Tag Archives: management system

What Baseball Can Teach on Talent

In the 1988 film “Bull Durham,” Nuke LaLoosh, a young pitcher with great talent but no professional experience (or maturity), embarks on his professional career with the minor league Durham Bulls.

Crash Davis, an experienced though aging catcher near the end of his playing days, is responsible for grooming LaLoosh into a more polished player. Davis and the team’s coaches and managers spend an entire summer trying to teach LaLoosh the finer points of baseball, and – as importantly – how to think and comport himself like a professional. LaLoosh, Davis, and the Bulls have many ups and downs as the season progresses, but eventually Davis’ mentoring of LaLoosh is effective, and the young pitcher is poised to go onto to bigger and better things, just as Davis prepares to retire from the game.

There are many similarities between the insurance industry and “America’s Pastime,” not the least of which is how to manage and solve the challenges of maintaining a pipeline of young talent. The insurance industry can learn a great deal from baseball’s tried and true strategy of developing talent organically through the minor leagues.

Moreover, professional teams – which, like insurers, are in a data-driven business – have invested significantly in data analytics to operate more economically and efficiently with the resources they already have. Using similar strategies, the insurance industry can build an effective strategy for recruitment, training and development, as well as for sustainable operations, thereby establishing a platform for long-term success.

Too many Crash Davises and not enough Nuke LaLooshes

The insurance industry is facing a crisis – a rapidly aging workforce. According to the U.S. Bureau of Labor Statistics, the number of insurance professionals aged 55 years and older has increased 74% in the last 10 years; by 2018, a quarter of insurance industry employees will be within five to 10 years of retirement. Moreover, by 2017, one in every three U.S. employees will be a Millennial, and Millennials will make up 75% of the global workforce by 2025.

These workforce changes mirror the demographic shifts in the U.S. population. The U.S. Census Bureau estimates that, in the U.S. alone, 10,000 baby boomers (those born between 1946 and 1964) will turn age 65 each and every day until 2030. While the expected number of Americans age 65 and older who leave the workforce will grow 75% by 2050, the expected number of American workers age 25 to 54 will grow by only 2%.

Most U.S. employers are woefully unprepared for the business realities of an aging workforce and face a potentially massive loss of skilled, knowledgeable workers. Companies that effectively recruit, train and develop dedicated future staff and leaders will differentiate themselves and set themselves up for success. Like professional baseball teams, they are trying to find ways to maximize existing talent and replenish it. Also like baseball teams, they are attempting to more effectively use analytics to improve functional efficiencies (e.g., scouting in baseball and claims/underwriting in insurance), as well as continue to automate routine/recurring processes (e.g., data collection in both industries).

Recruit

Traditionally, baseball teams have employed scouts who are responsible for finding and evaluating amateur baseball talent. The scouts talk with each other and college and high school coaches to develop a network of contacts and resources.

Human resources recruiters are the scouting departments of the insurance industry. Similar to baseball, where major league teams can either hire qualified free agents or grow talent organically through the minor league system, insurance recruiters have two options – to hire experienced candidates or recruit and develop raw talent through effective training programs. (For the purposes of this report, we focus below on acquiring and retaining young talent.)

Effective college campus and entry level hiring programs are just the first step in growing talent organically. Organic growth can only occur with the development of robust recruiting programs that focus on two key things:

  • Improving the insurance industry brand. Show Millennials that insurance isn’t boring. Insurance isn’t just about adjusting claims or underwriting risks, and it’s not necessarily an office-bound industry. It offers technical, sales, account management, data analytics and product development jobs similar to those in other industries that have more of a ”hip” image.
  • Educating talent about the variety of roles available in the industry. Letting young people know there are rewarding career paths available in insurance (and working with them to make the promise a reality) is more likely to result in long-term employment.

To recruit Millennials, companies must adapt their recruiting strategies. Companies must think like this generation, supplementing recruiting on college campuses and at career fairs with outreach via social media and online talent communities.

See Also: Why Millennials Are the Best Workers

In “Bull Durham,” Annie Savoy says, “Well, actually, nobody on this planet ever really chooses each other. I mean, it’s all a question of quantum physics, molecular attraction and timing.” However, as an employer, you DO choose employees and need to be in the best possible position to make them want to choose you.

Train

Training new employees, much like training baseball rookies, is critical to retaining talent. Companies that find ways to deliver cost-effective, interesting and meaningful training in fundamentals, coupled with mentorship programs that pair young employees with experienced ones, will create sustainable leadership pipelines. Of note, companies that use e-learning, which appeals to Millennials much more than conference room meetings and presentations, will especially benefit:

  • Company perceived as cutting-edge. A newly hired Millennial trained via an easy-to-follow e-learning system that is technologically up to date, with quality graphics and sound, will perceive that the company is on the cutting edge of technology.
  • Millennials feel respected. Companies that develop a high-quality, customized e-learning program, catering to the way Millennials learn, will demonstrate value and respect for the time and talents of their employees and build loyal, hard-working and fulfilled employees.
  • Cost-effective and agile. E-learning is well-suited to today’s work environment, which is fast-paced and characterized by constant change. Easily customizable and cost-effective, e-learning easily keeps pace with the rate at which technology, work procedures and workers develop.

When asked if he’s heard of Walt Whitman, Nuke says, “No. Who’s he play for?” We hope your personnel development and education is easier, but you should have the processes and systems in place to answer the questions of a younger generation that is learning on the job.

Developing a succession management plan that prioritizes leadership development not only improves retention, building a solid pipeline of talent for years to come, but also reduces recruiting costs.

Over the last 15 years, many baseball owners have realized that a high payroll does not necessarily result in on-field success. Expensive free agents are not a sure thing, and savvy clubs realized that they could be competitive (and have a lower payroll) by developing young players in-house. The World Series champion Kansas City Royals are a case in point: The team has developed much of its roster – and many of its best players – in its own system.

Because top talent clearly is a competitive differentiator, companies will define future success by developing deep and enduring bench strength – a pipeline of players with the leadership skills to be successful in the “big leagues.”

Good development results in beneficial, life-long lessons that benefit the employee and employer. Consider the following exchange after Nuke and Crash fight:

Crash: Did you hit me with your right hand or did you hit me with your left?

Nuke: My left.

Crash: Good! That’s good! When you get in a fight with a drunk, you don’t hit him with your pitching hand.

Remaining competitive even after the veterans leave

Attracting and hiring Millennials is only one way to address the challenge of an aging workforce, and building a developmental system is not the only way companies can promote the transfer of knowledge from one generation to the next. Many organizations are now seeking operational efficiencies via outsourcing, predictive analytics and automation to help address the challenges of an aging workforce.

Shifting back office operations (e.g., claims processing, call centers and mail rooms) to an outsourcing provider can help obviate the need to replace retiring workers. While companies historically have considered outsourcing from a cost and labor arbitrage perspective, they are now making it part of their overall growth strategy because the right outsourcing partners can help them create efficiencies, lower costs and enjoy bottom line savings.

Moreover, by consolidating existing and incoming information into standardized management systems and using advanced analytics to interpret this data, companies can position themselves to make better business decisions – consider the Oakland A’s now famous and commonly used “Moneyball” approach – with a smaller workforce. Some companies have gone so far as to globally standardize key processes by using business process management or workflow software that promotes procedural consistency throughout the enterprise.

As has been the case with forward-thinking baseball teams, these types of investments have enabled leading carriers to more effectively manage and use the vast amounts of structured and unstructured data they possess. Perhaps as importantly, these companies also have increased worker productivity because their employees are now able to focus much more of their time on value-added activities instead of routine, low- to no-value administrative and clerical tasks.

Last but not least, the carriers that have made meaningful investments in outsourcing, business process improvement and advanced analytics have created a virtuous cycle in terms of recruiting. Companies that are on the cutting edge of business technology are also more attractive to Millennials. As a result, these employers not only need fewer employees, they attract higher-caliber newcomers.

See Also: 22 Steps to Reduce the Impact of Retirement

To meet the challenges of an aging workforce, prescient carriers, agencies and brokers are already changing how they recruit and assess their workplace. They are modifying policies to appeal to Millennials, making physical changes to create a more inviting workplace and facilitating knowledge transfer to improve the long-term viability of their organizations. With the impending profound demographic changes, the need to build a pipeline of new talent is mission-critical. In addition, to further minimize the effects a shortage of workers may have, many companies have recognized the need to modernize processes and systems to more effectively manage the business even with a smaller workforce.

Implications

  • The insurance industry is facing an impending talent crunch. If it does not take steps to attract young employees, the crunch will become a crisis.
  • Millennials will soon predominate in the workforce, and insurers need to differentiate themselves from companies in other industries as being attractive places for Millennials to work. They can do this by:

– Effective recruiting that demonstrates rewarding career paths exist in the industry.

– Training that pairs new hires with experienced employees and helps build mentoring relationships; e-learning is a cost-effective way to do this, and one that Millennials like.

– Developing leaders internally – akin to a minor league system – which both encourages retention among younger employees and also eases internal succession planning because it ensures there is a healthy talent pipeline.

– Strategic outsourcing that focuses on complementary capabilities and not just cost reduction; modernizing business processes and effectively employing advanced analytics can significantly improve efficiencies, reduce costs, foster a focus on the things that really add value to the business and attract the best and the brightest newcomers to the industry workforce.

How to Find Mobility Solutions (Part 2)

Before continuing from the “How to Find Mobility Solutions (Part 1)” post, I want to repeat my bias: I think that until insurers, and insurance agencies/brokers, can operate entirely using apps on smart device they can’t really call themselves “mobile-next.”

Potential insurance mobility solutions

Focus on enabling producers to use a smart device that has the requisite apps to:

  • Manage their day (and week and month) — seeing list of sales opportunities, setting up appointments, finding meeting locations and going to meetings, using the native calendar/GPS/mapping capabilities of the smart device
  • Get notices about traffic conditions and suggested alternative routes to take if the producer is driving to a meeting
  • Get alerts about severe weather
  • Pull information about the customer from an agency management system or a carrier’s customer relationship management (CRM) system before the meeting
  • Note comments about the progress of each sale after each meeting, whether by using the keyboard, stylus (if applicable) or voice entry
  • See charts showing progress-to-date or progress-to-goals
  • Pull all relevant forms into a “potential sale area” on the device — forms related to the sale of a specific line of insurance and required by the insurance company or regulators
  • View the status of each sale in process and see the steps the carrier still needs to complete, with time estimates of each step
  • Get a quote for any insurance products the producer is allowed to sell
  • Walk a prospect through a policy application form either on the producer’s device or by sending it to the prospect’s smart device
  • Coordinate a 3-way video session with a subject-matter expert, the prospective client and the producer to answer questions the prospect or producer might have about the insurance product
  • Start a video session with a customer-service representative (CSR) or other colleague in the agency or in the carrier to ask questions or collaborate on an issue – from campaign management to new products to new requirements triggered by new regulations
  • Complete the policy application form, including getting the prospect’s e-signature if that can be done at the moment. If completion isn’t possible at the time of the meeting with the prospect, then enable the producer to store the policy application and filled-in data on the producer’s smart device and also upload the information to the relevant agency or carrier systems
  • Get alerts about any of the producer’s customers filing a claim, including the “when, where and why” of the claim
  • See how much time until the next meeting takes place (this is specifically for a smart watch) and get an alert (sound or haptic touch on the wrist) when the producer is close to or at a meeting location.

I realize this is only a starter list of mobile applications for a producer. What would you add?

Data Analytics Comes of Age for Agents

Sitting down for lunch with one of our top independent agents, I asked him about his business.  

“Things are great – we’re totally paperless now!” he responded triumphantly.

“So what are you doing with all of the data you’re collecting?” I asked.

“Oh, I’m too small to do any of that stuff,” he said with a shrug.

“You’re not,” I said. “In fact, it’s a powerful way for you to generate more business. Let me show you how….”

“Data analytics” sounds like rocket science—sophisticated, expensive, intimidating and beyond the reach of the typical independent agency. It isn't. Data analytics is simply the analysis of data that allows a person to make a better decision than they could without data.

The challenge occurs when there is so much data available that it becomes difficult to determine what information is relevant and what is not. It becomes even harder when the data is not stored in a way that can be easily analyzed.

Today’s technology allows people to analyze huge amounts of data in whatever form. Sophisticated software can identify patterns and relationships between millions of pieces of information that provide better insight into a subject. This is commonly referred to as “big data” analytics.

Don't get overwhelmed by these terms or the complexity of the algorithms used to analyze data. Just remember that the objective is to use data so you and your agency can make better decisions. Here are the key steps to improve your agency's performance:

Step 1:  Understand what you have

Your agency contains a treasure trove of information about your existing clients and potential customers.

Before you can even begin to run a data analytics program, spend time understanding the data you already collect. Start by creating a spreadsheet with all of the data you collect when you onboard a new client — for example, birthdate, home and work address.

Add information you collect as part of the underwriting process. For example, if you write a BOP policy for a client, capture all the additional data an insurer needs to evaluate the risk — the number of employees, store locations and industry.

When this spreadsheet is completed, you will discover the sheer volume of data you already collect about your clients.

Step 2: Understand what you want

Who are my most profitable clients? Are clients more profitable if I write both their commercial and personal lines insurance? How many policies per household do I need to maintain a high retention rate? How can I best target new clients? What type of people are my best referral sources? What marketing programs generate the best leads?

If you think you know the answer to these questions because you've asked them yourself, think again. Most agency owners base their answer on individual experience. That's no longer good enough. Insurance sales and marketing has transformed from an art to a science.

While the data you collect is extremely valuable, data analytics tools also allow you to incorporate outside data into your analysis. What information would you like to have about an existing client or a potential customer? What information would you like to know about a certain area or region?

Identify your “data gaps” — information you don't have but would like to have about a client or a prospect. This might include their net worth, whether they own another home or their business affiliations.  Consider any information you would like to have about a specific geographic area or other external information that would be helpful in allowing you to attract and retain clients.

Capturing all of this additional “outside” data is beyond the capability of any individual agency. But today there are companies that do just that. Find one that offers subscription- or transaction-based solutions, with little or no start-up costs, that are easily accessible by using their secure website. Find a platform you can use any time to plug in or access the data you want.

The data relationships that you build will allow you to create a strategic advantage. Stay away from cookie-cutter solutions that just provide “answers” to data questions. They don't allow you to differentiate the results of the data analysis.

Step 3: Put the data to work

Does your agency management system have a data analytics feature or tool? If it does, subscribe to it. If it doesn’t, demand that the vendor offer such a tool.

If your agency management system doesn't have a data analytics tool, reach out to the insurance company you write a lot of business with and ask if you can partner with them on a data analytics project. Offer to share your information if they will analyze your book of business. Make sure you play a key role in defining the data to be analyzed, and most importantly make sure you define the hypothesis or data relationship you are looking to uncover.

Take action

Today, customer acquisition and retention takes place in real time, or close to it. The more information you have about current and potential customers, the better you will be able to address their needs when and where they want it. That's why you need to embrace data analytics — it gives you the information you need, when you need it.

If you are like most agencies, you’ve already done the hard part by getting rid of your paper files and moving to an electronic agency management system platform. Now you need to start using your data.  You have a great opportunity to become a sophisticated marketer and drive better performance and growth out of your agency.

What are you waiting for?

Disjointed Reinsurance Systems: A Recipe for Disaster

Insurers’ numerous intricate reinsurance contracts and special pool arrangements, countless policies and arrays of transactions create a massive risk of having unintended exposure. The inability to ensure that each insured risk has the appropriate reinsurance program associated with it is a recipe for disaster.

Having disjointed systems—a combination of policy administration system (PAS) and spreadsheets, for example—or having systems working in silos are sure ways of having risks fall through the cracks. The question is not if it will happen but when and by how much.

Beyond excessive risk exposure, the risks are many: claims leakage, poor management of aging recoverables and lack of business intelligence capabilities. There’s also the likelihood of not being able to track out-of-compliance reinsurance contracts. For instance, if a reinsurer requires certain exclusion in the policies it reinsures and the direct writer issues the policy without the exclusion, then the policy is out of compliance, and the reinsurer may deny liability.

The result is unreliable financial information for trends, profitability analysis and exposure, to name a few.

Having fragmented solutions and manual processes is the worst formula when it comes to audit trails. This is particularly troubling in an age of stringent standards in an increasingly internationally regulated industry. Integrating the right solution will help reduce risks to an absolute minimum.

Consider vendors offering dedicated and comprehensive systems as opposed to policy administration system vendors, which may simply offer “reinsurance modules” as part of all-encompassing systems. Failing to pick the right solution will cost the insurer frustration and delays by attempting to “right” the solution through a series of customizations. This will surely lead to cost overruns, a lengthy implementation and an uncertain outcome. An incomplete system will need to be customized by adding missing functions.

Common system features a carrier should look out for are:
  • Cession treaties and facultative management
  • Claims and events management
  • Policy management
  • Technical accounting (billing)
  • Bordereaux/statements
  • Internal retrocession
  • Assumed and retrocession operations
  • Financial accounting
  • AP/AR
  • Regulatory reporting
  • Statistical reports
  • Business intelligence
Study before implementing

Picking the right solution is just the start. Implementing a new solution still has many pitfalls. Therefore, the first priority is to perform a thorough and meticulous preliminary study.

The study is directed by the vendor, similar to an audit through a series of meetings and interviews with the different stakeholders: IT, business, etc. It typically lasts one to three weeks depending on the complexity of the project. A good approach is to spend a half-day conducting the scheduled meeting(s) and the other half drafting the findings and submitting them for review the following day.

The study should at least contain the following:

  • A detailed report on the company’s current reinsurance management processes.
  • A determination of potential gaps between the carrier reinsurance processes and the target solution.
  • A list of contracts and financial data required for going live.
  • Specifications for the interfaces.
  • Definitions of the data conversion and migration strategy.
  • Reporting requirements and strategy.
  • Detailed project planning and identification of potential risks.
  • Repository requirements.
  • Assessment and revision of overall project costs.
Preliminary study/(gap analysis) sample:

1. Introduction
  • General introduction and description of project objectives and stakeholders
  • What’s in and out of scope
2. Description of current business setting

3. Business requirements

  • Cession requirements
  • Assumed and retrocession requirements
4. Systems Environment Topics
  • Interfaces/hardware and software requirements
5. Implementation requirements
6. System administration
  • Access, security, backups
7. Risks, pending issues and assumptions
8. Project management plan

The preliminary study report must be submitted to each stakeholder for review and validation as well as endorsement by the head of the steering committee of the insurance company before the start of the project. If necessary, the study should be revised until all parts are adequately defined. Ideally, the report should be used as a road map by the carrier and vendor.

All project risks and issues identified at this stage will be incorporated into the project planning. It saves much time and money to discover them before the implementation phase. One of the main reasons why projects fail is poor communication. Key people on different teams need to actively communicate with each other. There should be at  least one person from each invested area—IT, business and upper management must be part of a well-defined steering committee.

A clear-cut escalation process must be in place to tackle any foreseeable issues and address them in a timely manner.

A Successful Implementation Process
Key areas and related guidelines that are essential to successfully carry out a project.

Data cleansing
Before migration, an in-depth data scrubbing or cleansing is recommended. This is the process of amending or removing data derived from the existing applications that is erroneous, incomplete, inadequately formatted or replicated. The discrepancies discovered or deleted may have been originally produced by user-entry errors or by corruption in transmission or storage.

Data cleansing may also include actions such as harmonization of data, which relates to identifying commonalities in data sets and combining them into a single data component, as well as standardization of data, which is a means of changing a reference data set to a new standard—in other words, use of standard codes.

Data migration

Data migration pertains to the moving of data between the existing system (or systems) and the target application as well as all the measures required for migrating and validating the data throughout the entire cycle. The data needs to be converted so that it’s compatible with the reinsurance system before the migration can take place.

It’s a mapping of all the data with business rules and relevant codes attached to it; this step is required before the automatic migration can take place.

An effective and efficient data migration effort involves anticipating potential issues and threats as well as opportunities, such as determining the most suitable data-migration methodology early in the project and taking appropriate measures to mitigate potential risks. Suitable data migration methodology differs from one carrier to another based on its particular business model.

Analyze and understand the business requirements before gathering and working on the actual data. Thereafter, the carrier must delineate what needs to be migrated and how far back. In the case of long-tail business, such as asbestos coverage, all the historical data must be migrated. This is because it may take several years or decades to identify and assess claims.

Conversely, for short-tail lines, such as property fire or physical auto damage, for which losses are usually known and paid shortly after the loss occurs, only the applicable business data is to be singled out for migration.

A detailed mapping of the existing data and system architecture must be drafted to isolate any issues related to the conversion early on. Most likely, workarounds will be required to overcome the specificities or constraints of the new application. As a result, it will be crucial to establish checks and balances or guidelines to validate the quality and accuracy of the data to be loaded.

Identifying subject-matter experts who are thoroughly acquainted with the source data will lessen the risk of missing undocumented data snags and help ensure the success of the project. Therefore, proper planning for accessibility to qualified resources at both the vendor and insurer is critical. You’ll also need experts in the existing systems, the new application and other tools.

Interfaces

Interfaces in a reinsurance context relate to connecting to the data residing in the upstream system, or PAS, to the reinsurance management system, plus integrating the reinsurance data to other applications, such as the general ledger, the claims system and business intelligence tools.

Integration and interfaces are achieved by exchanging data between two different applications but can include tighter mechanisms such as direct function calls. These are synchronous communications used for information retrieval. The synchronous request is made using a direct function call to the target system.

Again, choosing the right partner will be critical. A provider with extensive experience in developing interfaces between primary insurance systems, general ledgers, BI suites and reinsurance solutions most likely has already developed such interfaces for the most popular packages and will have the know-how and best practices to develop new ones if needed. This will ensure that the process will proceed as smoothly as possible.

After the vendor (primarily) and the carrier carry out all essential implementation specifics to consolidate the process automation and integrations required to deliver the system, look to provide a fully deployable and testable solution ready for user acceptance testing in the reinsurance system test environment.

Formal user training must take place beforehand. It needs to include a role-based program and ought not to be a “one-size-fits-all” training course. Each user group needs to have a specific training program that relates to its particular job functions.

The next step is to prepare for a deployment in production. You’ll need to perform a number of parallel runs of the existing reinsurance solutions and the new reinsurance system and be able to replicate each one and reach the same desired outcome before going live.

Now that you’ve installed a modern, comprehensive reinsurance management system, you’ll have straigh-tthrough automated processing with all the checks and balances in place. You will be able to reap the benefits of a well-thought-out strategy paired with an appropriate reinsurance system that will lead to superior controls, reduced risk and better financials. You’ll no longer have any dangerous hidden “cracks” in your reinsurance program.
This article first appeared in Carrier Management magazine.