Scenario: Disability Insurance Claims Handling at InsureIT We consider the following business process for handling insurance claims for disability insurance (Disability Insurance is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work) at an insurance company InsureIT. The process starts when a customer lodges a disability claim. To do so, the customer fills in a form describing the disability. Then, customer performs a basic check to ensure that the insurance policy is valid. If insurance is not valid then there would be no claim. If the insurance is valid the customer submits the form to a senior claims handler via post. The senior claims handler first determines the type of claim. In this stage 80% of the claims are determined to be long term and 20% are determined to be short term, for both of which the senior claims handler performs benefit assessment. Then, a response letter is sent to the customer (by e-mail and post) informing them about the monthly entitlements. Finally, insurance is granted. In the case of short-term disability benefits, the senior claims handler can perform the benefit assessment without requiring further documentation. In these cases, the benefit assessment takes 20 minutes. However, in the case of long-term disability claims (more than three months), the senior claims handler requires a full medical report in order to assess the benefit entitlements. Senior claims handlers perceive that these medical reports are essential in order to assess the claims accurately and to avoid fraud. Once the senior claims handler has received the medical report, they can assess the benefits in about one hour on average. Later, a finance officer triggers the first entitlement payment manually and schedules the monthly entitlement for subsequent months. The finance officer takes on average 20 minutes to handle an entitlement. Finance officers handle payments in batches, once per working day. When a medical report is required, a senior claims handler contacts the customer (by phone or e-mail) to notify them that their claim is being assessed, and to ask the customer to send a signed form authorizing InsureIT to request medical reports from their health provider (hospital or clinic). Health providers will not issue a medical report to an insurance company unless the customer has signed such an authorization. Once the authorization has been received, the senior claims handler sends (by post) a request for medical reports to the health provider together with the insurer's letter of authorization. Hospitals reply to InsureIT either by post or in some cases via e-mail. On average, it takes about 15 working days for InsureIT to obtain the medical reports from the health provider (including 4 working days required for the back-and-forth postal mail). This average however hides a lot of variance. Some health providers are very cooperative and respond within a couple of working days of receiving the request. Others however can take up to 30 working days to respond. As a result, the average time between a claim being lodged and a decision being made is 3 working days in the case of short-term disability claims, and 20 working days for long-term disability claims. Naturally, so long waiting times cause anxiety to customers. In the case of long-term disability claims, a customer would on average call or send an e-mail enquiry twice, while the disability claim is being processed. Such enquiries are answered by the senior claims handler and it takes about 10 minutes per enquiry. In about a third of cases, senior claims handlers end up contacting the health provider to enquire about the estimated date to obtain a medical report. Each of these enquiries to health providers takes 10 minutes to a senior claims handler. The total benefit paid by the insurance company for a short-term disability is EUR 5K (typically spread across 2 or 3 months). For long-term disability, this amount is 20K, but some claims can cost up to 40K to the insurance company. In case of long-term disability, the duration of the benefit (number of months) cannot be determined in advance when the claim is lodged. In these cases, the benefit is granted for a period of 3 months and the case is reviewed by a senior claims officer every 3 months in order to determine if the benefit should be extended. Half of the benefit renewals are done after a simple check, which takes 30 minutes to the senior claims handler. But in the other half of renewals, the senior claims handler requires a new medical report, which means that the whole process of obtaining a medical report has to be repeated (except that the letter of authorization signed by the customer during the initial assessment can be reused). It often happens that the renewal takes too long and customers stop receiving their monthly benefit temporarily during the renewal process. The company employs two full-time senior claims handler dedicated to disability insurance. The performance of insurance companies is often measured in terms of the so-called combined ratio, which is the sum of claim payouts plus operational expenses (per year), divided by the sum of insurance premiums paid by customers (per year). The disability insurance unit of InsureIT has a combined ratio of 97%. As any other insurance company, InsureIT perceives investment income from the capital it retains. InsureIT's sales department estimates that the extreme delays in handling disability claims costs EUR 50K per year to InsureIT in lost sales of insurance policies due to unsatisfied customers and the resulting negative publicity. Given the persistent problems with obtaining health reports in a timely manner, claims handlers have tried to negotiate with several health providers a faster approach to obtain medical reports. A handful of health providers (the more cooperative ones) are willing to accept medical report requests by e-mail to save 2-3 working days. However, the majority of health providers do not see any incentive to put more resources into issuing medical reports for insurance companies. They perceive that their customers are the patients. The process of issuing medical reports to insurers is secondary for them. a) Propose a set of changes in the process. For each change, you should provide: A. A brief description of the process change; B. Which issue(s) are being addressed by the proposed change; C. How feasible is this change? In other words, how likely it is that the change can be implemented in a way that the benefits of the change exceed the costs in the medium-term (six months to one year timeframe). If the change requires an upfront investment, describe what investment is needed and how likely it is that this investment is justified given the impact of the issue that is being addressed. b) Draw a "to-be" BPMN model (using Bizagi, https://bpmn.io/, or any other software you wish; handwritten submissions will not be accepted) that incorporates your proposed changes