Taking a Lean Approach to Insurance, Part 2

So let’s take another look at the challenges faced by the insurance industry. I’m going to delve further into the obstacles Makoto faced while implementing Lean in the head office of a major insurer in Japan. Previously I shared with you the eye-opening conversation about the insurance industry with our President, Brad Schmidt. From New Product Development, through Sales, to New Business Acceptance, Brad provided some valuable insight into the world of insurance.

Now I’ll share further insights from Brad into the areas of Policy Owner’s Services and Claims Processing, with a focus on the need for cross-training and the interaction between these silos of business. Let’s begin.

Policy Owner’s Services is the department that allows change to existing customer policy- change of family members, dependents, address, increase or decrease in insurance and so on. Typically people make these changes via call centre or online. Subsequently, all the maintenance updates create a lot of back-office work. So the challenge here lies in the ability to create a motivating and engaging office environment, otherwise, it’s just no fun! So trying to make a motivating atmosphere is quite hard. And what is also interesting about maintenance is that you don’t know what kind of calls are coming in on any given day- every day is different; resulting in unpredictable workloads. You don’t have the ability to say, ‘Hey, folks, where are we at one o’clock, hey, where are we at three o’clock, who needs some help, who wants to do something else?’ The solution here is to train your people on doing different jobs, then you can have lots of flexibility. Making things visual- making the status visual, having little huddle meetings, asking who needs some help, cross-training– this can all have a huge impact. Essentially implementing the fundamentals of Lean, standard work, cross-training, visual management, 5S, and continuous improvement.

The last step in insurance is Claims Processing. This is when the customer makes a claim for payment or cancels a policy and requests payout, or has an annuity due, etc. A lot of times fraud occurs here. So the claims department will always assess it. They ask- ‘Is this a valid claim? Yes or No?’ If it is, the claim will be processed, but it is at this point you are open to people making things up. In addition to the potential for fraud, you can imagine if a check is sent to the wrong address- how bad that would be?! So quite rightly, there’s a lot of focus on quality here.

However, the problem is that people working in claims tend to think of themselves as artists… ‘I’m a detective!’ Their focus is not on the time the job is taking, but how well they do the job. So they think ‘Whether it takes me five minutes or 15 minutes doesn’t matter- each one’s different’. Whereas the company’s point of view is- ‘Hey team, you’re getting 2000 claims a day. That means you folks have to get one done every 30 seconds, so what are you waiting around/over processing for?!’ So these are just some of the wastes we can see in claims processing.

Typically each of these departments- new business, policy owner services, sales and claims to process are all run by different executives as well- they have different chains of command. And in claims, there may even be a call centre that has a different chain of command again. So even though the customer’s information travels from one department to another- and it should be that way- there’s a lot of waste as a result of all the information transfer.

Removing the waste between departments, or the silos of business is the best way to achieve quick wins. Most of this is down to eliminating poor communication and workflow. Within departments; teams can focus internally for further incremental improvement as well. Both approaches shift the needle, so to speak, toward high performance and efficient business processes.

If you’d like to know more get in contact here.