Insurance

Sustainable expense ratio reduction through operating model change

February 9, 2021 by

Gaining a competitive advantage has never been more critical for insurers in the current climate. By establishing an operating model that turns strategy into reality, insurance carriers can achieve that critical competitive differentiation whilst also reducing their expense ratio.

Operating model design involves aligning key elements of a business operation to deliver both the business strategy and service proposition.

Not only is operating model change important for delivering sustainable expense ratio reduction, it is also fundamental for enabling top-line growth, service improvement, operational resilience and control.

These benefits have never been more needed, as the last twelve months have been the most challenging on record for the insurance industry. COVID-19 has wreaked a devastating human impact, and in insurance it will be one of the biggest loss events in history. Low interest rates and challenging equity markets continue to depress investment returns. Many firms are urgently looking at ways to reduce costs across their businesses.

Reducing a firm’s expense ratio – the costs of acquiring, underwriting, quoting, handling renewals, endorsements, lapses, cancellations and claims handling – without significant strategic technology investment seems like an impossible stretch to many insurance carriers. But it is achievable through operating model change.

At Gobeyond Partners we have a proprietary approach to operating model design which was developed in partnership with one of the UK’s leading business schools. It’s been proven in over 50 organisations and solves these challenges by taking a holistic view of business operations, ensuring that your entire operation supports your strategy.

*Figure 1 – Gobeyond Partners’ operating model approach*

How to change your operating model to unlock expense ratio improvement

When delivering a programme to improve a client’s operating model, our experts will typically explore the following key areas – and here we have shown how that applies to insurance carriers.

Strategy & service proposition. The operating model sits at the heart of an organisation’s business strategy and service proposition, which needs to be defined first ahead of the operating model review

Customer (broker) experience. What is the true experience for your brokers? Are you over or under-servicing different segments?

Customer journey and process. Are there ways you can standardise, simplify, and automate processes without large IT costs? Are there efficiencies you can create to remove unnecessary workload from your underwriters or handle them in a different way? How can we ensure better operational resilience?

Locations, functions, and teams. How is work distributed and managed, particularly across remote teams? How well are handoffs between brokers, teams, partners and suppliers managed, and are they necessary?

Technology and infrastructure. How does technology support the creation of value?

People, culture and organisation. How does your organisational culture support capability and performance? How can collaboration and team working be encouraged?

Management framework – How effective are your decision-making processes and are the right performance measures in place? How well is your data being curated and managed?

An example of the benefits of an operating model review

Gobeyond Partners was engaged to work with an insurance carrier who was operating with expenses significantly higher than their industry peers. The team carried out a holistic review of our client’s operating model across areas such as technology, organisational structure, culture, process and the customer journey.

A rapid improvement plan was implemented for our client, which delivered outstanding and sustainable results:

20% capacity created
£1.3m savings delivered
Improved broker NPS scores

In summary

An operating model redesign presents the opportunity to take a transformational look at the whole organisation, often resulting in substantial benefits for the business and its customers.

If you are trying to cut costs have you considered an operating model review? And if you are currently reviewing your operating model, how are you linking up all the elements?

Find out more about our expertise in insurance by clicking HERE.

Gobeyond Partners have delivered projects for many of the top insurance firms in the UK & Europe for the last 10 years. This includes over 100 insurance engagements, ranging from operating model design for global brokers and carriers, to releasing capacity in underwriting, broking, claims and supporting functions.

Moving at pace while delivering value

October 2, 2020 by

This was first published as a guest article in partnership with Netcall, read the original piece here

Our previous interview with Dave Pattman, MD for Solution Development and Richard Farrell, Chief Innovation Officer at Netcall titled Shifting automation up a gear, focused on technology as the central key to unlocking efficient digital transformation with Richard and Dave exploring how customer support service levels can be maintained in these uncertain times, while accelerating change.

Continuing the conversation, we discuss how organisations can drive and improve customer service levels while driving digital transformation at pace. Knowing how tough it is to deal with the continuous uncertainty that the pandemic has caused, we ask how can organisations work through the changing policies and processes and get to the value quicker?

When you are working at pace, how is it possible to design processes which are going to be adopted and successfully meet the needs of the customer?

Richard: It’s a human-centric issue. The key to getting the processes right, is using your customer-facing people as a major part of the building process. They have amazing customer insight and also understand where the issues are with your current systems which prevent work from flowing effectively.

With Liberty Create, your customer experts can collaborate with IT to develop solutions to common customer experience issues. We call them citizen developers, as anyone can be taught to build with our drag and drop tech, they don’t need to be a seasoned developer.

By working together, they can build applications quickly and easily with IT controlling the secure and compliant environment and approving the build. Our studios within our low-code software create a nice line of demarcation between building, coding and testing.

Dave: When working at pace, it’s really important to have the right level of expertise to fall back on. While internal teams may have a strong grasp of the problem to solve, finding a suitable delivery partner who understands the technology and can deploy in appropriate areas is key to maintaining momentum.

The teams I lead hold a great degree of experience in technology deployment. When partnered with a client team who are able to bring their deep knowledge and proximity to the customer together, we’re able to both move at pace. This ensures that all-important scale and longevity of impact. Without that critical partnership, there’s too many false starts, single point solutions that only serve to move demand downstream or are unable to reach the scale required to realise ROI.

It seems automation isn’t simply about automation. People, process and technology are at the heart of it. So, how do organisations shift gears to adapt to this way of digitising?

Richard: I’d say the first objective is to opt for tools which allows you to add and prove value, quickly. That means that you can demonstrate the improvements and return on investment or efficiency savings, fast. You can show how reducing mundane tasks and refining the processes improves staff job satisfaction, making them more engaged and efficient, and also the positive impact it has on customer experience. Then, the next project gains momentum and you can work through several change projects, at a great pace.

Dave: Many examples of automation projects to date have seen large centralised functions created, who then hunt for opportunities to deploy automation. We’ve found that engaging colleagues much closer to the customer and providing easy tools to support has an evangelising effect, being an active part of change and transformation. This must continue to be grounded by, and supported with a clear strategic rationale, with a universal understanding of the customer service and wider brand proposition, and ultimately the customer journeys that deliver it. This avoids the nightmare ‘wild west’ IT scenarios that shutter initiatives and provide a framework for knowledge sharing.

Low-code provides many advantages for accelerating change in business led automation, can you outline the key rewards?

Richard: Aside from the collaboration between IT and business-people, it’s the pace at which you can make changes to systems adaptations, it allows you to work through the customer journey and resolve issues one process at a time. This means regular operational UK wins and as well as CX.

These changes are business led, and often automating mundane processes, so it can result in higher satisfaction for employees as it removes many of their mundane tasks. So rather than fearing job loss due to automation, they can deliver better service to customers and be more productive. For the employer, they are getting to the value of transformation much quicker – customer issues are reduced and staff have time to deal with the problems.

Dave: Where low-code is facilitated and encouraged by central teams and specialists, there’s huge opportunity to be more ‘fleet of foot’ in developing, deploying and iterating ‘best practice’ across functions and geographies.

When governance requirements are carefully balanced with the freedom for those closest to customers to develop innovative solutions; standards, particularly for heavily regulated businesses can be maintained and even improved while channelling the enthusiasm of colleagues to bring forward their deep understanding and co-create impactful solutions, leveraging internal expertise as required.

Shifting automation up a gear

September 22, 2020 by

This was first published as a guest article in partnership with Netcall, read the original piece here

We are moving away from firefighting mode and thoughts have turned to future planning, though it feels a little like we are all planning for the unknown. Agility and the capacity to adapt rapidly are high on the agenda. The challenge of switching to digital, automated journeys remains a key part of the bigger picture. But economic challenges, staffing decisions as the furlough scheme comes to an end and the need to drive out costs are likely to be fighting for focus.

Technology will be the central key to unlocking focused and efficient digital transformation. But the question is, how do you retain customer support service levels in these uncertain times, while accelerating change? We spoke to our Solution Development MD, Dave Pattman, and Richard Farrell, Chief Innovation Officer at Netcall for their perspectives on how organisations can move at pace with their digital transformation, balancing the need to optimise the efficiency of interactions, with driving and improving customer service levels.

In this post-COVID era, can automation provide a solution to reduce headcount without reducing customer service capacity?

Richard: There’s no doubt that Robotic Process Automation (RPA) and self-service are powerful tools to utilise in your operations. They offer excellent options to reduce simple, repetitive tasks which your staff may be currently handling and they can even improve efficiency as human-error mistakes are limited to the customer’s side. But, your people are vitally important. By moving the mundane tasks into automation, you can elevate the value that your staff provide. They’ll get some extra capacity which can be spent dealing with customers on the more complex transactions.

Dave: Automation certainly has the capability to deliver this, however there must be careful consideration as to where technology is deployed throughout the customer journey. As journeys and processes become far less linear, careful mapping and planning to avoid dead-ends and automation loops, while providing the ability for customers to deal with a person where required can reduce unnecessary friction and service need faster, reducing demand further down the chain as customers become ever more frustrated.

We view automation not just as a cost-reduction tool in it’s own right but as a vehicle to redistribute demand, which can either reduce headcount or place people in roles that add greater value to the customer thus boosting profitability. Taking the right approach means that cost and customer experience levels don’t always needed to be traded off against one another.

What sort of simple transactions can be automated successfully – can you offer an example?

Richard: As millions of people come off furlough and our unemployment rate rises, defaulting on bill payments has never been so high, it’s surely set to continue to increase, sadly. Therefore, for many organisations, bad debts and defaulted payments were a relatively minor issue before the global pandemic, but the situation has now got worse. It’s causing issues with debt recovery which produces a huge amount of work to process. And also extra demand into your contact centre.

Traditionally, back-end systems are not known for flexibility. At Netcall, we’ve shown how low-code can automate back-end processes, building a self-serve portal for customers. Building applications in low-code is fast.

In fact, at a recent innovation event, our team created a working prototype in a hackathon in the duration of the event, specifically to demonstrate the speed of designing and building in Liberty Create, our low-code solution. This application captures the customer data and provides an optimal user journey. This reduces administration work and speeds up the delivery of the debt recovery process for the organisation.

It’s a perfect example of how something which was “on the list” has just leap-frogged in importance post-COVID. It’s now needed immediately to deal with the new normal. Low-code has enabled a very fast solution which resolves the issue and also refines the customer experience at the same time.

What advice do you have for businesses seeking to accelerate adoption of automation technologies?

Dave: A culture of ‘test, learn and scale’ is critical to successfully accelerating the automation agenda. By engaging colleagues much closer to delivering for customers, providing them with tools such as low-code and supporting them with a clear governance framework, problem statements are easier to identify, solutions delivered, iterated and scaled. With the growing democratisation of tools, automation can be seen by colleagues as another powerful enabler, not a harbinger of cost-reduction through mass layoffs.

More insight into successful automation

For further insight on accelerating change, join Richard and Dave on a 15 minute webinar on 8^th October, sharing an agile automation framework and explaining how to effectively prepare your organisation for uncertain futures.

How can the insurance industry use automation to respond to post-COVID pressures?

August 26, 2020 by

Many commercial and general insurers are feeling increased pressure to accelerate their digital agendas, as the economic realities of the COVID-19 pandemic are felt across the world. This has been coupled with a significant shift of customer and client interactions into digital channels, experienced by over 50% of business leaders surveyed during research for our latest whitepaper. In order to effectively meet client demand in digital channels, organisations must take a new approach that reflects the current situation, rather than simply speeding up existing digital and automation programmes defined pre-COVID.

Promising progress

For a sector which has often – rightly or wrongly – been viewed as slow to embrace innovative approaches, there are many recent examples of tactical ‘quality of life improvements’ emerging, as well as smart devices to support customers. Technology has been used to enhance claim submissions, through delivering more effective personalised communication to customers, providing service to high-risk groups such as young drivers, and increasing the capability of digital assistants to answer common queries (before shifting to human service for greater support).

However as the COVID-19 pandemic caused major disruption to customer behaviour and colleague working patterns, strain on digital channels to deliver a higher proportion of service alongside less predictable demand has caused many firms to question whether they are delivering a differentiated service proposition that’s scalable and, perhaps most importantly, profitable.

Are insurers thinking broadly enough?

Many firms have so far used automation and digital technologies on a tactical level to solve specific and immediate problems across the customer lifecycle. Effective automation solutions have been deployed, such as enabling payments to be taken with staff working from home and shifting higher proportions of document signing to online services. However very few have reimagined how solutions can support customer journeys in a post-pandemic world.

Fresh challenges are also presenting themselves, such as the notion of ‘core hours’ being called into question. As client and customer schedules become more flexible and adoption of more digital propositions in other aspects of life continues to increase, there will be less tolerance for disjointed experiences, unnecessary friction or delays.

We see three key areas which insurers need to address in order to move forward:

Reduce variation

Many insurers have grown through acquisition, bringing a litany of different systems, data types and approaches together, along with additional management and back-office procedures.

While this current state of working has been just about manageable for many, the introduction of automation technologies will provide a real impetus for change to reduce variation and achieve real scale and impact.

Before moving forward, businesses should take the time to reassess how to bring together work into one common approach, ensuring the business is ‘transformation ready’.

Unite around a common purpose

Data, technology and change teams often work in siloes but now, more than ever, they should be united in pursuit of a common goal. More often than not, colleagues at all levels lack enough of an understanding of the transformation agenda, how they can play their part in supporting it and the benefits to them. Other priorities, and in some cases performance incentives, can end up competing with broader strategic objectives to diminish the sense of a common purpose.

Take a flexible approach to technology

Firms have found themselves either taking a ‘big systems’ approach, with development taking years and having few opportunities to test, or taking very fleet-of-foot tactical approaches that enable short-term wins but fail to deliver long-term strategic objectives. We have found that it is possible to take much more flexible approaches to technology, provided that the strategic picture is clear and every component has a clear purpose as part of well-designed customer journeys.

The untapped opportunity

Intelligent use of data and automation can unlock a pathway for insurers to develop, test and scale propositions fit for a post-COVID world. There are three areas where insurers can start in order to understand the specific opportunities available:

1. Continue implementing tactical improvements to test and learn

While remaining agile, new approaches must be aligned with broader strategic opportunities and customer journeys, understanding the end-to-end consequences of implementation as opposed to a ‘move fast and break things’ culture.

2. Understand where technology and people are best placed along the customer journey

Instead of seeking to digitise existing journeys, taking an approach that blends digital and human service where appropriate will deliver more profitable outcomes. Understand where human discretion and judgement can add most value, for example tracking claims can manifest as a powerful differentiator and avoid ‘demand loops’ as issues are never fully resolved.

3. Be focused with the change agenda

With ongoing financial pressures, a sharp focus to ensure both resources and attention are deployed in the most effective areas is vital. If activity doesn’t support your objectives, its purpose should be heavily questioned.

Keeping a strong focus on core strategic objectives and the customer journey throughout will ensure that you move with renewed pace and uncover profitable, scalable solutions.

Reimagining service for the new world

July 20, 2020 by

In just a few weeks, the pandemic has forced shifts in behaviour that may otherwise have taken years. It has forced organisations to question whether digital transformation programmes are moving with enough pace, or in many cases whether they are even fit for purpose at all.

Working practices and expectations have changed, and many consumers have been forced to adopt channels that they are now unlikely to abandon. It is clear that as organisations, we all need to think differently about the future if we are going to survive and succeed.

Alongside Craig Gibson, Chief Commercial Officer at Webhelp UK; we have drawn together our knowledge across business operating models, end-to-end customer journeys, and customer engagement to provide our views on how organisations can shape the future.

More than that, we have then tested these views with senior leaders across a variety of sectors, developing four vital characteristics that we believe will help us all to be fit for the future:

More adaptable
Possessing inherent agility that can rapidly course-correct and flex to shifts in demand across channels, geographies, and customer needs

More focused
Using limited resources wisely, setting clear priorities that deliver rapid, effective change that is focused on reducing the number of initiatives to the vital few

More digital
Delivering easy to access service which is technology enabled, rather than technology-led, across multiple channels and touchpoints

More human
Demonstrating transparency, empathy and an ability to form deep emotional connections with both customers and colleagues

For organisations there is an opportunity to build afresh, using the same core capabilities that have helped many of us during this crisis: a strong sense of connection between colleagues, a common purpose, and the coming together of human ingenuity with technological innovation.

Our latest whitepaper ‘Reimagining service for the new world’ explores these themes in more detail, and how we might harness them to build the resilient, customer-focused businesses of tomorrow.

Achieving data-driven performance management

June 24, 2020 by

Recent events have accelerated a topic that has long been debated in global, dispersed operations. How do you drive performance in a consistent and data-driven way? And how do you make sure it is personalised, targeted and human? Most importantly, how do you deliver it in such a way that it is moving the needle on your day-to-day metrics, strategic goals, and your customer experience?

In this article, key members of the Gobeyond Partners team give their views on how this can be done holistically, by leveraging our Achieve Performance Management analytics tool.

New challenges

With very different and unsettling realities previously unthinkable for many now the norm, two major challenges have presented themselves.

1. Dispersed teams need a fresh approach to work management

How teams communicate and the rhythms they use to deliver work will both need adaptation. With the near removal of opportunity for spontaneous conversation, ideation and collaboration commonplace in physical environments, the dispersed nature of operations for the foreseeable future will require far more structure to function effectively.

With 48% of leaders believing their current performance management processes are weak at driving business value, structure and discipline matters now more than ever. Whether conducting purposeful virtual meetings, acting on Key Performance Indicators or utilising intelligent analytics to highlight trends and outliers, there must be a considered adjustment of plans and priorities to reflect reality.

As we continue to support clients, we’ve observed that teams with strong operational discipline already in place are finding it easier to transition and adjust, with the learning curve much steeper for those with less mature approaches.

While we may not see quite the same levels of volatility and change as we did at the outset of the crisis, an ability to review, interrogate and drive action based on real-time data is paramount.

2. Colleagues need tailored support

Relative performance between colleagues can and will differ. In some cases, performance may improve due to home circumstances being more conducive to their personality types; for others, declines can be expected. This should influence the management focus individuals should be receiving, and the coaching style that is most effective.

With 37% of colleagues currently unhappy with the support and coaching received as they adjust to new ways of working and expectations, there is still much more to be done here.

Employee profiling can help explore the drivers and preferences of team members, and better distribute work according to ability; however, caution should be applied to ensure people aren’t placed into arbitrary categories.

By understanding behaviours and performance for each individual, you can establish actionable recommendations and tailored coaching to provide timely support. When this can scale across organisations, blending operational data and predictive analytics to model the impact of change and incorporate real-world performance in shorter loops, you empower everyone in your business to deliver improvements.

Our solution, successfully deployed in multi-site and virtual operations – empowering managers, team leaders and advisors to take control of their own performance

As understanding of drivers and outcomes increase, this may require teams to be reformed, based as much around the qualities and characteristics of individuals as it is around their professional skillset and functional responsibilities, with organisational design operating models adapting and flexing to enable this.

An opportunity to become better

While these challenges can seem like another problem to address alongside the changes in customer demand and logistical or technical hurdles of working differently, we should view them as a unique opportunity to reset and deliver a strong sense of value for everyone in your business.

We believe three significant opportunities should be recognised:

1. A focus on outcomes, not tasks

Clear, defined outcomes that are understood by all become more important than the ‘to-do list’. There is often a tendency in remote environments for teams to become more focused on tasks to complete, with interactions becoming more transactional in nature.

To align teams, embed disciplines and maximise connection are important bedrocks. However, delivering these in the context of ‘principles over process’ where possible will deliver the real transformation and performance gains.

Becoming more outcome driven drives further focus and scrutiny on the right Key Performance Indicators (KPIs). Where dashboard reports are typically packed with multiple metrics and visualisations, now is the time to ask whether measures such as Average Handling Time or more transactional based satisfaction measures are really the right way to assess how effectively broader customer need is being met?

2. Balance frequent interval controls with a view of longer-term goals

With a focus on outcomes and a slimmer set of measures comes a broader understanding of how every colleague brings value to the organisation, increasing their ability and propensity to deliver during critical moments.

It is important, though, to strike the right balance between maintaining a manageable cadence, keeping energy levels and focus up, while reflecting on wider business objectives. Regular ‘social time’ for teams to decompress, reflect and realign their focus should feature in calendars, with more structure and frequency needed in remote working scenarios.

3. Use data more effectively

Combining disparate data sources, understanding end-to-end performance and identifying remedial action was an increasing priority pre-COVID. As teams are increasingly dispersed, this need becomes ever-more critical.

Combining key operational metrics into a high-level dashboard alone is no longer enough. We must also overlay customer and colleague engagement metrics including sentiment and emotional analysis, with algorithms highlighting overall trends and outliers, to drive further investigation of future roadblocks or areas of untapped opportunity.

While better use of data will play a huge role in building understanding and delivering improvements, it should never wholly replace ad hoc human interaction and more anecdotal sources.

Our key recommendations

The potent combination of uncertain global economics, rapidly shifting customer demand and reduced interaction, particularly between front-line colleagues and leaders, is creating a need to double-down on key operational disciplines.

In summary, our recommendations to ameliorate the challenges and seize the opportunities we discuss above are:

Maintain focus on the core KPIs that are closely entwined with your organisational objectives. Not every manager is comfortable analysing data, but there are now lots of new ways you can introduce real data into 1:1 performance discussions
Acknowledge any issues and communicate them broadly to build trust, camaraderie and a sense of everyone pulling in the same direction
Take a whole company approach with consistency across all functions, aligned to strategic objectives

While micromanagement may be required in certain situations to manage performance and maintain focus, this should be done by exception only. Empowering colleagues to understand their own performance and drive improvement will help sustain highly motivated, adaptable teams for the future.