201306 IASA Conference-Session 602: Operational Efficiency
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Presentation at annual IASA Conference on optimizing insurance operations with case study participation from Nick Intrieri of AXA Equitable and Thomas Noh of Farmers Insurance.
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201306 IASA Conference-Session 602: Operational Efficiency
- 2. Optimizing Operations to Improve Quality, Performance and Profits Session 602
- 3. Session 602 Optimizing Operations to Improve Quality, Performance and Profits § Moderator: Steven Callahan, CMC®, FFSI The Nolan Company www.renolan.com § Panelists Thomas Noh Farmers Insurance Head of Claims Finance, QA and CI Nick Intrieri, PMP AXA Equitable Director, Retirement Services Solutions »3
- 4. Overview and Objectives § Decision-making processes and strategic focus changed • Economic conditions limiting portfolio returns • Competitiveness and market saturation challenging organic growth • Cost structures seen as unsustainable, cost management critical § Costs and capital investments heavily scrutinized • Structural changes: outsourcing, consolidation, acquisition, divestiture • Process changes: LEAN, CI, Value Analysis, Process Optimization • Technology: Legacy replacement, Decision and Process Automation § Session Objectives: • Real world review of cost management methods that have been used • Case study of suitable approaches that drove measurable results • Incorporate financial impacts of techniques used 4
- 5. PC Claims Severity Setting the Stage: Challenging Economy Driving Financial Governance and Control 5 Investments Regulation Market ExitsTechnological Advances Competition
- 6. Setting the Stage: Cultural Shifts Driving Sales and Service Strategies Generational Differences New Social Dynamics Five Generations of Consumers, Large New Wave Coming (% of Total Population) Ethnic Diversity The Digital Generations - powerful consumers 6
- 7. Service OperationsNew↑ & Old↓ Technology NewService Methods 7 Setting the Stage: Solutions Abound Challenge: what to spend where when & why
- 8. Two Questions: One - What Methodologies will Work Best CustomizedCustomized Relevant Impactful Lean Six Sigma Total Quality Mgt Total Quality Mgt ReengineerReengineer Value Analysis Value Analysis Constraint Theory Constraint Theory Change Based on Importance, Reliability, and Cost Design to Customer Requirements Innovative Transformations Remove Waste and Improve Flow Reduce or Eliminate Errors Manage Constraints 8
- 9. Second Question: Two – Where is greatest Near Term Impact § Common Missing Link: Review of Effectiveness • Expense focus drives reviews of efficiency: doing it fast • Customer focus drives reviews of quality: doing it right • Effectiveness looks: doing the right thing fast and right § Best Practice course of action 1. Determine key processes / areas of assessment (IT, Service, etc.) 2. Assign Impact / Importance to each key process / area 3. Evaluate Effectiveness by Process / Area 4. Identify Significant Gaps in Effectiveness 5. Rank by Impact / Importance across Resource / Timing Map 6. Develop Action Plan 9
- 10. Efficiency Vs Effectiveness: Consider Using the RATER Model § Evaluates Effectiveness across Multiple Key Dimensions 1. Reliability – the ability to provide the service you have promised consistently, accurately, and on time 2. Assurance – the knowledge, skills, and credibility of staff; and their ability to use this expertise to inspire trust and confidence 3. Tangible – high quality, or appearance of high quality in the physical aspects of service delivery. Can include documents, presentation, facilities and packaging 4. Empathy – the extent to which the provider displays concern and values employees and customers 5. Responsiveness – the ability to provide effective answers and solutions quickly or within needed expectations 10
- 11. Case Study – Property Casualty Thomas Noh Farmers Insurance Head of Claims Finance, Quality Assurance, and Continuous Improvement 11
- 12. Optimizing Operations • Continuous Improvement (CI) • Competitor analysis / external benchmarking • Internal benchmarking • Financial planning and analysis 12
- 13. Continuous Improvement Foundation How are the following influencing the customers: • Operating Systems • Performance Systems • Mindsets and Behaviors • Organization and Skills 13
- 14. CI Techniques (Six Sigma, Lean) 14
- 15. CI Techniques/Tools .. - Kaizen/Re-creation - Teams and committees - Inititiatives, campaigns 15
- 16. CI Techniques/Tools … § communication • (huddles, blogs, newsletters) § Innovation campaigns 16
- 17. External benchmarking/Competitor Analysis § AM Best/SNL § Annual Statements, Annual Reports, SEC filings, Rate filings § Ward group, CCC, ISO, etc…. § Management consultants § Periodical, press releases, publications 17
- 18. Sample Competitor Analysis Growth(GPW) Profitable Growth (Winners) Unprofitable Growth (Positioning) Profitable Contraction (Retrenching) Unprofitable Contraction (Losers) Profitability (Combined Ratio) 18
- 21. Financial planning analysis § Financial modeling § Internal benchmarking § Actuarial analysis § Business analytics 21
- 22. Regression Analysis Nevada y = 1.9084x - 584.94 R² = 0.8833 $(40,000) $(20,000) $- $20,000 $40,000 $60,000 $80,000 $100,000 - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 X = 2012 work units Y = 2012 cost 22
- 23. Exception reporting/alerts Airline over $500 First class flights Hotel over $200 Luxury brand hotels Cell phone international/directory assistance Excess gasoline Cost per policy Cost per employee 23
- 27. Case Study – Annuities Nick Intrieri AXA – Equitable Director, Retirement Service Solutions 27
- 28. Digital Solutions at AXA-Equitable Expense Management E-Insurance Strategies 28
- 29. Background - Policyholder E-Insurance Strategies § Life and Annuity carrier § Customer Snapshot: ~2.9M clients, $138B of in-force assets § Challenge: Increasing operating expenses and stagnant web utilization § eDelivery penetration low 29
- 30. Policyholder • Build a client experience that is efficient and gratifying • Provide awareness of digital tools through effective marketing techniques Self Service Tools § Online Account Access: Non financial transactions, account balance inquires, trades § eDelivery options: Statements, Prospectus, Annual Reports § Win/win for client and carrier? § In 2010: 24% Online Account Access; 5.4% eDelivery Why is the adoption rate so low???? 30
- 31. Policyholder • Build a client experience that is efficient and gratifying • Provide awareness of digital tools through effective marketing techniques Motivation and Awareness § Lengthy enrollment process § Previous marketing strategy inserts and envelopes § Client incentives unclear § Company incentives very clear (eDelivery): 31
- 32. Policyholder • Build a client experience that is efficient and gratifying • Provide awareness of digital tools through effective marketing techniques Savings Breakdown What is the best way to increase eDelivery? Inforce Prospectus Annual Report Semi-Annual Report Statements (4x) Confirms (6x) Marketing Budget Service Center Budget 32
- 33. Policyholder • Build a client experience that is efficient and gratifying • Provide awareness of digital tools through effective marketing techniques Action Plan – Provide Incentive § Launched AXA Equitable eDelivery Sweepstakes in 2010 § Emphasize “Go Green” Theme 1. Grand Prize – Hybrid Car (2011 Ford Fusion) 2. 154 First and Second Place Prizes 3. Contest Spanned from January – October 2010 4. Separate “Employee Sweepstakes” for AXA policy holders 5. Goal – Increase eDelivery rate by 3% 33
- 34. Policyholder • Build a client experience that is efficient and gratifying • Provide awareness of digital tools through effective marketing techniques Approach § Formal Project Plan Approach (Led By Service Center) § Creation of “EZ Being Green” Team § Compliance and Legal § IT § Sweepstakes Administration 34
- 35. Policyholder • Build a client experience that is efficient and gratifying • Provide awareness of digital tools through effective marketing techniques Marketing Strategy § Stuffers in statements/confirms: § Email Campaign: This image cannot currently be displayed. 35
- 36. Policyholder • Build a client experience that is efficient and gratifying • Provide awareness of digital tools through effective marketing techniques Results E-Delivery grand-prize winner John Holland with VP Accumulator Field Services Jim O'Boyle, VP, AXA Equitable and Larry George, Financial Professional, AXA Advisors. – Chattanooga Times § Increased eDelivery enrollment 161% from prior year § Company save ~$1M annually § Positive customer feedback § 2012 Sweepstakes yielded additional 50% enrollment increase § Currently at 11.5% eDelivery adoption rate 36
- 37. Background – Advisor E-Insurance Strategies § 50% of Variable Annuity business from Retail Sales Force (AXA Advisors) § 100% of applications submitted via Paper § Complex variable annuity products (SCS, Retirement Cornerstone) § NIGO Rate for AXA Advisors >50% § 3rd party electronic order entry (Aplifi, Ebix) 20% NIGO Rate 37
- 38. Advisor • Deliver a more efficient way for our Salesforce to sell our products • Implement an aggressive adoption plan to maximize return of investment Clear Opportunity § Eliminate multiple manual touch points that result in high NIGOs § Further AXA’s strategic goals of straight through processing and brand recognition § Position AXA as an industry leader in technological advancement eApp + eSignature = Straight Through Processing 38
- 39. Advisor • Deliver a more efficient way for our Salesforce to sell our products • Implement an aggressive adoption plan to maximize return of investment Approach § Business Led Project Management § Waterfall Methodology § Project Team Across All Business Units § Vendor Selection Process § Compliance & Legal § Enormous Budget Pressure § Aggressive Adoption Targets (50% Year End) 39
- 40. Advisor • Deliver a more efficient way for our Salesforce to sell our products • Implement an aggressive adoption plan to maximize return of investment System Design 40
- 41. Advisor • Deliver a more efficient way for our Salesforce to sell our products • Implement an aggressive adoption plan to maximize return of investment Rollout Plan § Launched pilot in 3 branches Jan - March § Multiple WebEx Training Schedules for Admins, Advisors, and Branch Operations Managers § Comprehensive Communication Plan 1. Intranet/Email/Field Bulletin 2. Materials: Tutorial Video, User Manual, Quick Reference Cards § On site training and demos with big producers throughout 2013 § Dedicated eApp support team (Phone & Email) 41
- 42. Advisor • Deliver a more efficient way for our Salesforce to sell our products • Implement an aggressive adoption plan to maximize return of investment Results § Positive feedback from AXA Advisors 1. iPad capability smooth and convenient 2. Electronic signatures flexible and intuitive § 7.5% adoption through May on track for 50% Year End § NIGO Rate reduced from 53% to 2% for eApp submissions “It cut the entire process down a week. I don’t have to travel to get signatures or pay for overnighting paperwork. “ -Travis Penfield (AXA Advisors) “As a new advisor and not being quite as familiar with all of the required forms, Annuity eApp was a huge asset.” -Kevin Kaplan (AXA Advisors) “Game changer” “Can abandon trunk full of applications” 42
- 43. Background – Back Office E-Insurance Strategies § 2011: AXA Equitable engaged Nolan to help streamline Document Management Center (DMC) Operations in order to: § Streamline DMC functions (Prep, Scan, Mail) across enterprise § Leverage Digital Content (Email) § DMC Consolidation § *Optical Character Recognition § Construction of a Digital Mailroom: Big Opportunity 43
- 44. Back Office • Streamline and standardize document management process and best practice for consistent client experience • Automate and digitize for increased efficiency Eliminate Waste § 2011 State Document Management: Scan Verify Open Sort Prep Scan Index DepositDeposit § Proposed “Optimal” State with OCR: This image cannot currently be displa… Open 44
- 45. Back Office • Streamline and standardize document management process and best practice for consistent client experience • Automate and digitize for increased efficiency Insiders Technologies - smartFIX 45
- 46. Back Office • Streamline and standardize document management process and best practice for consistent client experience • Automate and digitize for increased efficiency Approach § Consolidation implemented prior to OCR § Staggered rollout enterprise wide § AGILE Development (Vendor Driven) § Business area ramp up at each site (New Business, Inforce, etc.) § Project completed in 18 months 46
- 47. Back Office • Streamline and standardize document management process and best practice for consistent client experience • Automate and digitize for increased efficiency Results § Successful Implementation On Time & Budget § OCR Enterprise Support Team: Best Practice § Classification Rate: 55%; Straight Through Rate: 8% § 2013 Savings to be realized: $.75M/Annual Still to come…. § Optimization Ramp Up Savings: $1.8M/Annual § Classification Rate 85%; Straight Through Rate: 25% 47
- 48. Digital Solutions at AXA Equitable Expense Management Customer Centricity Digital Solutions 48
- 49. QUESTIONS? Thank You For Your Time! Have a safe trip home. Steven Callahan, CMC®, FFSI The Nolan Company www.renolan.com Thomas Noh Farmers Insurance Head of Claims Finance, QA and CI Nick Intrieri, PMP AXA Equitable Director, Retirement Services Solutions49
- 50. Please Complete the Session Evaluation Form on the Conference App and Include Your Conference Registration ID# to be Included in a Drawing for a Free Conference Registration for the 2014 Annual Conference! NOTE: Your Conference Registration ID# is Located at the Bottom Left Hand Corner of Your Badge.