Traditional to
Customer-Centric
Claims Organization
Ayhan Dayoglu
03.10.2013
2
The cost of claims payments and expenses is the largest
spending category
• In order to maintain “Profitable and Sustainable Growth”, Business As
Usual Gaps with Budgeted Targets should be closed through improved
claims operations and organization
1
Almost 80 percent of each earned
premium amount is “claimed by
claims” as pay-out and related
expenses
INCREASING THE PROFIT
2
SUSTAINABLE GROWTH
3
Claim Process: Moment of truth
Company
Strategic Approach
Vision
A
Direct Focus, Retention is
key to success
Differentiate by claims service
and focus on customer
satisfaction
B
Focus on Agency; service
the agent
Provide claims service that
meets industry standard
C
Speed up settlement
Focus on efficiency and
accelerate handling time
D
Low cost provider
Focus on efficiency and
effective cost ingredents
Source: Deloitte
4
Claims management is highly challenging
top-down commitment to
operational excellence
right claim with the right resource
at the right time
•
•
•
•
•
•
•
•
More stable and predictable
loss costs
More efficient and
predictable operating
expenses
Improved loss and expense
costs
Higher overall claim service
ratings
Higher policyholder retention
Improved employee
productivity
More reserve stability
Improved regulatory
compliance
•
Leveraging advanced
analytics
•
Supplier management
•
Legal cost management
•
Technology enablement
•
Fraud detection
Multiple
processes
and
platforms.
Complex,
duplicative
functions
Often with
outdated
technology
5
Alarming Situation
Non-Core Activities
Claim Systems
56% of an average
claims
professionals’ day
is focused on
non-core activities
25%
Manuel
&
Paper Based
Resolve
14%
25%
Resolve at
the First
Contact
Source: Accenture Research
6
New channels are changing the game
use of mobile devices for first notice of loss
proliferation of the use of social media
7
Today’s problems for insurance companies
Pressure to reduce costs
IT issues
Stretch targets
Backlogs
Disengaged employees
Increased workloads
High customer expectations
8
Today’s problems for insurance companies
9
Delivering a resonant customer experience proposition
• How do customers perceive the quality of
insurance interactions, taking into account the
customer’s specific values and standards ?
• How do I track a customer’s journey along
entirely the her lifecycle (from an initial quote
to a claim), across product categories, and
across channels ?
10
Factors influencing customers’ decision to choose and leave an
insurer (%)
Source: Cap Gemini
11
There is a gap between what customers expect of insurers and what
they believe they receive
Source : Accenture
12
Most insurerer struggle to achieve the differentiation which is
crucial to growth
Source : Accenture
13
The job of management : manage people and budgets
Henry Ford’s mass production system
Board
Managers
Seperating decisions from work
Workers
Top-Down Approach
Americanism & Fordism
What is Fordism (Taylorism)






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Work lacks intellectual content
Mechanization
Routinization & simplification of tasks
Fragmentation
Specializations
Coercion outweighs consent
Work speeds up
Liberation of brain to think other things:
this led industrialists to form educational
institutes for workers
14
The consequences of a top-down fear culture :
unhappy customers & higher costs;
 command and control design
spoils the delivery of service to
customers.
 Breaking work down into lowcost functional operations
fragments the flow of work.
 Customers experience difficulty
in getting through to someone
who can solve their problem,
 They find they have to repeat
their problem, call back again
and it takes time to get
problems solved.
 Many customers give up. Bad
service is not only bad for
customers; it also costs more
15
Mass production demoralises workers
WHENEVER THERE IS A
PROBLEM
85% OF THE TIME
IT WILL BE IN THE
SYSTEM
15% OF THE TIME
IT WILL BE THE WORKER
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The job of manager has changed
THE JOB OF THE MANAGER IS TO WORK ON THE SYSTEM TO IMPROVE IT, WITH THEIR HELP.
Thinking
System
Performance
 To change performance, we need to change the system.
 To change the system we need to change our thinking.
There are two steps to changing management thinking:
* understanding what is wrong with the current assumptions
– the harder part – and
* learning to operate with different assumptions.
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If you want people to do a good job, design a good job to do
If you design a system where the people who do the work, have control of the work, people change
To design a good job to do, change the system.
To change the system, change the way you think
Traditional Assumptions
Systems Thinking View
All incoming work is treated as “work to be
done’’
Identify & eliminate non-value / failure demand work
Functional specialization reduces unit costs
Functional specialization increases end to end costs
Targets work
Targets make performance Worse
Process standardization reduces costs and
improves service
Standardization of processes increases end to
end costs and makes service worse
Outsourcing saves money
Outsourcing failure / waste is not a sensible way to
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Change based on knowledge
Understand current performance –
“what and why”
Use front line staff to study the work
Check
Implement the
changes
Do
Plan
Identify levers for
change
Experiment to get
to perfect
19
Change in the approach
FROM
TO
Functional teams
Multi-skilled teams trained to resolve high
frequency customer demands
Targets / Rules
Purpose, Principles, Measures
Competition
Collaboration
What’s in it for me ?
What matters to the customer ?
Managers behind desk
Leaders “in the work”
20
Culture change is free
When you change the system,
your people become your asset
21
What about suppliers
Work Providers
(Insurers)
Clients/Customers
Battlefield
Common
Interests
Supplier Resistance
Supplier Desire
22
Understanding & meeting real needs
Insurance Company
• Fulfil liabilities – policy & compliance
• Cost reduction
Supplier
• Retention/satisfaction
Provide solutions to physical,
emotional, liability and
management needs for all
parties
• Competitive advantage
Policyholder
• Restoration
• Satisfaction
• Perceived value
23
Cost reduction causes customer dissatisfaction
Source : Insurance Association of Turkey / Accenture
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Basic standards are needed to structure system thinking
Source : Insurance Assosiation of Turkey / Accenture
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Summary
 Organizations are complex systems – a change in one part of
the system can have unplanned and unintended
consequences on another part of the system
 Management thinking is still rooted in 19th Century factories
 A new way of management thinking is required if
businesses are to succeed in the 21st Century
 Start by understanding why your customers are displeased
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THANK YOU