Quality - Insurance Company Case Study


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An example of a Quality Management Program designed, developed and implemented in a global insurance company

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Quality - Insurance Company Case Study

  1. 1. ASQ SECTION 300 INSURANCE COMPANY CASE Jorge Rosas – Quality Manager Chubb Group of Insurance New York, October 12, 2010 All material presented is Chubb & Son Proprietary information and may not be used or replicated without prior written consent.
  2. 2. Broker Survey Conclusions • Broker perception of a high quality service hinges on the relationship with front line team (UW/UA/CSR). • This perception of high quality service has a definite impact on both the overall broker satisfaction and the probability of placing additional business with Chubb.
  3. 3. Key Characteristics* of High Quality Service • Ease of access and communication with company representatives (Accessibility) • Conformance with Client/Broker specifications and requests (Accuracy) • Timeframe of contact after submission (Responsiveness) • Delivery of quotes within specified timeframes (Timeliness) *Based on VOC survey
  4. 4. Customer Satisfaction Benefits • Increased loyalty • Higher growth • Improved renewal retention rates • Enhanced market share • Decreased acquisition costs • Improved profitability • Rising stock prices
  5. 5. The Kano* Model – Impact of Quality Characteristics on Satisfaction • Delight (key drivers): – Accessibility High Delightful characteristic – Accuracy – Responsiveness Broker Satisfaction – Timeliness • Performance (basic Max pt. drivers), i.e.: Performance – Technical expertise characteristic Must-be characteristic – Competitive rates • Must-be (non drivers), i.e.: – Financial solidity – Reputation Low Investment in Characteristic *Dr. Noriaki Kano, Science University of Tokyo
  6. 6. Stock Performance of Companies with Quality Programs (Kopp Index) vs. the S&P 500 Index
  7. 7. Therefore… By investing in the enhancement of those quality characteristics that drive delight (Accessibility, Accuracy, Responsiveness and Timeliness), we will exponentially improve the probability of brokers placing business with Chubb, thus improving the potential appreciation of Chubb’s stock.
  8. 8. What is the Quality Program Measuring? • It concentrates on the accuracy of the transaction • Measures customer sensitive characteristics • Tracks regulatory compliance
  9. 9. How does this impact the Brokers? • The goal of the Quality Program is to deliver error free policies to the Brokers • Minimizes Broker E&O exposure • Enhances Broker efficiency by reducing rework and “bounce” • Uncovers areas of improvement that both the Broker and Chubb may influence
  10. 10. How can we use the Quality Program as a Marketing tool? • By providing Broker specific reports that show how Chubb is performing in customer sensitive Quality metrics • By using the same Quality checklists used by Brokers to control Carrier quality, so that they are comfortable that we are measuring what is important to them • By establishing differentiated Quality based SLA’s
  12. 12. The Past. . . • Quality assessments were performed by individual zone or branch • Compliance and state-specific-oriented vs. customer-oriented • Diverse checklist, administered with great variation • No standardized tools or systems to capture data
  13. 13. The Present… • Standardization of checklists – New Hire and Production Line QC • Standardization of procedures – New Hire Certification and Random Sampling • Designated person to check consistently • Standardized reports and metrics
  14. 14. Quality Improvement Benefits • Customer Satisfaction: the overarching Quality Management System and the Process Improvement methods are predicated upon the Voice of the Customer (VOC), which is a customer driven methodology. • Decreased Costs: through focusing on continuous and relentless improvement in end-to-end quality, more efficient and effective processes will be implemented resulting in decreased rework and improved capacity.
  15. 15. QUALITY AND PROCESS IMPROVEMENT Methodology Customer Satisfaction DESIGN US MEASURE IN UO NT CONTROL NT EME Process CO OV R IMP Improvement Quality of ANALYZE Performance: QUALITY IMPROVE effectiveness Quality of and efficiency Conformance: uniformity and dependability Quality of Design: customer orientation Brainstorming, Cause & Effect Descriptive stats, SPC, Process analysis, Customer surveys, Calibration, CAPA, capability, ServQual, QFD, Quality Reliability, Quality manuals Quality audits, characteristics, Data mgt COPQ, ROI QUALITY MANAGEMENT SYSTEM
  16. 16. • 100 % Pr • Pro e- ductio issuance W or k n or P QC ractic • Sel f- e chec Review w k ith NH • Rev lists ie QC proce w of Cer ss tificat ion New Hire Practicum Training QC • 100 % Pre • Pro - ductio issuance • Pro n wor QC cess k QC Stage 1 Rev iews Stage 1 New Hire • 50% Pr • Produ e-issuance Q ct C • Proce ion work ss Stag e 2 Re views QC New Hire Certification Stage 2 New Hire Certification • 30 T r CSR, ansactions issuan20 per UA per year, p - Post er • Prod ce QC - uction • On-g work oing Quality Program Phases Production QC Production QC
  17. 17. The Checklists - CTQs • Created by a cross-functional team of experts • Designed specifically for New Hire and Production QC • Customized for each Line of Business subject to QC • Compliance and Customer focus • Yes/No answers (binary distribution) = less ambiguity
  18. 18. QC Staff Roles • Quality Coordinator – Lead and/or facilitate the quality control process within one or more locations. – Focus on Quality process coordination and generating reports. – Serve as the liaison with the other functional areas of the Centers to provide support to comply with quality initiatives. • Quality Specialist – Responsible for the ongoing Branch and Center QC processes. – Analyze quality trends and provides feedback to Center/Branch management. – Maintain communication with Home Office Quality on system and process issues. • Quality Technician – Provide quality support in the Centers. – Perform basic quality tasks. – Responsible for the NHQC transaction reviews. – May switch between QC and CSR responsibilities.
  19. 19. New Hire QC Method • A Continuous Sampling Plan was chosen as the best way to obtain a statistically valid sampling procedure (CSP-C i =10, f =0.5, c =0) • A certification algorithm was created as a way to ensure consistent quality of WPC’s products. • All transactions subject to QC • All reviews performed pre-issuance
  20. 20. Certification Algorithm • Conforming Reviews: – Those in which 85% or more of the checklist questions are considered correct. • Stage 1 QC: – 100% control on all transactions. – 10 consecutive reviews must be considered conforming before moving to Stage 2. • Stage 2 QC: – 50% of the transactions will be reviewed. – 5 consecutive reviews must be considered conforming before certification can be issued.
  21. 21. Production QC Method • Conforming Reviews: 100% of checklist questions considered correct • Quota random sample, evenly distributed, minimum 30 reviews per year, c = 0 (Zero Acceptance Number) • Book/Issue transactions only, on major LOB • All reviews performed post-issuance • Defect Free Rate (DFR) metric • Goals established at individual, unit and Branch level, based on DFR • Trend analyses used for CAPA
  22. 22. Global Quality Information System (GQIS) Quality Sampling Characteristics Plans Repository SM and Procedures (questions) QM COGNOS Business BPM Intelligence Reports QC Roles and Workflows QM = Quality Management, QC = Quality Control, SM = Statistical Methods, BPM = Business Process Management
  23. 23. GQIS FEATURES • BPM: automated workflow and process controls • Automated data loads: ability to source data from multiple systems; i.e. CUW IM, CSI Express, EZER (EUZ) • Flexible sampling plans: large array of sample variables available • Customized checklists: the checklists containing the quality characteristics under scrutiny are designed based on user needs • Role-based user profiles: GQIS uses different roles, which are defined in the system’s BPM engine to provide a role-based view of the process • Variable workflows: system maps are configured based on user defined and documented workflows and procedures • Scalability: supports a large number of concurrent users in multiple locations
  24. 24. Defect Free Rate (DFR) Improvement PROCESSING CENTERS BRANCHES DFR % Start Year 2 DFR % Start Year 2 ATD 83 91 ATD 78 84 Auto 61 89 Auto 77 81 Marine 91 95 Marine 74 83 Package 65 79 Package 79 88 Umbrella 70 85 Umbrella 49 68 WC 74 88 WC 88 93 TOTAL 69 84 TOTAL 71 81
  25. 25. Cost of Quality Investments Losses • Prevention: activities • Failures: the costs specifically designed to relative to non prevent poor quality in conforming products or products and services. services • Appraisal: activities – Internal Failure Costs: those that are identified prior to associated with delivery of the product or measuring, evaluating or service, or that are not visible to the customer after delivery. auditing products and – External Failure Costs: those services to assure that are identified after conformance with delivery of the product or service to the customer. standards.
  26. 26. Prevention – Appraisal – Failure Model Failure costs Costs $ Total Quality Costs Appraisal and Prevention costs 0 Quality % 100
  27. 27. Cost of Quality Results CCI's cost analysis as a result of Finance for Improvement Program. $25,000,000 Finance for Improvement Breakdown Prevention Costs $20,000,000 Appraisal Costs Failure Costs $4,057,175 $15,000,000 $3,443,651 $3,306,444 $10,000,000 $3,313,731 Quality Program is in a Medium to Advanced $5,000,000 $11,589,672 stage $8,387,775 $- 2007 2010
  28. 28. Achievements • Quality Culture: both centralized and field operations have adopted Quality metrics as a key strategy element. Employees now accept and request their individual Quality metrics. • Certification: ensures all new hires reach a minimum processing knowledge threshold prior to production duty. • Production QC (PQC): ensures production line employees are performing up to expected Quality standards through an ongoing feedback loop. • Defect Free Rate (DFR) Goals: this metric, which indicates how often we are providing the customer a flawless product and how well we are complying with applicable regulations, has become an integral part of individual and Branch/Center level performance goals. • Global Quality Information System (GQIS): a dedicated Quality application has been deployed throughout the U.S. It is the platform through which future Quality products/services will be delivered for all domestic and international territories.