PegaWORLD: Zurich’s Operational Transformation Through BPM

Nancy Mueller, EVP of Operations at Zurich Insurance North American, gave a keynote today on their operational transformation. Zurich has 60,000 employees, 9,500 of them in North America, and serves customers in 170 countries. Due to growth by acquisition, they ended up with five separate legal entities within the US, only one of which was branded as Zurich; this tended to inhibit enterprise-wide transformation. Their business in North America is purely commercial, which tends to result in much more complex policies that require highly-skilled and knowledgeable underwriters.

She admitted that the insurance industry isn’t exactly at the forefront of technology adoption and progressive change, but that they are recognizing that change is necessary: to stay competitive, to adapt to changing economic environments, and to meet customer demands. Their focus for change is the vision of a target operating model with specific success criteria around efficiency, effectiveness and customer satisfaction. They started with process, a significant new idea for Zurich, and managing the metrics around the business processes: getting the right skills doing the right parts of the process. For example, in underwriting, there were a lot of steps being done by the highly-skilled underwriters because it was just easier than handing things off (something that I’ve seen in practice with my insurance clients), although it could be much more effective to have underwriter support people involved that can take on the tasks that don’t need to be done by an underwriter. One of the challenges was managing a paperless process: trying to get people to stop printing out emails and sending them around to drive processes – something that I still see in many financial and insurance organizations.

As they looked into their processes, they found that there were many ways to do the same process, when it should be much more structured, and ended up standardizing their processes using Lean methods in order to reduce waste and streamline processes. The result of just looking at the process was a focus on the things that their current systems didn’t do: many of the process aberrations were due to workarounds for lack of system functionality. Also, they saw the need for electronic underwriting files in order to allow collaboration during the underwriting process: as simple as that sounds, many insurance companies are just not there yet. Moving to an electronic file in turn drives the needs for BPM: you needs something to move that electronic file from one desk to another in order to complete that standardized underwriting process.

Once those two components of technology are in place – electronic underwriting files and BPM – portions of the process can be done by people other than underwriters without decreasing efficiency. They’re just starting to roll this out, but expect to deploy it across the organization later this year. This also provides a base for looking at other ways to be more agile and flexible in their business, not just incremental improvements in their existing processes.

So far, they are seeing improvements in quality that are being noticed by their brokers and customers: policies are being issued right the first time, requiring less return and rework, which is critical for their commercial customer base. They’ve also improved their policy renewal and delivery timeframe, required to meet commercial insurance regulations. They’re looking forward to their full roll-out later this year, and how this can help them to further improve on their major performance metric, customer satisfaction.

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