According to Deloitte Insights, insurers adapt to growth in a volatile economy. And that is true as the insurance industry remains resilient, continues to generate growth, and maintains overall profitability worldwide despite turbulence in the global economy.
The United States is the world’s biggest insurance market showing growth during 2018, 2019, and 2020. The robust growth is also expected to happen in developing countries.
What Is Operational Excellence in Insurance?
The Smartsheet.com experts defined operational excellence as “a framework for businesses to focus on growth and execute their strategy better than their competitors.”
Companies pursuing operational excellence led by the desire for continuous improvement adopt a mindset of problem-solving, teamwork, and top-line growth, allowing them to create more value for customers.
How Does It Work?
Operational excellence can be best described as a mindset that embraces certain principles and methods to create significant improvement within a working environment and corporation in general.
It is a ground for business focused on growth and can be reached only when every organization member works to maximize customers' value. Consequently, OE is a path for achieving stable growth.
What Is Cost Efficiency in Insurance?
Cost efficiency is the act of saving money by making a product or performing an activity better. Since the insurance industry is mature and highly competitive, cost efficiency may be the main profitability driver.
Insurance Cost Efficiency Strategies
Kepner-Tregoe.com defines 6 main strategies to improve cost efficiency for increasing operational excellence:
- Improving Business Processes
- Shutdown, Turns, and Shutdown (STO)
- Supply Chain Management
- Security Efficiency
- Corrective and Preventive Action Management (CAPA)
- Quality Improvement
These are effective methods for improving operational efficiency. The strategies can reduce operating costs while increasing productivity by allowing to reallocate the resources strategically. Moreover, Kepner-Tregoe cost reduction strategies provide additional benefits that impact the entire business by eliminating waste, speeding up processes, and using resources efficiently.
5 Ways to Achieve Operational Excellence and Cost Efficiency for Insurance Organizations in 2021
1. Celebrate Success, Incentivize Good Performance
The key point of this tip is to build support, top-down and bottom-up. The strategic priorities of many successful companies are to have a culture of operational excellence and cost-efficiency. It gives a huge impact and effective impulse for keeping the organization prosper. No matter the dimension and the purpose of your organization, ensure operational excellence is a number one priority guided by the management team.
Moreover, be sure to award employees for good performance. At the end of the year, at Foundrymag, they offer awards for the best workers alongside the President's Award for Excellence for the best example of optimum performance.
Eric Larson, a company’s head of a department responsible for developing a culture of operational excellence and improving efficiencies, says that maintaining and improving a dashboard of key metrics for each team and senior management has given him insight into best practices to promote efficiencies and ensure that capital expenditures improve technical effectiveness.
2. Develop Appropriate Metrics
One of the most important aspects of operational excellence is how you measure success. Deciding on what metrics to use is crucial for every business, and insurance is not the exception. There are plenty of metrics to track the OE success, and for insurance, we suggest the following.
- Percentage Pending
- Bind Rate
- Number of Referrals
- Contract Rate
- Quota & Quote Rate
- Policies In-Force per Agent
- Retention Rate
- Sales Growth Rate
3. Network for Improvements
Make sure you have an efficient system to support agents and departments that might need back-up. Find ways to provide the newbies with the assistance of experienced workers. This can be done in both formal and informal ways.
Again, Foundry Mag specialists have elaborated the beta-version of a program named OPERA (Operational Expert Resource Application), whose goal is to help the business solve operational issues. This app helps them connect their North American workers with foreign employees to find organizational and other kinds of issues.
4. Respect Every Individual
Every insurance company member is a value chain that plays a significant role in an organization's welfare. Everyone has dignity and potential, so each employee deserves to be respected. It would help if you manifested this respect by involving the employees in any improvements in their department. Such an approach would help all team members feel more empowered, appreciated, and valuable. Remember that successful leaders always practice humility.
5. Reach for Perfection
This step is met with resistance by people who claim that perfection is impossible. Even though it may be truly impossible, nobody says you still can’t try to reach for it. Setting the high bar, you make up a different mindset in your organization. Facing a problem, try to look for long-term solutions, and always simplify the process without harming the outcome's quality.
In a Nutshell
The insurance business is a well-established business in the USA that performs as its biggest insurance market. In this article, we’ve discussed the modern state of the insurance industry, operational excellence and cost-efficiency in insurance, and where to find custom insurance software development services.
At Intellectsoft, we develop custom solutions to help insurance companies reach their goals. Are you and your organization looking for improvements? Talk to our experts and find out more about the topic and how your business can start benefiting from it today!