After successfully reducing insurance operating costs, the president of the U.S. retail network faced a daunting challenge. To achieve the next level of targeted performance improvement, the retail network must adopt lean principles in insurance. The previous cost cutting effort eliminated unprofitable agents: a third of the total. Now, lean six sigma management principles must increase productivity of the remaining agents and support operations in the home office. For a year, the president and an internal operations consulting team researched six sigma projects in the insurance industry. The efforts were narrow in scope. Rarely was the operational improvement supported by quantified productivity metrics. The retail network needed end-to-end lean process improvement.
Non-technology, self-funding operational
– No new technology
– End-to-end new business process
– 7-month implementation
Technology upgrades had not improved operational efficiency or customer service. Agencies still operated with their own one-off practices. Executives were convinced that non-standard processes were to blame. The Lab’s non-technology improvement templates transformed the retail network operations into a life insurance “knowledge work factory.” Errors on new business applications decreased by 70 percent. This boosted revenue-per-agent by half. Productivity measurement for underwriters showed a three-fold gain. Operating costs fell by 20 percent.
A Top 3 global, multi-line insurer, the company serves over 75 million customers in 40 countries. The U.S. retail life division employs more than 10,000 people in its personal lines business units.
Implementation began with a 7-week Phase I analysis. It delivered a guaranteed, self funding Phase II implementation work plan, completed in 7 months.
– Cost reduction
– Service improvement
– Sales uptime increase
– Retail life
– Retail annuity
– Individual distribution
The Lab implemented over 350 non-technology, operational improvements. Examples:
Applications Rejected Earlier — Over 80 percent of application rejections were issued from underwriting, long after processing costs were incurred. Process standardization for application submission by agencies cut this in half in six weeks. Quality metrics helped shift the easiest rejection decisions to agency management, avoiding unnecessary underwriting costs.
Increased Sales Productivity and Uptime — Agents spent as much time following up with customers for additional information as they spent selling new policies. The Lab simplified new business applications to improve first pass quality and reduce follow ups. Within three months, agents increased their sales time – and revenue – by 60 percent.
Improved Customer Service — Customers initially want quick, approximate quotes to make decisions. Instead they received exact quotes after a delay. One-third of prospects went elsewhere. The Lab implemented quick reference price guides. Similarly, customer-focused process improvement rapidly delivered both service gains and sales force operational efficiency.