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.
3. Session 602
Optimizing Operations to Improve
Quality, Performance and Profits
Ā§ Moderator: Steven Callahan, CMCĀ®, FFSI
The Nolan Company
www.renolan.com
Ā§ Panelists Thomas Noh
Farmers Insurance
Head of Claims Finance, QA and CI
Nick Intrieri, PMP
AXA Equitable
Director, Retirement Services Solutions
Ā»3
4. Overview and Objectives
Ā§ Decision-making processes and strategic focus changed
ā¢ Economic conditions limiting portfolio returns
ā¢ Competitiveness and market saturation challenging organic growth
ā¢ Cost structures seen as unsustainable, cost management critical
Ā§ Costs and capital investments heavily scrutinized
ā¢ Structural changes: outsourcing, consolidation, acquisition, divestiture
ā¢ Process changes: LEAN, CI, Value Analysis, Process Optimization
ā¢ Technology: Legacy replacement, Decision and Process Automation
Ā§ Session Objectives:
ā¢ Real world review of cost management methods that have been used
ā¢ Case study of suitable approaches that drove measurable results
ā¢ 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
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7. Service OperationsNewā & Oldā
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
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9. Second Question:
Two ā Where is greatest Near Term Impact
Ā§ Common Missing Link: Review of Effectiveness
ā¢ Expense focus drives reviews of efficiency: doing it fast
ā¢ Customer focus drives reviews of quality: doing it right
ā¢ Effectiveness looks: doing the right thing fast and right
Ā§ 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
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10. Efficiency Vs Effectiveness:
Consider Using the RATER Model
Ā§ Evaluates Effectiveness across Multiple Key Dimensions
1. Reliability ā the ability to provide the service you have promised
consistently, accurately, and on time
2. Assurance ā the knowledge, skills, and credibility of staff; and their
ability to use this expertise to inspire trust and confidence
3. Tangible ā high quality, or appearance of high quality in the
physical aspects of service delivery. Can include documents,
presentation, facilities and packaging
4. Empathy ā the extent to which the provider displays concern and
values employees and customers
5. Responsiveness ā the ability to provide effective answers and
solutions quickly or within needed expectations
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11. Case Study ā Property Casualty
Thomas Noh
Farmers Insurance
Head of Claims Finance, Quality Assurance, and
Continuous Improvement
11
13. Continuous Improvement Foundation
How are the following influencing the customers:
ā¢ Operating Systems
ā¢ Performance Systems
ā¢ Mindsets and Behaviors
ā¢ Organization and Skills
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22. Regression Analysis
Nevada
y = 1.9084x - 584.94
RĀ² = 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
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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
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29. Background - Policyholder
E-Insurance
Strategies
Ā§ Life and Annuity carrier
Ā§ Customer Snapshot: ~2.9M clients, $138B of in-force assets
Ā§ Challenge: Increasing operating expenses and stagnant web
utilization
Ā§ eDelivery penetration low
29
30. Policyholder
ā¢ Build a client experience that is efficient and gratifying
ā¢ Provide awareness of digital tools through effective marketing
techniques
Self Service Tools
Ā§ Online Account Access: Non financial transactions, account
balance inquires, trades
Ā§ eDelivery options: Statements, Prospectus, Annual Reports
Ā§ Win/win for client and carrier?
Ā§ In 2010: 24% Online Account Access; 5.4% eDelivery
Why is the adoption rate so low????
30
31. Policyholder
ā¢ Build a client experience that is efficient and gratifying
ā¢ Provide awareness of digital tools through effective marketing
techniques
Motivation and Awareness
Ā§ Lengthy enrollment process
Ā§ Previous marketing strategy inserts and envelopes
Ā§ Client incentives unclear
Ā§ Company incentives very clear (eDelivery):
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32. Policyholder
ā¢ Build a client experience that is efficient and gratifying
ā¢ 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
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33. Policyholder
ā¢ Build a client experience that is efficient and gratifying
ā¢ Provide awareness of digital tools through effective marketing
techniques
Action Plan ā Provide Incentive
Ā§ Launched AXA Equitable eDelivery Sweepstakes in 2010
Ā§ Emphasize āGo Greenā Theme
1. Grand Prize ā Hybrid Car (2011 Ford Fusion)
2. 154 First and Second Place Prizes
3. Contest Spanned from January ā October 2010
4. Separate āEmployee Sweepstakesā for AXA policy
holders
5. Goal ā Increase eDelivery rate by 3%
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34. Policyholder
ā¢ Build a client experience that is efficient and gratifying
ā¢ Provide awareness of digital tools through effective marketing
techniques
Approach
Ā§ Formal Project Plan Approach (Led By Service Center)
Ā§ Creation of āEZ Being Greenā Team
Ā§ Compliance and Legal
Ā§ IT
Ā§ Sweepstakes Administration
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35. Policyholder
ā¢ Build a client experience that is efficient and gratifying
ā¢ Provide awareness of digital tools through effective marketing
techniques
Marketing Strategy
Ā§ Stuffers in
statements/confirms:
Ā§ Email Campaign:
This image cannot currently be displayed.
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36. Policyholder
ā¢ Build a client experience that is efficient and gratifying
ā¢ 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. ā Chattanooga
Times
Ā§ Increased eDelivery enrollment 161% from
prior year
Ā§ Company save ~$1M annually
Ā§ Positive customer feedback
Ā§ 2012 Sweepstakes yielded additional 50%
enrollment increase
Ā§ Currently at 11.5% eDelivery adoption rate
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37. Background ā Advisor
E-Insurance
Strategies
Ā§ 50% of Variable Annuity business from Retail Sales Force (AXA
Advisors)
Ā§ 100% of applications submitted via Paper
Ā§ Complex variable annuity products (SCS, Retirement Cornerstone)
Ā§ NIGO Rate for AXA Advisors >50%
Ā§ 3rd party electronic order entry (Aplifi, Ebix) 20% NIGO Rate
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38. Advisor
ā¢ Deliver a more efficient way for our Salesforce to sell our products
ā¢ Implement an aggressive adoption plan to maximize return of
investment
Clear Opportunity
Ā§ Eliminate multiple manual touch points that result in high
NIGOs
Ā§ Further AXAās strategic goals of straight through processing and
brand recognition
Ā§ Position AXA as an industry leader in technological
advancement
eApp + eSignature = Straight Through Processing
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39. Advisor
ā¢ Deliver a more efficient way for our Salesforce to sell our products
ā¢ Implement an aggressive adoption plan to maximize return of
investment
Approach
Ā§ Business Led Project Management
Ā§ Waterfall Methodology
Ā§ Project Team Across All Business Units
Ā§ Vendor Selection Process
Ā§ Compliance & Legal
Ā§ Enormous Budget Pressure
Ā§ Aggressive Adoption Targets (50% Year End)
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40. Advisor
ā¢ Deliver a more efficient way for our Salesforce to sell our products
ā¢ Implement an aggressive adoption plan to maximize return of
investment
System Design
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41. Advisor
ā¢ Deliver a more efficient way for our Salesforce to sell our products
ā¢ Implement an aggressive adoption plan to maximize return of
investment
Rollout Plan
Ā§ Launched pilot in 3 branches Jan - March
Ā§ Multiple WebEx Training Schedules for Admins, Advisors, and Branch
Operations Managers
Ā§ Comprehensive Communication Plan
1. Intranet/Email/Field Bulletin
2. Materials: Tutorial Video, User Manual, Quick Reference Cards
Ā§ On site training and demos with big producers throughout 2013
Ā§ Dedicated eApp support team (Phone & Email)
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42. Advisor
ā¢ Deliver a more efficient way for our Salesforce to sell our products
ā¢ Implement an aggressive adoption plan to maximize return of
investment
Results
Ā§ Positive feedback from AXA Advisors
1. iPad capability smooth and convenient
2. Electronic signatures flexible and intuitive
Ā§ 7.5% adoption through May on track for 50% Year End
Ā§ NIGO Rate reduced from 53% to 2% for eApp submissions
āIt cut the entire process down
a week. I donāt have to travel to
get signatures or pay for
overnighting paperwork. ā
-Travis Penfield (AXA Advisors)
āAs a new advisor and not being
quite as familiar with all of the
required forms, Annuity eApp
was a huge asset.ā
-Kevin Kaplan (AXA
Advisors)
āGame
changerā
āCan abandon
trunk full of
applicationsā
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43. Background ā Back Office
E-Insurance
Strategies
Ā§ 2011: AXA Equitable engaged Nolan to help streamline Document
Management Center (DMC) Operations in order to:
Ā§ Streamline DMC functions (Prep, Scan, Mail) across enterprise
Ā§ Leverage Digital Content (Email)
Ā§ DMC Consolidation
Ā§ *Optical Character Recognition
Ā§ Construction of a Digital Mailroom: Big Opportunity
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44. Back Office
ā¢ Streamline and standardize document management process and best
practice for consistent client experience
ā¢ Automate and digitize for increased efficiency
Eliminate Waste
Ā§ 2011 State Document Management:
Scan Verify
Open Sort Prep Scan Index DepositDeposit
Ā§ Proposed āOptimalā State with OCR:
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cannot
currently
be displaā¦
Open
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45. Back Office
ā¢ Streamline and standardize document management process and best
practice for consistent client experience
ā¢ Automate and digitize for increased efficiency
Insiders Technologies - smartFIX
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46. Back Office
ā¢ Streamline and standardize document management process and best
practice for consistent client experience
ā¢ Automate and digitize for increased efficiency
Approach
Ā§ Consolidation implemented prior to OCR
Ā§ Staggered rollout enterprise wide
Ā§ AGILE Development (Vendor Driven)
Ā§ Business area ramp up at each site (New Business, Inforce, etc.)
Ā§ Project completed in 18 months
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47. Back Office
ā¢ Streamline and standardize document management process and best
practice for consistent client experience
ā¢ Automate and digitize for increased efficiency
Results
Ā§ Successful Implementation On Time & Budget
Ā§ OCR Enterprise Support Team: Best Practice
Ā§ Classification Rate: 55%; Straight Through Rate: 8%
Ā§ 2013 Savings to be realized: $.75M/Annual
Still to comeā¦.
Ā§ Optimization Ramp Up Savings: $1.8M/Annual
Ā§ Classification Rate 85%; Straight Through Rate: 25%
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48. Digital Solutions at AXA Equitable
Expense Management
Customer Centricity
Digital
Solutions
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49. QUESTIONS?
Thank You For Your Time!
Have a safe trip home.
Steven Callahan, CMCĀ®, 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
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