Insurance companies are complex organizations managing multiple levels of service and product offerings, so there is always a risk of varying degrees of costly inefficiency. As experts in operations consulting for insurance companies of every size in every industry, we have developed tools to help carriers streamline their processes and start achieving greater value from their operations. Even small bumps in profitability can have a major impact, both long- and short-term.
In our experience providing insurance support services, we have discovered that there is plenty of low-hanging fruit that insurance companies can begin to capitalize on, beginning immediately. Here’s how.
You might be familiar with the Pareto Principle, also known as the “80/20 Rule”. This is the idea that 80% of your organization’s problems stem from the same 20% of root causes. Address these causes and experience exponentially improved results. This is especially true in the insurance industry since so many aspects of an organization are so deeply interconnected. Many insurance companies recognize that they have an efficiency problem but have no idea where to begin. We say: find the quick win and start there.
Take an inventory of your operational processes and separate your core processes from your supporting services. Your core processes are those that directly contribute to your customers’ experience with your company. Supporting processes are all the ancillary functions that surround your core processes.
Once you separate your core and supporting processes, create a ranking scale of core processes from least to most dysfunctional (i.e. those that cost too much, take too long, or receive the most customer complaints). Then rank the same items based on the amount of resistance you expect to receive when making change. Finally, evaluate your core processes based on the amount of investment (time or money) required to improve the process.
Find the processes that rank highest in dysfunction and lowest in resistance, time, and cost. These are your first priorities. By evaluating based on these criteria, you can reduce a list of potentially hundreds of areas for improvement to two or three that you can address right away. Once you have tackled the issues that are easiest to fix, you should move on to those that require deeper investments of time and resources.
As insurance providers, your business is necessarily financially-focused. However, keep in mind that at its core your operation revolves around people–your customers and your staff. During many of our insurance operations consulting projects, we see companies fall short of their process improvement goals because they forget to address the strong psychological component that surrounds change. The most successful companies carefully build staff buy-in before and during change implementation.
Finally, remember that change takes place from the top down. Leadership must clearly communicate the vision and context for change, and must consistently reiterate this message until the change becomes institutionalized.
Many companies contract an outside party to evaluate their processes and find ways to achieve greater value. This can reveal areas for operational improvement that have become so entrenched in an organization as to become nearly invisible. We recommend that you work specifically with insurance support services specialists, instead of a general business process management partner, due to nuances specific to the insurance industry. General consultants can only provide general advice.
Outside insurance operations consulting partners also bring discipline to the process. They facilitate communication between departments, gather and interpret organization-wide input and can act as a conduit to ensure that important information makes its way up the chain.
Whether you hire an insurance operations consulting firm to evaluate your hypotheses about whether a particular change is a smart investment, or you turn over the entire project for soup to nuts implementation, a third party can often be more effective in evaluating ways to uncover hidden value in your operations and helping you achieve it.
When it comes to process improvement, there’s an old saying, “Don’t try to boil the ocean.” That is, if you attempt to tackle everything at once, you’ll likely become overwhelmed and shelve the whole project. Instead, take a holistic look at your desired changes and how they impact your customers, staff and operations and start where you can make measurable gains right away. Remember that progress is all about incremental improvements.
Ready to find value in your everyday operations? Contact us today for a consultation.