given you better insights into the role of the insurance business analyst. The insurance BA typically wears many hats – that of a domain and solution expert, a requirements project manager, a facilitator and a test manager.
The list of roles I’ve described here are not exhaustive – in some cases, I’ve seen BAs do system design and also training, for example.
I guess what’s important is to understand the critical, marketable skills an insurance BA must have. From what I’ve seen, domain and solution skills are more valued than say, generic skills like facilitation and coordination.
That’s why I emphasize the importance of upskilling and training yourself in the insurance domain and system solutions if you want to pursue the path of an insurance BA. The same holds true of insurance project managers.
Certainly, given the rapid commoditization of skills these days, training in more premium skill sets like these becomes more important than ever.
That’s all I have for now. Until next time, have fun in your work as a business analyst!