Traditional to Customer-Centric Claims Organization

1. Traditional to Customer-Centric Claims Organization Ayhan Dayoglu 03.10.2013

2. The cost of claims payments and expenses is the largest spending category • In order to maintain “Profitable and Sustainable Growth”, Business As Usual Gaps with Budgeted Targets should be closed through improved claims operations and organization 1 Almost 80 percent of each earned premium amount is “claimed by claims” as pay-out and related expenses INCREASING THE PROFIT 2 SUSTAINABLE GROWTH

3. Claim Process: Moment of truth Source: Deloitte

4. Claims management is highly challenging Multiple processes and platforms. Complex, duplicative functions Often with outdated technology top-down commitment to operational excellence right claim with the right resource at the right time • More stable and predictable loss costs • More efficient and predictable operating expenses • Improved loss and expense costs • Higher overall claim service ratings • Higher policyholder retention • Improved employee productivity • More reserve stability • Improved regulatory compliance • Leveraging advanced analytics • Supplier management • Legal cost management • Technology enablement • Fraud detection

5. Alarming Situation 25% 56% of an average claims professionals’ day is focused on non-core activities Manuel & Paper Based 14% 25% Resolve at the First Contact Source: Accenture Research

6. New channels are changing the game use of mobile devices for first notice of loss proliferation of the use of social media

7. Today’s problems for insurance companies Pressure to reduce costs IT issues Stretch targets Backlogs Disengaged employees Increased workloads High customer expectations

8. Today’s problems for insurance companies

9. Delivering a resonant customer experience proposition • How do customers perceive the quality of insurance interactions, taking into account the customer’s specific values and standards ? • How do I track a customer’s journey along entirelythe her lifecycle (from an initial quote to a claim), across product categories, and across channels ?

10. Factors influencing customers’ decision to choose and leave an insurer (%) Source: Cap Gemini

11. There is a gap between what customers expect of insurers and what they believe they receive Source : Accenture

12. Most insurerer struggle to achieve the differentiation which is crucial to growth Source : Accenture

13. The job of management : manage people and budgets Henry Ford’s mass production system Americanism & Fordism • What is Fordism (Taylorism) • Work lacks intellectual content • Mechanization • Routinization & simplification of tasks • Fragmentation • Specializations • Coercion outweighs consent • Work speeds up • Liberation of brain to think other things: this led industrialists to form educational institutes for workers Seperating decisions from work Top-Down Approach

14. The consequences of a top-down fear culture : unhappy customers & higher costs; • command and control design spoils the delivery of service tocustomers. • Breaking work down into low-cost functional operations fragments the flowof work. • Customers experience difficulty in getting through to someone who can solvetheir problem, • They find they have to repeat their problem, call back again and it takestime to get problems solved. • Many customers give up. Bad service is not only bad forcustomers; it also costs more

15. Mass production demoralises workers WHENEVER THERE IS A PROBLEM 85% OF THE TIME IT WILL BE IN THE SYSTEM 15% OF THE TIME IT WILL BE THE WORKER

16. The job of manager has changed THE JOB OF THE MANAGER IS TO WORK ON THE SYSTEM TO IMPROVE IT, WITH THEIR HELP. • To changeperformance, we need to change the system. • To change the system we need to change ourthinking. • There are two steps to changing management thinking: • * understanding what iswrong with the current assumptions • – the harder part – and • * learning to operate withdifferent assumptions.

17. If you want people to do a good job, design a good job to do If you design a system where the people who do the work,have control of the work,people change To design a good job to do, change the system. To change the system, change the way you think

18. Change based on knowledge Understand current performance – “what and why” Use front line staff to study the work Implement the changes Identify levers forchange Experiment to get toperfect

19. Change in the approach

20. Culture change is free When you change the system,your people become your asset

21. What about suppliers Work Providers (Insurers) Clients/Customers Common Interests Battlefield Supplier Resistance Supplier Desire

22. Insurance Company Policyholder Supplier • Fulfil liabilities – policy & compliance • Cost reduction • Retention/satisfaction • Competitive advantage • Restoration • Satisfaction • Perceived value Provide solutions to physical, emotional, liability and management needs for all parties Understanding & meeting real needs

23. Cost reduction causes customer dissatisfaction Source : Insurance Association of Turkey / Accenture

24. Basic standards are needed to structure system thinking Source : Insurance Assosiation of Turkey / Accenture

25. Summary • Organizations are complex systems – achange in one part of the system can haveunplanned and unintended consequences onanother part of the system • Management thinking is still rooted in 19thCentury factories • A new way of management thinking isrequired if businesses are to succeed in the21st Century • Start by understanding why your customers are displeased

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