Effective STP in Insurance India

What is STP?

Straight-through Processing commonly known as STP is a mechanism, a system that automates or computerizes the end-to-end processing of transactions of financial instruments.

It involves use of a single mechanism to process, manage or control all elements of the work-flow of a financial transaction, including the commonly known Front, Middle, and Back office, and also the General Ledger. In short, STP can be defined as electronically capturing and processing transactions in one outdo, from the point of first ‘deal’ to the final settlement.

What is the benefit of using STP over the traditional method?

  • In the old traditional method, every transaction involved costly multiple data re-entry from the paper documents and other sources which are bound to errors, discrepancies, delays and probable fraud also.
  • Additionally, the traditional means and methods of capturing and processing of information such as phone, fax, email etc. requires human intervention which further slows down the entire cycle, introduces errors and delays Settlement.
  • Using STP allows orders to be processed, confirmed, cleared and settled in a lesser time period, more cost effectively and with involves fewer errors.
  • Other than compressing the clearing and settlement time, STP also gives a flexible, cost-effective infrastructure, which allows e-business expansion through real-time processing and access to enterprise data.
  • Moreover STP also streamlines back-office activities, leading to fewer failures, lower risks and radically reducing the per transaction costs.
  • It holds a set of applications, business processes and standards, that are set to revolutionize and reform the settlement and processing standards within the capital markets industry.

How STP enables Superior Customer Experience

Timing is everything, and this can be felt profoundly in today’s insurance industry. Today insurance customers are demanding that their carriers provide a customer experience (CX) that showcases the convenience and immediacy of online retailing, but seasoned claims adjusters are vanishing, why?

Along with increasing chase for profitability and efficiency, these issues are creating a perfect hurricane of worries for insurers.

Customers today want their interactions with their insurers be as convenient, fast, easy and satisfying as shopping at their favourite online store, and are ready to stop their carriers services if they feel their needs are unsatisfied. According to a survey 83% of customers may switch insurers if they have had a negative claims experience – and remember there are mass disruptive start-ups waiting in the wings to snatch up such lost opportunities.

A study of by McKinsey in the U.S. identified five such qualities as key to customer satisfaction:

  1. Employee courtesy
  2. effortlessness and easy communication with the insurer
  3. Employee knowledge, acquaintance and professionalism
  4. Transparency and smoothness of the process
  5. The speed and time duration of the claim settlement

Thus we can conclude Straight through processing “STP” is the only possible manner in which traditional insurers can meet increasingly demanding of customer expectations and maintain their competitive advantage in market.

What are the benefits of adopting STP in India?

  1. Helps shortening of the settlement cycle.
  2. Increases transparency in process.
  3. Avoids expensive duplication of work and human intervention.
  4. Reduces Risks and errors.
  5. Quicker and speedy data capturing, processing and report generation.
  6. Increase of overall efficiencies.
  7. Makes the market cost more effective and valuable.
  8. Enhanced regulation by systematic audit trial.
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