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    LEAN Insurance Operations

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    cpears56
    The president of a large life insurance company's retail network wanted to increase agent productivity and reduce application costs after eliminating unprofitable agents. An operations consulting team researched six sigma projects but found they were narrow in scope and lacked productivity metrics. The company implemented over 350 non-technology operational improvements across underwriting, retail annuity, and individual distribution processes over a 7-month period. Key results included reducing operating costs by 20%, increasing annual savings by $54 million, boosting agent productivity and sales uptime by 60%, and cutting the break-even point to 6 months with an ROI of 5x in 12 months.

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    LEAN Insurance Operations

    Uploaded by

    cpears56
    165 views1 page
    The president of a large life insurance company's retail network wanted to increase agent productivity and reduce application costs after eliminating unprofitable agents. An operations consulting team researched six sigma projects but found they were narrow in scope and lacked productivity metrics. The company implemented over 350 non-technology operational improvements across underwriting, retail annuity, and individual distribution processes over a 7-month period. Key results included reducing operating costs by 20%, increasing annual savings by $54 million, boosting agent productivity and sales uptime by 60%, and cutting the break-even point to 6 months with an ROI of 5x in 12 months.

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    LEAN guidance for insurance companies

    Original Title

    LEAN insurance Operations

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    The president of a large life insurance company's retail network wanted to increase agent productivity and reduce application costs after eliminating unprofitable agents. An operations consulting team researched six sigma projects but found they were narrow in scope and lacked productivity metrics. The company implemented over 350 non-technology operational improvements across underwriting, retail annuity, and individual distribution processes over a 7-month period. Key results included reducing operating costs by 20%, increasing annual savings by $54 million, boosting agent productivity and sales uptime by 60%, and cutting the break-even point to 6 months with an ROI of 5x in 12 months.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    165 views1 page

    LEAN Insurance Operations

    Uploaded by

    cpears56
    The president of a large life insurance company's retail network wanted to increase agent productivity and reduce application costs after eliminating unprofitable agents. An operations consulting team researched six sigma projects but found they were narrow in scope and lacked productivity metrics. The company implemented over 350 non-technology operational improvements across underwriting, retail annuity, and individual distribution processes over a 7-month period. Key results included reducing operating costs by 20%, increasing annual savings by $54 million, boosting agent productivity and sales uptime by 60%, and cutting the break-even point to 6 months with an ROI of 5x in 12 months.

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    Life Insurance Operations CASE

    STUD
    Y
    Personal Lines—New Business Process
    Lean Insurance Operations for
    Retail Life Distribution Networks

    Situation – Increasing Insurance Agent Productivity While Reducing Application Costs


    Top 3
    After successfully reducing insurance operating costs, the president of the U.S.
    Global Insurer
    retail network faced a daunting challenge. To achieve the next level of targeted
    performance improvement, the retail network must adopt lean principles in insurance.
    The previous cost cutting effort eliminated unprofitable agents: a third of the total. Retail Life—Personal Lines
    Now, lean management principles must increase productivity of the remaining agents United States
    and support operations in the home office. For a year, the president and an internal
    operations consulting team researched six sigma projects in the insurance industry.
    The efforts were narrow in scope. Rarely was the operational improvement supported Project Sponsor:
    by quantified productivity metrics. The retail network needed end-to-end lean process President, Retail Life
    improvement.
    Non-technology, self-funding operational
    improvement implementation:
    Client Description, Project Scope, Objectives
    – No new technology
    Technology upgrades had not improved operational efficiency or customer service.
    Agencies still operated with their own one-off practices. Executives were convinced – End-to-end new business process
    that non-standard processes were to blame. The Lab’s non-technology improvement – 7-month implementation
    templates transformed the retail network operations into a life insurance “knowledge
    work factory.” Errors on new business applications decreased by 70 percent. This
    Project Objectives:
    boosted revenue-per-agent by half. Productivity measurement for underwriters – Cost reduction
    showed a three-fold gain. Operating costs fell by 20 percent. – Service improvement
    A Top 3 global, multi-line insurer, the company serves over 75 million customers in 40 – Sales uptime increase
    countries. The U.S. retail life division employs more than 10,000 people in its personal
    lines business units. Project Scope:
    – Retail life
    Implementation began with a 7-week Phase I analysis. It delivered a guaranteed, self-
    funding Phase II implementation work plan, completed in 7 months. – Underwriting
    – Retail annuity
    Implementing Lean Principles in Insurance –Transformation Examples
    – Individual distribution
    The Lab implemented over 350 non-technology, operational improvements.
    Examples: Implementation Results:
    – Operating cost . . . . . . . . . . . . â 20%
    Applications Rejected Earlier—Over 80 percent of application rejections were
    issued from underwriting, long after processing costs were incurred. Process – Annual savings . . . . . . . . . . . . . . $54M
    standardization for application submission by agencies cut this in half in six – Capacity improvement . . . . . . .  20%
    weeks. Quality metrics helped shift the easiest rejection decisions to agency
    – Sales uptime . . . . . . . . . . . . . .  60%
    management, avoiding unnecessary underwriting costs.
    – Break even point . . . . . . . . . . . . 6 mos.
    Increased Sales Productivity and Uptime—Agents spent as much time following up
    – ROI (12 month) . . . . . . . . . . . . . . . . 5X
    with customers for additional information as they spent selling new policies. The
    Lab simplified new business applications to improve first pass quality and reduce
    follow ups. Within three months, agents increased their sales time – and revenue –
    by 60 percent.

    Improved Customer Service—Customers initially want quick, approximate quotes


    to make decisions. Instead they received exact quotes after a delay. One-third of
    prospects went elsewhere. The Lab implemented quick reference price guides. FSO1b.GLO1.170710
    Similarly, customer-focused process improvement rapidly delivered both service
    gains and sales force operational efficiency.

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