OPERATIONS AND INFORMATION MANAGEMENT

Lean Processes in Insurance Industry

Group 3

OBJECTIVES

To explore how the Lean principles could help to improve the

operational efficiencies in the Insurance Industry with specific

focus on Federal* Retirement Fund Administration Business.

*Pseudonym

TABLE OF CONTENTS

Background on Lean

Literature Review “Tima Insurance”

Federal Insurance “Case Study”

Business Overview

Conclusion

LEAN

Greater Efficiency

Improved Service

Greater Efficiency

Improved Service

Creating more value for customers with fewer resources

•Henry Ford who created The 1st flow production system for mass production - Toyota Production System (Womack et al. 2007)•Consequently the concept of Lean thinking emerged from the Toyota Production System•Thinking – Antidote to waste•Primary Waste classified by Toyota (Tahichi Ohno, 1988):

Over production Transportation InventoryInventory Waiting time Processing wasteMotion Production defects

Four key imperatives to implement Lean concepts in Operations

Taking a customer’s view of waste to define value according to customers and Improving process flow by optimizing touch time and minimizing cycle timeLinking customer value to employee performance andEnsuring staff at all levels are committed to the ideal of excellence and sustainable transformation.

Quality – Value – Delivery – Energised People

LEAN IN INSURANCE INDUSTRY

Tima* Insurance !!A Insurance company that applied

“Lean principles”into their Call Centre operation with

Success!!!! *Pseudonym

Provide insurance & financial services in US & internationally. Have life, property & casualty insurance business. Greater than US$100 billion in assets

TIMA’S BUSINESS CHALLENGE

common problem—delivering consistent & exceptional customer service.

Mediocre Customer service measurement and customer feedback capabilities.

Fierce market competition threatening their market share

BUSINESS ACTIONS – CHECK-PLAN-DO

What did they do? Launched Lean as Closed-Loop Project which was to - :

Define Customer Interactions, Measure Quality of Interactions, Analyze Quality Gaps using performance tools and Act through Training staff

Project aimed at addressing core principles of Lean thinking: Measurement centred around the customer; Customer value drivers linked to the process; Customer-focused call representative coaching; and Processes streamlined to maximize customer satisfaction.

What the findings were?: After-call surveys- could pinpoint areas that drive higher

customer experience scores. High correlation between Agent behaviour and customer

satisfaction. a gap between good behaviour and adherence to process

standards

GETTING IT RIGHT

Conducted a root-cause diagnosis on KPIs (AHT) by listening to the actual calls.

Developed training modules & coaching techniques from the findings

Tracked Performance using Coaching Improvement Tracker,

Used colour coded visual displays in the call centre to highlight performance trends.

Under achieving agents were made to listen to calls to assist them identify own areas of improvement

Developed knowledge library from the agents learnings

WHAT DID THEY ACHIEVE?

 Increase in first call resolution ratesIncrease in customer satisfaction scoresIncrease in salesIncrease in Employee morale – trained better to handle the callsbetter knowledge reference libraries

Reduction in average hold time -agents now resolving customer enquiries quickerReduction in transfer rates as the agents were trained to handle the calls and have

How Federal* Insurance applied

Lean Principles to solve the business

challenges in their Retirement Fund Administration.

*pseudonym

BUSINESS OVERVIEW

SI

Business Model

Operating model

Business Architecture

Growth, retention & retailisation

Companies, corporates, unions and public sector

Customer

Customer

Customer

Offer administration of pension funds. Actuarial & consultancy services

Call Centre, Liaison centre, 8 production offices, 8 different service offerings, 8 SLA

Multiple IT platforms, processes and staff per production office. 1 IT support team, 1 HR,1 Finance team.

Markets we serve

BUSINESS CHALLENGE

Operational CostAdministration feesCustomer complaints

New Business salesMarket shareProfitsEfficienciesEmployee Morale

ACTIONS Strategic Decision to launch a Project team to drive Business Model

Change Team Launched Project Demand Analysis

Understanding Value and failure Demand from the customer’s perspective

Findings

Lean approach

Demand Failure Demands %

Benefit payment/transaction status request Chaser Benefit Payments 45%

Quotes - divorce, withdrawals & retirals  How much is my fund worth? 10%

Product/Rules information I want info about the fund 5%

Confirm documents received Have you received my documents? 10%

Tax related requests - IRP3/IT88 etc Please give me this information/document 5%

May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-110%

10%

20%

30%

40%

50%

60%

70%

80%

90%

SLAValueFailurePOCR

RFA May to Dec 2011

ACTION

•Lean program launched November 2011•Lean Approach taken

© 2012 Vanguard

Each one of these is a Process, with …and plenty of Rework

A N EXAMPLE OF THE WASTE DUE TO POOR OM DESIGN (PROCESS-PEOPLE-IT)

MemberCalls to enquireAbout Product/Request quote/Follow up on

pmnt

Search for info and cannot Find answers+- 2 min call

Agent CreatesInfo Required &

Informs Member to call Back in XX (SLA)Time (48 hours)

Member on hold whilst agent

Contacts processing for info

– Hold Time?

Value Stream

Follow-up callFrom Mbr.

No feedback yet,Agent escalate

To TL& ask mbr to call again

Follow up call. Mbr informed

of reqmnts,

mbr complains, reqmnts waived request finalised

TL escalates,Process starts, outstanding Requirement

Request pended

Page 15

Process Process Process

FINDINGS

Waste identified Motion, Waiting, Rework, Inventory, Over Processing,

Transportation, Wasted People Potential Changes Applied

Training of staff on multiple processes User Interface upgraded, SMS functionality implemented, MIS tool upgraded to accurately capture customer

interaction Tax number validation system, Business Requirements Relaxed, Measures Tool, Visual Displays to monitor performance trends,

continuous improvement ideas NPS Tool – detractor call back process

SUCCESS Quotes requested done on call, via fax and email &

same day, before it took 2 to 3 days. Repeat calls and escalations reduced. Calls overall reduced, increase in Point of Contact resolution & reduction in benefit payment cycle time Knowledge library improved Agents enabled to respond to customer enquiries at

POC. Benefit payments calls are treated with urgency; claim

is tagged for processing office to action and process. All areas of customer service collaborating Member detail changes (address, banking, income tax

number, beneficiary) are done at point of contact. Detractors or dissatisfied customers from the NPS

results scores are contacted daily to understand service failures.

CHALLENGES & OPPORTUNITIES

Challenges Legacy IT Platforms, Phase in implementation approach, Time spent on buy-in Change Management, Earning Potential of Staff = quicker staff attrition.

Future Opportunities Revamp IT Platforms, Revamp Business Model in line with current customer

needs More use Social Media, invest in proper MIS tool, Redefine business measures. More focus on customer

CONCLUSION

Lean applies in every business & every process

It is the way of thinking and acting for the entire organisation

Service Organisations can benefit significantly from applying lean principles

Customers demand value and speed Lean is a bout eliminating waste and delivering value.

Should encompass Processes, People and IT

Process

People

Operating Mode

l

IT

Thank you