Final Report Business Process Reengineering

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Final Report Business Process Reengineering

  1. 1. BUSINESS PROCESS REENGINEERING REPORT TAKAFUL PAKISTAN Submitted to: Mr. Sohail Majeed Team Members Hira Anwar Khan MadihaSarfaraz Syed Hasan Nemat
  2. 2. ACKNOWLEDGEMENT ‘In the Name of Allah, the most Beneficent, the most Merciful’ Takaful Pakistan Limited was incorporated in June, 2006 with its registered head office in Karachi. With an authorized capital of Rs. 300 million. It is currently the only rated Takaful Company in the country and one of the few amongst contemporary insurance companies that have been assigned ‘A’ ratings. This report is purely based on interview conducted at Takaful Pakistan Limited Head Office and information gathered about the Work Processesthey practice. We take this opportunity to express our profound gratitude and deep regards to our guide Mr. SohailMajeedfor his exemplary guidance, monitoring and constant encouragement throughout the course of this project. The blessing, help and guidance given by him time to time have given us the strength to look beyond our limits and get the best out of us. We also take this opportunity to express a deep sense of gratitude to Mr. Akbar Ali Qureshi, Head of Fire, Property, Re-Takaful, Takaful Pakistan Ltd, for his cordial support, valuable information and guidance, which helped us in completing this task through various stages. Lastly, we thank almighty, our parents and friends for their constant encouragement without which this assignment would not have been possible. 1
  3. 3. CONTENTS LISTING TABLE OF CONTENTS ACKNOWLEDGEMENT ........................................................................................................................................................... 1 CONTENTS LISTING ............................................................................................................................................................... 2 TABLE OF CONTENTS ....................................................................................................................................................... 2 LIST OF FIGURES ............................................................................................................................................................... 2 EXECUTIVE SUMMARY ......................................................................................................................................................... 3 INTRODUCTION .................................................................................................................................................................... 4 PROCESS ANALYSIS ............................................................................................................................................................... 5 PROBLEM DEFINITION.......................................................................................................................................................... 6 PROPOSED SOLUTION ........................................................................................................................................................... 7 CONCLUSION........................................................................................................................................................................ 10 APPENDICES ....................................................................................................................................................................... 11 QUESTIONNAIRE ............................................................................................................................................................ 11 VISUALS OF VISIT............................................................................................... Error! Bookmark not defined. LIST OF FIGURES Figure 1 The Process of Policy issuance ................................................................................................. 5 Figure 2 The Process of Claim Handling ............................................................................................... 6 Figure 3 Complete Process from Intimation to Claim........................................................................... 6 Figure 4 Authoritative Structure for Quotation and Policy Making ................................................... 7 Figure 5 Proposed Overall Process ...................................................................................................... 8 Figure 6 Fareeq-e-Takaful Members ..................................................................................................... 9 Figure 7 Process Versions ...................................................................................................................... 9 2
  4. 4. EXECUTIVE SUMMARY Business Process Reengineering claims the most successful organization change process but application has been successful in some cases, others have suffered losses. BPR still provoke managers to think about their process and bring about a change in their organization. This report acknowledges BPR as a change process and its usage in a service sector organization Takaful Pakistan Limited which is an Islamic insurance company. Takaful comes from the Arabic root word ‘Kafala’, meaning "guarantee". Takaful therefore is the practice whereby individuals in the community jointly guarantee themselves against loss or damage. Takaful Pakistan Limited is a traditional organization, where the level of fragmentation in high. The departments are made on the basis of Product Portfolio. Hiring is done on the basis of expertise. The problem in the process of Takaful Pakistan Limited is the fragmented work tasks performed by different departments acting like silos which makes them department centric. Also the authoritative structure is very complex; making the process time consuming and complex. The distribution of underwriting department into four different departments has not helped the company. Finally there is a requirement for division of applicants on the basis of priority. The proposed solution is based on the measures used in Business Process Reengineering and the methods studied during the course of BPR sessions. The proposed solution shall change Takaful Pakistan from a traditional organization to a Reengineered Organization whose prime focus remains the customer. In the proposed solution, the concept of department is a forgotten theme. The concept of a team ‘Fareeq-e-Takaful’ is introduced, the members of the team shall work in unison. The authoritative structure which was complex in the existing system is now simple. The team is the owner of the process having the authority to complete the transaction without any other signatory intervention. Lastly, prioritizing work in the form of versions to easily process the applications 3
  5. 5. INTRODUCTION Business Process Reengineering has been the talk of the corporations since its inception. The biggest reason being its impact on the organization. Successful Implementation of BPR has given huge gains but at the same time Failures has incurred greater losses. Both ways BPR has made managers think about their processes. Business Process Reengineering is simply theanalysis of the process and rethinking of the complete process to bring about a radical change in business process which in exchange creates dramatic improvements in overall performance of the corporation. From the very start our businesses cut the processes into fragments so as to increase the speed of processing. In a way fragmentation has made work easier and faster, but when looking from a broader view it has added much more work done in terms of administration, control. Also the advantage of greater profit by quantifying production has minimized due to administrative expenses. BPR has emerged as the answer to all such problems. This report analyzes the processes of a Takaful Company and identifies measures for bring about the change through BPR.Takaful comes from the Arabic root word ‘Kafala’, meaning "guarantee". Takaful therefore is the practice whereby individuals in the community jointly guarantee themselves against loss or damage. The company in our consideration is Takaful Pakistan Limited. Takaful Pakistan Limited marked its inception in June, 2006. Capital valuation of Rs. 300 million. Company shares are owned by reputable financial institutions like Arif Habib Investments etc.Lead by an experienced team of trained professionals and headed by an esteem Shariah Board, Takaful Pakistan Limited provides risk coverage in all facets of General insurance namely Property (Fire & Engineering), Marine, Motor, Liabilities, etc. Currently company is operating from Lahore, Peshawar, Karachi (head office). Takaful Pakistan Limited is a traditional organization; its processes are highly fragmented, with work divided into piece meal tasks and different departments have authority over different tasks not the complete process. Ever product is dealt by a different department, making it difficult to control the processes Our proposed process shall join these piecemeal tasks and make it a single process where customer would become the main priority. We propose a team known as ‘Fareeqe-Takaful’ whom shall handle the complete process from intimation to claim. As there are different types of customers (individuals, banks, and corporate groups) we suggest that different versions of processes should be constructed so as to decrease the complexity and lead time. 4
  6. 6. PROCESS ANALYSIS Takaful Pakistan Limited is a service company and its purpose is coverage of Risks and therefore its prime focus is their customers. Customers are the reason for existence but still companies are not customer centric; same is the case with Takaful Pakistan Limited. The processes are tailored as piece meal tasks and divided into different departments for completing the process. The tasks are handled by different people in different departments; therefore it takes quite some time to complete a transaction. To understand the process at Takaful Pakistan Limited see figures Intimation Information gathered Quotation made and sent Inspection Policy Issued Figure 1The Process of Policy issuance The process starts with customer intimation; it can be a phone call, email by the customer himself or a request from an agent (made on behalf of the customers). Intimation is forwarded to the underwriting department; a representative here asks for the complete information of the valuable to cover, processed through email. As soon as the information is received in terms of valuation, location etc.; a quotation is made by another member of the underwriting department. Quotation is a document containing the coverage list; terms and conditions, clauses relating to the coverage. First a draft of the quotation is made which is checked and signed by the Head of Underwriting Department and then sent back for printing final quotation and sending it to Customer. This process is completed in a single working day after the complete information has been gathered. Quotation is sent to customers by two means; riders, courier. Riders are mail man hired by Takaful Pakistan. They work in shifts. Now the process is dependent upon the customer, whenever he replies on behalf of the quotation; the process is railed again. The quotation terms are subject to change in 15-30 days. Now the Underwriting Department sends an inspector to the site where customer wants coverage on. Inspection is done to check the given situation matches real situation or not. Inspector fills a form and clicks photographs of the site for documentation. This documentation is then checked and signed by the Head, Underwriting for further process. Inspection is at least completed in a day; depending upon the size of site. The underwriting department now prepares the policy and the contribution schedule using the in house MIS. Firstly a draft of the policy is prepared which is checked by the 5
  7. 7. signatory and then the final policy is made wrapped in a jacket with the complete contribution schedule. As soon as the policy is delivered the contribution deposits starts. The first deposit is made within 3 months. Policy takes an hour to complete. As Policy issuance process part is explained now moving to Claim Handling; another piecemeal task handled by the Benefit department. This process starts with a claim from the customer made to the underwriting department which then forwards it to benefit department for further process. Loss Claim by Customer Information Gathering Survey of the Site Report of Survey made & checked Required Documents Submission Check Issued Figure 2The Process of Claim Handling Benefit department first gathers the information about losses from the customers then appoints an independent surveyor (industry practice) who surveys the losses incurred on site. The surveyor also prepares a complete report of the losses with photographs and forensic evidence. In the report he also mentions the set of documents required to trigger the claim process. This report is checked and signed by the Head of Benefit Department and then the list of documents is communicated with the customer.As the customers submits the set of documents, the process of claim issuance starts and ends up in issuance of loss amount check by the Accounting Department. The time frame for the Claim process is 10-45 days. Underwriting department is subdivided into four department made in accordance with the product; Namely Fire & Property Underwriting, Marine Underwriting, Health Underwriting and Motor & Accident Underwriting. This increases the fragmentation of the process. Agents/ Marketing Department Attract Customer Administration Movement of Coordination Information Documents Gathered Underwriting Quotation made Inspection Benefit Policy made Survey Report Make decision of Claim Figure 3Complete Process from Intimation to Claim Figure 3 describes the complete process in the form of tasks and the departments interlinked. As far as the Administration Department is concerned, the complete process is directed through this department, also documents (quotation, policy) is moved by admin. PROBLEM DEFINITION 6
  8. 8. As the process suggests Takaful Pakistan Limited is a traditional organization, the level of fragmentation in high. The departments are made on the basis of Product Portfolio. Hiring is done on the basis of expertise. People working in Fire and Property Underwriting department are not trained to handle the tasks of Marine Underwriting Department. This shows that having the same process does not work for the employees but the product portfolio is the center of interest for them. This section introduces the different problem sets identified by us. Firstly, when talking about the policy issuance process; this takes no more than 2.5 days to complete but according to the information gathered it can take up to 3 months to complete the process. After the visit we asked one of its customers about the lead time for policy issuance; the client mentioned that for his company it took 7 months to complete the process for a simple fire policy. Secondly, the authoritative structure is quite complex, employees aren’t given authority over the task they do, each task when completed has to be checked by the department head. This causes increase in lead time and produces inefficient results. Even when the quotation is returned from the customer, CEO himself checks the quotations and then forwards it to relevant underwriting department through admin. So the authority is one major concern for Takaful Pakistan Limited. As most traditional organizations employees and decision making are considered two different things, this adds more non value added work, also increases the lead time. Lastly, the lead time varies from industry to industry and individual to individual; as we were told that for banks, lead time is less than a day, as for financing, banks requires coverage and need quotation in 15 minutes because coverage is the last avenue for their business process, so employees work against the priority for banking sector. This increases the queue time for all other applications. Draft Prepared Submitted to Head of Department If Approved Figure 4 Authoritative Structure for Quotation and Policy Making PROPOSED SOLUTION 7 Final Copy is made
  9. 9. The problem in the process of Takaful Pakistan Limited is the fragmented work tasks performed by different departments acting like silos which makes them department centric not customer centric. Also the authoritative structure is very complex; making the process time consuming and complex.The distribution of underwriting department into four different departments has not helped the company. Finally there is a requirement for division of applicants on the basis of priority. We are proposing this solution, keeping in mind the problems identified. The proposed solution is based on the measures used in Business Process Reengineering and the methods studied during the course of BPR sessions. The proposed solution shall change Takaful Pakistan from a traditional organization to a Reengineered Organization whose prime focus remains the customer. Underwriting Department Benefit Department If claimed Information Gathered Quotation Made, Sent Inspection Policy Made, Survey Tasks Converged to Process Sent Document Requirement Decision on Claim Process From Intimation to Claim Process Owners Fareeq-e-Takaful Figure5 Proposed Overall Process The above figure shows the complete transformation of the tasks in the process (Intimation-Claim) to a complete process handled by a team known as the Fareeq-eTakaful. As the task set of process is broad and can’t be handled by a single employee therefore a team is made. Few of the tasks (Inspection, Survey) can’t be done by any team members it requires qualified and trained professional. This is why a Case Team was better than a case manager. Fareeq-e-Takaful constitutes of four individuals whose work tasks would be Information Gathering (policy, claim), Underwriting, Inspection, Survey, Claim Handling. 8
  10. 10. Fareeq-e-Takaful Information Officer Underwriting Officer Inspector Independent Surveyor Claim Officer Figure 6Fareeq-e-Takaful Members Now the concept of department is a forgotten theme. These individuals shall work in unison given space near to each other so that they can easily communicate and share information without using any communication means. The only person indirectly linked with the process is the surveyor as the industry demand is an independent surveyor. The authoritative structure which was complex in the existing system is now simple. The team is the owner of the process having the authority to complete the transaction with any other signatory intervention up to a certain level decided by the management. In cases where considerations are required team can consult with an expert within the organization or a consultant for the purpose. Lastly, now the point arises of prioritizing the applications, this measure could be solved by introducing different versions of the process based upon the lead time requirement for completing the application and the process Complexity. Process metrics should be decided on these two measures and at least 3 versions are proposed. V1 : Faster Service, Repetitve Applications Banks and Financial Institutions Decide as per condition Corporate Organizations V2: Medium CSL, Medium Complexity Individuals Slow Service, Complex Figure 7Process Versions The above diagram illustrates the versions and the conditions when to provoke the version, it also shows the customer categorization which makes it easier to understand the version and need. This is how the complete process could be reengineered keeping in mind the problem which we thought can be used in the case of Takaful Pakistan Limited. 9
  11. 11. CONCLUSION These days’ organizations around the globe feel the need for change as the customers are not the same as in the past eras. Customers have evolved and so is the need of organizations. This pressure is immense in the service sector as customers have choices available. Takaful Pakistan Limited is a service sector organization following the processes of a traditional organization. Fragmentation of work is the real problem for the organization which is common in Traditional Organizations. This report projects a future process structure for the organizations which shall help in achieving greater CSL and increased satisfaction of employees. Future Research is required for other processes which this report has not covered. 10
  12. 12. APPENDICES QUESTIONNAIRE What is meant by Takaful? How is it different from Insurance? Give us an overview about Takaful Pakistan Limited Products? Can you give a detailed overview of the complete application to claim process? How many people are involved in the process? Which departments are interlinked with which process? Who is the authorized signatory of each process? Who handles the process when signing authority is absent? How much time is required from intimation to policy? How much time is required by Benefit department for handling claim? Cycle time required for each process? Most clients are from which industry? What is the shortest lead time to issue a policy? How much time is set for quotation approval? What SOP’s are followed regarding process time frame? 11

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