Faced with tightening economics and increased competitive uncertainty, many large insurance enterprises have used operational excellence programs to closely monitor and improve all areas of performance. But efficiency - doing more with less - is not enough anymore. The goal now is operational excellence.
Oliver Wyman Partner Mathieu Sebastien notes that being operationally excellent requires tailored solutions to well-defined problems – and programs should aim to provide benefits to all insurers’ stakeholders. This includes shareholders (cost and operational risks reduction), customers (quality of service), as well as employees (quality of life at work and employee satisfaction).
It is no surprise that operational excellence programs are being dramatically reshaped by digital reengineering. Not only does this fresh thinking have the potential to deeply disrupt classic operational excellence programs, it offers insurers practical ways to improve performance across all four pillars – and this could be a real game changer.
Today, many insurers are already capitalizing on the benefits brought about by digital reengineering. One example is using technology to improve existing activities and processes, such as robotic process automation (RPA), flows digitization, and self-service. Another approach is to improve the processes themselves, through inter alia end-to-end or front-to-back process digitization. These can be incorporated into an existing digital reengineering plan. The first approach generates rapid results and requires limited investments. Alternately, the second approach will have more of an impact on a larger base, but does require more implementation time and costs.
Technology will no doubt bring tangible results across each of the four operational excellence pillars (cost reduction, quality of service enhancement, quality of life at work enhancement, operational risks reduction). For example, well-designed RPA programs can drastically reduce costs (by replacing manual work by robots), increase the quality of service (speed and availability of response), improve quality of life at work (by removing repetitive low value added tasks) and reduce operational risks (no careless errors and better visibility). Front-to-back process reengineering has the potential to align an insurer’s operational performance at the same levels associated with InsurTech’s best practices. Leveraging smart processes and new technologies has the potential to make an astonishing impact on customer experience, as well as radically improve productivity. For instance, email analysis technology has allowed some insurance agents and employees to automate processing of up to 30% of customer emails, allowing them more time to meet with customers. And this share will gradually and relentlessly increase, with a positive impact on productivity and quality of service, seen in better response times. Virtual assistants will help insurance agents and employees mobilize the right expertise in real time with a great impact on their quality of life at work and on customer satisfaction.
It is no surprise that operational excellence programs are being dramatically reshaped by digital reengineering. Not only does this fresh thinking have the potential to deeply disrupt classic operational excellence programs, it offers insurers practical ways to improve performance across all key dimensions - and that could be a real game changer.
Read Mathieu's complete article, "Next Generation of Operational Excellence for Insurers." And to learn more about how a range of financial services firms are meeting today's disruptive challenges by opening new opportunities in customer value, see Oliver Wyman's latest State of the Financial Services Industry Report 2018, "The Customer Value Gap - Recalculating the Route."