Strategic Building Blocks to Unleash an Organization's Potential
By DENISE GARTH, vice president, global industry affairs,
Remember as children how blocks, Lincoln Logs and LEGO unleashed our creativity and imagination? We need that creativity and imagination in our organizations to unlock the potential for a new and better future, particularly in light of the current economic upheaval. Doing more of the same and expecting a different result is not working in any industry, especially insurance.
Today's operational reality for the insurance industry is more challenging than ever before. With net written premium declining for the first time since 1943, rate of return on surplus sharply down, combined ratios increasing and severely lower shareholder value, insurance companies must be bold and creative to ensure future growth, let alone survival.
Two strategic building blocks can provide fuel for creativity and imagination: data management and business process outsourcing.
STOP THE DATA BLEEDING
A critical question for your organization is, "Do you know what you don't know?" If you don't, you may be "bleeding" data and information, rather than leveraging it to power your organization, operationally and strategically.
Data feeds, sustains, grows and protects our organizations. Data is used to analyze, plan and facilitate decisions from underwriting, claims, reinsurance, regulatory and financial. It is a strategic asset and the fuel that powers organizational results.
But all too often, data is not managed or used as a strategic asset. Most companies are data rich but lack "street smart" information to enable strategic intelligence and insight.
Data management, when approached enterprisewide, creates a strategic framework that comprises components including data stewardship, data architecture, data model, process model, analytics and business intelligence.
This framework provides a foundation to enable an organization to become a more agile, nimbler, customer-focused and performance-driven organization. Real-time data, which can be used to analyze and develop decisions, provides organizational agility to adjust course when needed. Data management is also required to effectively use strategic technologies like SOA, SaaS, BPO and relationship networking.
Data management opens up the potential to:
-- Manage and create unique products, and underwrite them based on customer life-time value.
-- Increase profitability by managing claims, using specific data attributes to eliminate inflated repair costs by 20 percent to 30 percent.
-- Reduce fraud and increase profitability by eliminating claimant submissions across multiple brands.
-- Create flexible product pricing points and underwriting rules.
-- Use relationship networks to gather and analyze data to design innovative products.
-- Use real-time data, analysis and reporting against KPI metrics for BPO partners to manage expected outcomes.
BUILDING WITH BPO
Another critical question is: "How can you maintain operations while investing in strategic initiatives?" As companies address operational challenges from expense pressures, time to market and augmentation of resources, they need options.
These options must meet the ongoing challenges while supporting strategic initiatives that innovate and transform the business. Business process outsourcing is the strategic building block that supports both.
From a tactical and cost-efficiency view, BPO offers cost variability based on volumes, creating immediate cost savings. BPO provides best practices to strengthen a company's operations. Organizational options are created by reallocating resources (people and money) to fund and accelerate strategic initiatives, allowing management to focus on business capabilities that differentiate the company and create greater value.
The view of the benefits of BPO has moved beyond just cost-efficiency to one that also considers BPO as part of an agile organizational structure that integrates partners with expertise, enabling operational and strategic initiatives.
Again, consider the potential to:
-- Reallocate 20 percent to 30 percent of resources to strategic initiatives.
--Reduce accident rates by 69 percent using fleet collision management services.
-- Increase profitability by decreasing claims expenses 20 percent to 30 percent of managed repair programs.
--Increase quality of special investigations referrals and dollar recovery using automated fraud scoring.
-- Enhance customer service, increase calls 25 percent, increase coverage to 24/7 at the same or lower cost.
-- Improve time to market of products by weeks or months with reduced financial investment and risk.
READY TO BUILD TODAY, AND TOMORROW
Today, these building blocks are mature, robust and flexible and are being embraced by insurance leaders in innovative ways. New ideas are emerging that are breaking the shackles of history and tradition to invigorate, innovate and transform.
While the building blocks can achieve immediate and significant cost savings, their strategic, long-term value is in the reallocation of resources, business insights and investment options that create a dynamic, flexible, agile, growing business.
Only with these attributes can a business achieve and sustain competitive advantage, superior customer service, responsiveness and innovative products. For long-term success, a business must create an environment that encourages operational excellence, accommodates marketplace shifts or demands, and acts as an incubator for future innovation and ongoing transformation.
Can you unleash your childhood creativity? It will take leadership, vision and courage to embrace change using the data management and BPO strategic building blocks.
March 3, 2009
Copyright 2009© LRP Publications