Factory Concept for Insurance Companies
Taylorism alone is not enough. An intelligent mixture of standardization and individuality is essential to secure the ability to adapt on dynamic markets. Detecon International supports insurance companies with concepts and tools to reduce value depth and strengthen core competencies.
Dr. Buisset, in an international comparison, the German insurance companies work with the highest cost ratios. What can the companies do to increase efficiency?
Buisset: While the automotive industry has the transformation behind it, banks and insurance companies are just getting started: they must further automate their processes to cut costs. In many cases, principles from factory concepts can be transferred to a company’s processes, and repetitive processes in particular can frequently be standardized, automated, and outsourced. From today’s standpoint, 70% to 80% of the business processes in certain fields can be standardized, enabling their sale or purchase on the market.
What steps are necessary for this?
Buisset: The institutes must first identify their core competencies which set them apart from competitors and employ resource to strengthen these areas. Clearly competitive elements and consequently processes which cannot be completely standardized include underwriting, i.e., the pricing of the specific insurance products on the basis of the individual risk assessment, or the design of new business models with partners who share the risk or on the basis of new technologies. In contrast, many elements of other business processes such as sales/marketing, clientele management, customer service, claims and capital investment management can be standardized and outsourced to specialized service providers. The result is a reduced service depth, greater flexibility, and standardization in the mass business.
Nevertheless, insurance companies are facing a significant transformation in processes. Will this not lead to new difficulties?
Buisset: In any case, there will be new challenges. In a high performer study, Detecon has analyzed the characteristics of companies which achieve two-digit growth rates and enjoy a tremendous innovation capability despite a difficult economic situation. One centrally used element is the dual process design. This means that in every company there are strictly Tayloristic processes which make use of rule-based procedures without exception. At the same time, there are areas which demand creativity and individual talent and which cannot be regulated. Consistent interaction between the two components is of decisive importance.
