Making the Case for Quality

May 2014

India-based Life Insurer Improves Customer

Retention Through Six Sigma, Quality Tools
by Adam Wise
When an organizations vision and purpose is publicized as being the most admired corporation for
service excellence by local citizens, maintaining a high customer retention rate must be a priority.
While attracting new business is a critical component to long-term success, organizations will not reach
maximum profitability when failing to retain large swathes of its own customers.

At a Glance . . .
Recognizing their
companys customer
retention rate dipped below
acceptable levels, Max
Life Insurance Company
leaders initiated the quality
improvement project,
Unnati, to reclaim deeply
lapsed policyholders.
Using Six Sigma and
quality tools, team members
identified more than one
dozen possible solutions
for sales agents to improve
relationships with customers
and recoup their business.
The improvement project
helped put Max Life on
the path to nearly tripling
its retention rate while
generating $8.6 million
in additional revenue.
Project Unnati was
named a finalist in
ASQs International Team
Excellence Award Process.

ASQ

In the insurance industry, some customer policies will inevitably lapse, or expire, without payment. If
sales agents lack the requisite drive to recover the business from these individuals, the organizations
retention rate will suffer. So when agents for one India-based life insurance company became more
focused on attracting new customers than keeping old onesretaining less than 1 percent of all lapsed
policyholderscompany leaders initiated a year-long quality project to identify why customers were
not renewing, and how best to regain their business.
Achieving quality success from such a project would mean gaining millions of dollars in what would
have been lost revenue.

About Max Life Insurance Co. Ltd.

Founded in 2000 and headquartered in New Delhi, India, Max Life Insurance Co. Ltd. (Max Life)
is the largest and fastest growing nonbank-owned private life insurer in India. With a capital base of
$3.9billion, Max Life manages more than $37.9 billion in assets. Max Life is a joint venture between
Max India Limited and Mitsui Sumitomo Insurance Co. Ltd., and was certified to both ISO 9001:2000
and ISO 9001:2008.

Organizational Growth Highlights New Challenge

Like all young organizations, Max Lifes early years focused on identifying and attracting new business. Money from new customers dominated the companys revenue stream for eight years, always
growing from the previous year, until the trend shifted in 2009 and renewal income became the primary source of revenue. Renewals increased from 45 percent of annual revenues in 2008 to 56 percent
in 2009, followed by 67 percent and 73 percent in 2010 and 2011, respectively.
A life insurance policy is a long-term contract between an insurance company and the insured individual (policyholder). The payment of premium toward a regular policywhich can be on a payment
schedule of monthly, quarterly, semi-annually, or annuallyis spread over the premium paying term of
the policy. Max Life provides policyholders grace periods of 15 to 30 days on their due dates, depending on the payment schedule. If at the end of the grace period a premium is still not paid, the insurance
policy lapses effective as of the first unpaid premium (FUP). Customers can revive lapsed policies,

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though the company reserves the right to accept or reject the

revival, or revive the policy on modified terms. Max Life follows a process of revival that depends on the period elapsed
since the date of FUP, and also based on the health conditions of
the life assured at the time of revival.
Despite the fact that renewing customers comprised a major portion of the companys revenue stream, Max Life leaders still saw
millions of dollars being squandered every year to lapsed policies.

Identifying Opportunities for Improvement

As part of Max Lifes ongoing commitment to excellence, leaders undertake an annual exercise to identify organizational
improvement opportunities. Factors used to identify the improvement opportunities include customer and distributor satisfaction
survey data and Max Lifes six strategic pillars (as seen below).

Max Lifes Six Strategic Pillars

1.
2.
3.
4.
5.
6.

Transform current agency to Platinum Standard

Build a robust multichannel distribution architecture
Realign product strategy
Improve persistency
Focus on cost management
Shape the regulatory agenda

Multiple quality tools were used during the project identification

process to help determine the greatest organizational need with
best possible outcomes, including process mapping, SWOT analysis, and critical to quality (CTQ) trees. Using Pareto analysis,
company leaders zeroed in on lapse recovery, which achieved an
impact evaluation of 71 points (as seen in Figure 1), as the highest priority improvement project opportunity. Leaders called it
Project Unnati, an Indian term meaning progress.
Figure 1 Max Life Pareto of potential improvement projects

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Count 71 51 50 49 45 35 34 23 23 21 14
P
ercent 17.1 12.3 12.0 11.8 10.8 8.4 8.2 5.5 5.5 5.0 3.4
Cum % 17.1 29.3 41.3 53.1 63.9 72.4 80.5 86.1 91.6 96.6 100

ASQ

Percent

80

300

Jumpstarting the Customer Recovery Process

When Project Unnati commenced in early October 2010, Max
Life identified more than 1.5 million individuals whose policies had lapsed, and thus were at risk of being lost as customers.
Such a large number of deeply lapsed policies carried a potential
revenue loss exceeding $50 million.
The team first created a charter,
which specifically outlined a
project goal of increasing the
average collection rate of active
agents from 0.90 percent, which
company leaders admitted was
very low, to 1.50 percent.

Difference Between Active

Agent and Inactive Agent
The Max Life Insurance sales model is
agency-based, wherein the company
hires agents on a commission basis.
Agents are initially classified as
Active Agents; however, agents who
have stopped sourcing business for
any reason, health or otherwise, are
termed as Inactive Agents and are not
eligible for any further commissions.

The team used three months of

data to arrive at a project CTQ
tree. Using SIPOC (suppliers,
inputs, processes, outputs, and
customers), a top-down chart,
and a functional deployment chart, team members identified in
detail the suppliers, customers, input, output, and involvement of
cross-functional units to understand the entire process flow.
Another important task for the Executive Committee (members
identified below) and quality leadership within Max Life was to
pinpoint the improvement projects goals. The following were
the four objectives:

Pareto chart of potential project

400

Of the six strategic pillars, Improve persistency was the one

most directly connected to this improvement initiative. In simple
terms, Max Life defines persistency as nothing more than customer retention. In a perfect world, for every 100 policies being
sold, Max Life should retain all 100 policyholders by the end of
that year. But in reality, the company was only retaining 70 out
of every 100 customers.

Improve collection percentage

Sustain conservation ratio
Increase customer satisfaction
Increase distributor satisfaction

Next, leaders charted the potential stakeholders who could be

affected by changes made to improve customer retention, and
came up with the following list:
Executive Committee (chief executive officer,
chief financial officer, and operations head)
Renewals and retention (vice president of renewals)
Distribution partners (active agents and sales managers)
Policyholder
Quality and business excellence (senior manager,
quality leader, and head of quality)

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Figure 2 Fishbone diagram for potential root causes

Policy holder data

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Project participants used an impact matrix to rate the positive

and negative ramifications each stakeholder group could experience as a result of this project. Members detected a very high
positive impact on the Executive Committee and renewals head
due to improvements within the companys organizational goals,
but a negative high impact was detected for the companys distribution partners due to a fear of change in the current process.
To understand why the company was struggling with its customer retention rate, the Six Sigma process improvement method
was initiated, first to analyze and baseline the project, and then
to identify possible root causes.
Using a fishbone diagram (see Figure 2), the team brainstormed
57 possible root causes for the high-lapse data. Potential causes
Figure 3 Seven final root causes
Premium
amount

Diversified
geography

Policy tenure

Single and
multiple policy

Agent type

Disposition
codes

Low agent
engagement

ASQ

included data quality, low agent engagement, poor incentives, and

service issues. Subject matter experts and Max Life customers
provided stakeholder feedback during the root cause identification stage. The team received the feedback through focus group
meetings, customer call listening analysis, and complaint trends.
About 500 customers were sampled, with the individuals sharing
a variety of reasons why their policies had lapsed, including:
I am not satisfied with the product sold to me.
My agent has not got in touch with me after I bought the policy.
Your process is too complicated. I dont want to pay for
medicals.
Project team members went back to the drawing board using
quality tools like Pareto diagrams and failure modes and effects
analysis to whittle down the possible root causes. The team
paired down the lengthy list to seven final root causes with the
help of cause and effect matrix, as seen in Figure 3.
By brainstorming and benchmarking, which included site visits to other organizations within the industry, team members
generated 23 possible solutions to the seven root causes (see
Table1 on p.4). The team, as with all quality improvement
projects within Max Life, used four selection criteria to trim
the solutions list: (i) CTQ impact and (ii) Cost impact, both of
which were mandatory, and (iii) Time and (iv) Ease, both of
which were optional criteria. If a solution failed to meet either

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of the mandatory criteria, it would be immediately discarded.

The improvement team scored each solution against
the criteria, on a scale of one to 10, to ensure only
viable solutions were chosen. Fifteen solutions
made the final cut. Solutions that scored higher
than 550 on the Solution Selection Priority Number
(SSPN) scale were selected for implementation.
In Table 2, each of the final solutions is briefly
explained. For example, solution 6.5 (agent engagement program) led to the creation of the agent
engagement drive, Get Your Customers Back to
Life. Through the drive, agents were encouraged
to revive their existing customer-lapsed base.

No Project Is Perfect
Even with positive steps achieved by the improvement team, resistance could, and did, take place
among all stakeholder groups (see Table 3 on p.5).

Table 1 Solution selection matrix

Final solutions

CTQ

TIME

COST

EASE

ORG
GOAL

SSPN

1.1 Send >50K premium data to agents

589

1.2 Send complete lapsed data to MDRT

10

653

1.3 Campaigns within zones

403

1.4 Send SMS to <10K premium

742

2.1 Awareness session through agent meets

10

501

2.2 Concalis with CRE heads on performance

10

407

2.3 Publish regular MIS to zone heads

10

591

2.4 Campaigns within zones

10

641

3.1 Involve agents by personal calling

450

3.2 Calling prioritization

659

3.3 Allocation prioritization on policies

742

4.1 Flagging of active agent base in BPs calling

10

744

4.2 Sensitize business partners

515

4.3 Top location prioritization

499

6.1 Certification

10

744

6.2 Contest

10

591

6.3 Pro-active sending data with proper flagging

405

6.4 MIS/Performance board

10

582

For example, as company leaders had predicted,

6.5 Agent engagement program
9
8
9
10
5
some distribution partners resisted change after
7.1 Scripts revision
9
10
8
8
5
having become used to doing business a certain
7.2 Objection handling training
8
9
9
6
5
way for so long. As a means to help remedy the
7.3 Contest
9
9
9
10
5
situation, project team members met with the dis7.4
Special
focus
on
positive
disposition
codes
9
9
8
8
5
tributors and created a value stream map of their
entire process to eliminate
or combine 36 percent of
Table 2 List of final solutions
their work steps. The effort
Root causes
Final solutions
Brief explanation
resulted in a win-win situPremium
1.1 Send >50K premium data to agents Make the lapsed data available to all active agents
ation as the partners agreed
1.2 Send complete lapsed
Make the customized lapsed data available to all active agents
to the recommendations
data to MDRT
with no additional costs.

Results
There were numerous positive improvements achieved
through Project Unnati
(which can be seen in further detail in Table 4 on
p.5), but likely none more
important than the companys improved collection
rate. The team surpassed
expectations by improving
the rate from 0.90 percent
to 2.54 percent.
Max Life Insurance
broke its own records by

ASQ

663
733
659
744
390

1.4 Send SMS to <10K premium

Send communication weekly to all customers whose premium is less than 10K

2.3 Publish regular MIS to zone heads

Send regular updated to four zone heads

2.4 Campaigns within zones

Initiate contest within zone to participate and

results best in collection activities

3.2 Calling prioritization

Advise distribution partners to monitor calling as per prioritization

matrix like call high premium and positive disposition people first

3.3 Allocation prioritization on policies

Allocate base to distribution partners, with a

prioritization like policy type, tenure wise, etc.

Single and
multiple policies

4.1 Flagging of active agent

base in BPs calling

Flag the active agent base, so that agent should call them first

Agent type

6.1 Certification

Provide YB/GB certification to those people, who were engaged via projects

6.2 Contest

Initiate activities for motivating agents, GO, employees

to participate in collection activities

6.4 MIS/Performance board

Publish regular dashboard for key stake holder on fortnightly basis

6.5 Agent engagement program

Engage agents to work on their lapsed portfolio to

earn more commission and new business

7.1 Scripts revision

Revision of calling script at call center

7.2 Objection handling training

Increase the scenarios in objection handling script

7.3 Contest

Initiate activities for motivating calling agents to meet their target

Geography

Premium tenure

Disposition
codes

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generating more than $8.6 million in revenue via Project Unnati,

while also becoming best in industry with a conservation ratio
of 84 percent (source: Insurance Regulatory and Development
Authority), a key measure tracked within the Indian insurance
industry that indicates conservation/lapsation of old business.
We were able to achieve all of our internal targets, said Divya
Tuteja, senior manager at Max Life. We saw a surge in customer satisfaction scores as we saw the Top 2 box score increase
Table 3 Stakeholder resistance action plan
Stakeholders

Types

Resistance

Action taken

Why

Executive
committee

Internal

1) Decision on
holy cows

Steering
Committee
reviews and toll
gate reviews

For sharing
achievements
in the project
journey and
keeping them
engaged
on project
implementations
and results

2) Time share
vs. mind share
3) Conflicting
priorities

Integrating our
project reviews
with weekly
office reviews
Substantiating
expenses with
comprehensive
CBAs

Head
renewals and
retention

Internal

Bang for
the buck

Periodic
meetings

Competing
priorities

Morning
breakfast
meetings

Now vs. then

Distribution
partners

Internal

Resistance to
new changes
in processes

Team
engagement
and building
exercise

Quality and
business
excellence

Internal

Competing
priorities

Dedicated
quality resource

Policyholders

External

Could refuse to
pay premium

Communication
plan

Could raise very

high expectation
with agent

Calling
strategies
Renew a smile
theme

For sharing
achievements
in the project
journey and
keeping them
engaged
on project
implementations
and results
For motivating
and engaging
team

To remain
connected with
them and keep
them posted
on simplified
processes
and nature of
benefit they
would get once
they remain
insured

Table 4 Project Unnati results

Tangible benefits

Metrics

Baseline

Achieved

Project CTQ

% of customer
revived

.90%

2.54%

Revenue enhancement

$ MM

$2.2 MM

$8.6 MM

Call quality score

Percentage

64%

81%

Reduction in cost per policy

MM

.01

.008

Survey scores

T2B and B2B

T2B-<46
B2B>16

T2B-<51
B2B>10

ASQ

from 46 to 51, with a significant drop in Bottom 2 box. Other

parameters like ease of paying, call quality scores, and CTQ
scores also showed encouraging results.
Project Unnati has won multiple accolades, including the Project
of the Year Award 2012 as part of Max Life Insurance Business
Excellence annual award, which is recognized by Max Life CEO
Rajesh Sud. The project has also won the League of Honor
Award from the chairman of Max India, Analjeet Singh, and
also received a prestigious national recognition from the QCI-DL
Shah Quality Award and Qimpro.
As of December 2012, more than a year after the improvement
project ended, Max Life had maintained a high collection percentage of 2.14.
But even beyond the tangible improvements were the intangible
benefits resulting from Project Unnati, including instituting a
quality-based work culture. As with all quality improvement initiatives, positively affecting culture is a key aspect to long-term
success, and nowhere in the company was it more important to
make positive gains than with the agents, as they deal most directly
with customers on a day-to-day basis. Recognizing this, Max Life
launched its Renew a Smile program, which asked agents to sign
a pledge promising to make a difference in key pain areas faced by
customers. The pledge states the internal stakeholders will:
Ensure accurate and reliable renewal communication
Improve call quality on renewals
Offer easy and self-pay premium payment options
Project Unnati helped make our processes robust and effective in
terms of recovering the premium from our deep-lapsed portfolio,
Tuteja said. We are now taking a proactive approach by engaging our agents to help them realize how bringing the customers
back benefits them monetarily, and moreover, how important
it is to meet your existing customers expectations, rather them
making the effort to sell to a prospective customer.

For More Information

To learn more about Max Life Insurance and its services,
visit the companys website at www.maxlifeinsurance.com.
For questions about Project Unnati, contact Divya Tuteja at
divya.tuteja@maxlifeinsurance.com.
For details on the International Team Excellence Award
Process, visit wcqi.asq.org/team-award/.
To read more examples of successful quality improvement
initiatives, visit the ASQ Knowledge Center Case Studies
landing page at asq.org/knowledge-center/case-studies.

About the Author

Adam Wise is an ASQ staff writer.

www.asq.org

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