Disregarding all the risk management, marketing, and actuary principles, WE as Insurance Professionals have to be aware that are working in a very Noble profession established to cover the financial losses for individuals/organizations. Insurance Companies can suggest preventive measures to their clients, but no one can stop the unforeseen from occurring.
Sometimes, due to heavy workload and huge tension, we tend to forget that we are covering Humanity’s assets (i.e. Life, Health, Properties, etc). Thus, all the Operational strategies that we develop & implement should serve for this ultimate goal, while respecting sound business principles and maximizing “Healthy” profitability to the company. After all, we are working in a business-oriented environment and not in a charitable one.
One of the most common issues that insurance companies face nowadays is the lack of coherence and homogeneity between the departments which imposes the role of an Operational Leader who can bring things together.
Based on my market research within the regional market, below are some of the hints that any insurance company can implement to benefit from maximum productivity:
It is no secret that the insurance sector is the most one embracing all specialties in the world due to its wide exposure to all economic sectors (i.e. Doctors for Medical & Health Departments, Engineers for P&C, Marine specialists for Marine Hull & Cargo, etc). Having all these specialties with diverse backgrounds under one roof is by far one of the most operational challenges any company can face. Having said that, the Operations Leader should be the turning factor in this status quo, by gathering all parties under the “Corporate Strategy” umbrella. The initiative should be done in close cooperation with the Human Resources Department by having a deep understanding of the dynamics and characteristics of each one in order to create strong internal Trust bonds, and achieve corporate objectives.
Insurance is considered a Service Industry as it deals with intangible products. Thus, companies need to solve all issues attributed with this nature, especially the below two characteristics:
One of the solutions for the Operations Leader is “Standard Operating Procedure” (SOP). SOPs are very crucial to reach optimum service consistency, customer service, and compliance. An SOP is a list of standard steps taken to achieve a certain operational task, and better to be made as a flowchart for fast memorizing. (i.e. a- Quotation issuance from the time the query is received from the sales/intermediary/agent till its issuance (each line with a separate SOP), b- Claims handling from the notification time till final settlement (each line with a separate SOP), c- Collection procedure and follow up until full premium settlement, etc).
Whether it is Communication, Motivation, Empowerment, or even outside events, it is the Operations Leader in cooperation with the Human Resources department task to make sure that all individuals are performing their Job Descriptions fully while minimizing internal conflicts. A simple input vs. output study should be made (not in monetary terms) in order to specify a certain budget to be allocated for Human Resources investments on trainings, events, and professional certifications. Based on my experience, introductory trainings (outside company premises) should be made for staff for topics different than their original job description (i.e. A sales training to be done for the technical staff and vice versa). That way, the team will have a better understanding about other members’ tasks, and accepting their dilemmas.
Insurers should substitute “Top-Bottom” decision-making with a “Bottom-Up” formula for daily Operational tasks. Senior Management should keep in mind, that the operational staff are the front office of the company, so all issues start and end with them. Thus, they have the advantage of knowing customer needs and feedback for the service provided, and their opinions should be given the priority with any operational move. After all, if you don’t trust your employees for their opinion, you shouldn’t have hired them in the first place!!!!
Therefore KPIs should be clearly set by the Operational Leader, firmly implemented for all departments, and consistently measured against organizational objectives. Below are some of the KPIs that can be studied.
· Number of new prospects contacted;
· Closing ratio;
· Average size of sale;
· Number of referrals;
· Connections with clients;
· Customer satisfaction;
· Retention of business rates; and
· Percentage of cross-sold accounts.
· Client satisfaction;
· Problem resolution rate;
· Calls handled per day and within 24-hours;
· Mail handled in 24-hours;
· Claims turnaround; and
· Number of cross-sold accounts.
· Meeting monthly budget;
· Zero receivables over 30 days;
· Accuracy rates; and
· Speed in closing agency financials.
· Growth rates by department and by line of business;
· Expense ratios for each major expense category;
· Contingent commissions to total commissions ratio;
· Reported profit margin;
· Pro forma profit margin (EBITA);
· Trust ratio;
· Current ratio;
· Age of receivables; and
· Agency cash flow.
In Conclusion, it has been proven scientifically that Insurance is one of the most stressful careers (mentally) you could ever have, and the primary reason is the huge responsibility that lies on the sector which unfortunately, not everyone realize it. Therefore, there should always be an Operation Leader who can minimize the tension, and scrutinize the strategies to reach organizational short, middle, and long term objectives.