Optimizing Operations to ImproveQuality, Performance and ProfitsSession 602
Session 602Optimizing Operations to ImproveQuality, Performance and Profits§ Moderator: Steven Callahan, CMC®, FFSIThe Nol...
Overview and Objectives§ Decision-making processes and strategic focus changed• Economic conditions limiting portfolio ret...
PC Claims SeveritySetting the Stage: Challenging EconomyDriving Financial Governance and Control5InvestmentsRegulationMark...
Setting the Stage: Cultural ShiftsDriving Sales and Service StrategiesGenerational DifferencesNew Social DynamicsFive Gene...
Service OperationsNew↑ & Old↓TechnologyNewServiceMethods7Setting the Stage: Solutions AboundChallenge: what to spend where...
Two Questions:One - What Methodologies will Work BestCustomizedCustomizedRelevantImpactfulLeanSixSigmaTotalQualityMgtTotal...
Second Question:Two – Where is greatest Near Term Impact§ Common Missing Link: Review of Effectiveness• Expense focus driv...
Efficiency Vs Effectiveness:Consider Using the RATER Model§ Evaluates Effectiveness across Multiple Key Dimensions1. Relia...
Case Study – Property CasualtyThomas NohFarmers InsuranceHead of Claims Finance, Quality Assurance, andContinuous Improvem...
Optimizing Operations• Continuous Improvement (CI)• Competitor analysis / external benchmarking• Internal benchmarking• Fi...
Continuous Improvement FoundationHow are the following influencing the customers:• Operating Systems• Performance Systems•...
CI Techniques (Six Sigma, Lean)14
CI Techniques/Tools ..- Kaizen/Re-creation- Teams and committees- Inititiatives, campaigns15
CI Techniques/Tools …§ communication• (huddles, blogs, newsletters)§ Innovation campaigns16
External benchmarking/CompetitorAnalysis§ AM Best/SNL§ Annual Statements, Annual Reports, SEC filings, Ratefilings§ Ward g...
Sample Competitor AnalysisGrowth(GPW)Profitable Growth(Winners)UnprofitableGrowth(Positioning)ProfitableContraction(Retren...
Sample Competitor Analysis19
Sample Competitor Analysis(benchmark)20
Financial planning analysis§ Financial modeling§ Internal benchmarking§ Actuarial analysis§ Business analytics21
Regression AnalysisNevaday = 1.9084x - 584.94R² = 0.8833$(40,000)$(20,000)$-$20,000$40,000$60,000$80,000$100,000- 5,000 10...
Exception reporting/alertsAirline over $500First class flightsHotel over $200Luxury brand hotelsCell phone international/d...
Internal benchmarking example24
Actuarial analysis25
Business Analytics26
Case Study – AnnuitiesNick IntrieriAXA – EquitableDirector, Retirement Service Solutions27
Digital Solutions at AXA-EquitableExpense ManagementE-InsuranceStrategies28
Background - PolicyholderE-InsuranceStrategies§ Life and Annuity carrier§ Customer Snapshot: ~2.9M clients, $138B of in-fo...
Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effec...
Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effec...
Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effec...
Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effec...
Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effec...
Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effec...
Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effec...
Background – AdvisorE-InsuranceStrategies§ 50% of Variable Annuity business from Retail Sales Force (AXAAdvisors)§ 100% of...
Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to ma...
Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to ma...
Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to ma...
Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to ma...
Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to ma...
Background – Back OfficeE-InsuranceStrategies§ 2011: AXA Equitable engaged Nolan to help streamline DocumentManagement Cen...
Back Office• Streamline and standardize document management process and bestpractice for consistent client experience• Aut...
Back Office• Streamline and standardize document management process and bestpractice for consistent client experience• Aut...
Back Office• Streamline and standardize document management process and bestpractice for consistent client experience• Aut...
Back Office• Streamline and standardize document management process and bestpractice for consistent client experience• Aut...
Digital Solutions at AXA EquitableExpense ManagementCustomer CentricityDigitalSolutions48
QUESTIONS?Thank You For Your Time!Have a safe trip home.Steven Callahan, CMC®, FFSIThe Nolan Companywww.renolan.comThomas ...
Please Complete the Session Evaluation Form onthe Conference App and Include Your ConferenceRegistration ID# to be Include...
201306 IASA Conference-Session 602: Operational Efficiency
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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

  1. 1. Optimizing Operations to ImproveQuality, Performance and ProfitsSession 602
  2. 2. Session 602Optimizing Operations to ImproveQuality, Performance and Profits§ Moderator: Steven Callahan, CMC®, FFSIThe Nolan Companywww.renolan.com§ Panelists Thomas NohFarmers InsuranceHead of Claims Finance, QA and CINick Intrieri, PMPAXA EquitableDirector, Retirement Services Solutions»3
  3. 3. 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 used4
  4. 4. PC Claims SeveritySetting the Stage: Challenging EconomyDriving Financial Governance and Control5InvestmentsRegulationMarket ExitsTechnological AdvancesCompetition
  5. 5. Setting the Stage: Cultural ShiftsDriving Sales and Service StrategiesGenerational DifferencesNew Social DynamicsFive Generations of Consumers, Large New Wave Coming(% of Total Population)Ethnic DiversityThe Digital Generations- powerful consumers6
  6. 6. Service OperationsNew↑ & Old↓TechnologyNewServiceMethods7Setting the Stage: Solutions AboundChallenge: what to spend where when & why
  7. 7. Two Questions:One - What Methodologies will Work BestCustomizedCustomizedRelevantImpactfulLeanSixSigmaTotalQualityMgtTotalQualityMgtReengineerReengineerValueAnalysisValueAnalysisConstraintTheoryConstraintTheoryChangeBased onImportance,Reliability,and CostDesign toCustomerRequirementsInnovativeTransformationsRemoveWaste andImproveFlowReduce orEliminateErrorsManageConstraints8
  8. 8. 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 action1. Determine key processes / areas of assessment (IT, Service, etc.)2. Assign Impact / Importance to each key process / area3. Evaluate Effectiveness by Process / Area4. Identify Significant Gaps in Effectiveness5. Rank by Impact / Importance across Resource / Timing Map6. Develop Action Plan9
  9. 9. Efficiency Vs Effectiveness:Consider Using the RATER Model§ Evaluates Effectiveness across Multiple Key Dimensions1. Reliability – the ability to provide the service you have promisedconsistently, accurately, and on time2. Assurance – the knowledge, skills, and credibility of staff; and theirability to use this expertise to inspire trust and confidence3. Tangible – high quality, or appearance of high quality in thephysical aspects of service delivery. Can include documents,presentation, facilities and packaging4. Empathy – the extent to which the provider displays concern andvalues employees and customers5. Responsiveness – the ability to provide effective answers andsolutions quickly or within needed expectations10
  10. 10. Case Study – Property CasualtyThomas NohFarmers InsuranceHead of Claims Finance, Quality Assurance, andContinuous Improvement11
  11. 11. Optimizing Operations• Continuous Improvement (CI)• Competitor analysis / external benchmarking• Internal benchmarking• Financial planning and analysis12
  12. 12. Continuous Improvement FoundationHow are the following influencing the customers:• Operating Systems• Performance Systems• Mindsets and Behaviors• Organization and Skills13
  13. 13. CI Techniques (Six Sigma, Lean)14
  14. 14. CI Techniques/Tools ..- Kaizen/Re-creation- Teams and committees- Inititiatives, campaigns15
  15. 15. CI Techniques/Tools …§ communication• (huddles, blogs, newsletters)§ Innovation campaigns16
  16. 16. External benchmarking/CompetitorAnalysis§ AM Best/SNL§ Annual Statements, Annual Reports, SEC filings, Ratefilings§ Ward group, CCC, ISO, etc….§ Management consultants§ Periodical, press releases, publications17
  17. 17. Sample Competitor AnalysisGrowth(GPW)Profitable Growth(Winners)UnprofitableGrowth(Positioning)ProfitableContraction(Retrenching)UnprofitableContraction(Losers)Profitability (Combined Ratio)18
  18. 18. Sample Competitor Analysis19
  19. 19. Sample Competitor Analysis(benchmark)20
  20. 20. Financial planning analysis§ Financial modeling§ Internal benchmarking§ Actuarial analysis§ Business analytics21
  21. 21. Regression AnalysisNevaday = 1.9084x - 584.94R² = 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 35,000X = 2012 work unitsY = 2012 cost22
  22. 22. Exception reporting/alertsAirline over $500First class flightsHotel over $200Luxury brand hotelsCell phone international/directory assistanceExcess gasolineCost per policyCost per employee23
  23. 23. Internal benchmarking example24
  24. 24. Actuarial analysis25
  25. 25. Business Analytics26
  26. 26. Case Study – AnnuitiesNick IntrieriAXA – EquitableDirector, Retirement Service Solutions27
  27. 27. Digital Solutions at AXA-EquitableExpense ManagementE-InsuranceStrategies28
  28. 28. Background - PolicyholderE-InsuranceStrategies§ Life and Annuity carrier§ Customer Snapshot: ~2.9M clients, $138B of in-force assets§ Challenge: Increasing operating expenses and stagnant webutilization§ eDelivery penetration low29
  29. 29. Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effective marketingtechniquesSelf Service Tools§ Online Account Access: Non financial transactions, accountbalance inquires, trades§ eDelivery options: Statements, Prospectus, Annual Reports§ Win/win for client and carrier?§ In 2010: 24% Online Account Access; 5.4% eDeliveryWhy is the adoption rate so low????30
  30. 30. Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effective marketingtechniquesMotivation and Awareness§ Lengthy enrollment process§ Previous marketing strategy inserts and envelopes§ Client incentives unclear§ Company incentives very clear (eDelivery):31
  31. 31. Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effective marketingtechniquesSavings BreakdownWhat is the best way to increase eDelivery?Inforce ProspectusAnnual ReportSemi-Annual ReportStatements (4x)Confirms (6x)Marketing BudgetService Center Budget32
  32. 32. Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effective marketingtechniquesAction Plan – Provide Incentive§ Launched AXA Equitable eDelivery Sweepstakes in 2010§ Emphasize “Go Green” Theme1. Grand Prize – Hybrid Car (2011 Ford Fusion)2. 154 First and Second Place Prizes3. Contest Spanned from January – October 20104. Separate “Employee Sweepstakes” for AXA policyholders5. Goal – Increase eDelivery rate by 3%33
  33. 33. Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effective marketingtechniquesApproach§ Formal Project Plan Approach (Led By Service Center)§ Creation of “EZ Being Green” Team§ Compliance and Legal§ IT§ Sweepstakes Administration34
  34. 34. Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effective marketingtechniquesMarketing Strategy§ Stuffers instatements/confirms:§ Email Campaign:This image cannot currently be displayed.35
  35. 35. Policyholder• Build a client experience that is efficient and gratifying• Provide awareness of digital tools through effective marketingtechniquesResultsE-Delivery grand-prize winner John Holland withVP Accumulator Field Services Jim OBoyle, VP,AXA Equitable and Larry George, FinancialProfessional, AXA Advisors. – ChattanoogaTimes§ Increased eDelivery enrollment 161% fromprior year§ Company save ~$1M annually§ Positive customer feedback§ 2012 Sweepstakes yielded additional 50%enrollment increase§ Currently at 11.5% eDelivery adoption rate36
  36. 36. Background – AdvisorE-InsuranceStrategies§ 50% of Variable Annuity business from Retail Sales Force (AXAAdvisors)§ 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 Rate37
  37. 37. Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to maximize return ofinvestmentClear Opportunity§ Eliminate multiple manual touch points that result in highNIGOs§ Further AXA’s strategic goals of straight through processing andbrand recognition§ Position AXA as an industry leader in technologicaladvancementeApp + eSignature = Straight Through Processing38
  38. 38. Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to maximize return ofinvestmentApproach§ 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
  39. 39. Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to maximize return ofinvestmentSystem Design40
  40. 40. Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to maximize return ofinvestmentRollout Plan§ Launched pilot in 3 branches Jan - March§ Multiple WebEx Training Schedules for Admins, Advisors, and BranchOperations Managers§ Comprehensive Communication Plan1. Intranet/Email/Field Bulletin2. 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
  41. 41. Advisor• Deliver a more efficient way for our Salesforce to sell our products• Implement an aggressive adoption plan to maximize return ofinvestmentResults§ Positive feedback from AXA Advisors1. iPad capability smooth and convenient2. 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 downa week. I don’t have to travel toget signatures or pay forovernighting paperwork. “-Travis Penfield (AXA Advisors)“As a new advisor and not beingquite as familiar with all of therequired forms, Annuity eAppwas a huge asset.”-Kevin Kaplan (AXAAdvisors)“Gamechanger”“Can abandontrunk full ofapplications”42
  42. 42. Background – Back OfficeE-InsuranceStrategies§ 2011: AXA Equitable engaged Nolan to help streamline DocumentManagement 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 Opportunity43
  43. 43. Back Office• Streamline and standardize document management process and bestpractice for consistent client experience• Automate and digitize for increased efficiencyEliminate Waste§ 2011 State Document Management:Scan VerifyOpen Sort Prep Scan Index DepositDeposit§ Proposed “Optimal” State with OCR:This imagecannotcurrentlybe displa…Open44
  44. 44. Back Office• Streamline and standardize document management process and bestpractice for consistent client experience• Automate and digitize for increased efficiencyInsiders Technologies - smartFIX45
  45. 45. Back Office• Streamline and standardize document management process and bestpractice for consistent client experience• Automate and digitize for increased efficiencyApproach§ 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 months46
  46. 46. Back Office• Streamline and standardize document management process and bestpractice for consistent client experience• Automate and digitize for increased efficiencyResults§ Successful Implementation On Time & Budget§ OCR Enterprise Support Team: Best Practice§ Classification Rate: 55%; Straight Through Rate: 8%§ 2013 Savings to be realized: $.75M/AnnualStill to come….§ Optimization Ramp Up Savings: $1.8M/Annual§ Classification Rate 85%; Straight Through Rate: 25%47
  47. 47. Digital Solutions at AXA EquitableExpense ManagementCustomer CentricityDigitalSolutions48
  48. 48. QUESTIONS?Thank You For Your Time!Have a safe trip home.Steven Callahan, CMC®, FFSIThe Nolan Companywww.renolan.comThomas NohFarmers InsuranceHead of Claims Finance, QA and CINick Intrieri, PMPAXA EquitableDirector, Retirement Services Solutions49
  49. 49. Please Complete the Session Evaluation Form onthe Conference App and Include Your ConferenceRegistration ID# to be Included in a Drawing for aFree Conference Registration for the 2014 AnnualConference!NOTE: Your Conference Registration ID# is Located at theBottom Left Hand Corner of Your Badge.
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