By Adam Vanevenhoven
As an actuary or insurance professional if you hear a reference to the marketing and distribution of financial products your first thoughts probably focus on product types, marketing plans, sales pitches, or maybe even the underwriting process. In fact the Marketing and Distribution section mission statement reads as follows: “The Marketing and Distribution Section fosters research and innovation in distribution methods of financial services products and in the marketing strategies with product design, underwriting and operations.” Today innovation is definitely a buzz word in the financial products space and underwriting has always received a significant amount of attention. It’s fair to say that operations is a neglected, or at least overlooked, component of marketing and distribution. This article will highlight an actuary’s foray into operations and how the experience has given her a new appreciation for this important piece of the marketing and distribution puzzle.
Kate Warren is currently on a rotation as an operational excellence black belt at Country Financial. Formerly her position was manager, actuary in Life/Health Product Development. She is currently co-leading a large Operational Excellence project which is not only a process improvement effort, but also a cross-company strategy effort with a three to five-year roadmap. The project extends beyond cost considerations and highlights the importance of operations to the successful marketing and distribution of financial products. Kate has graciously agreed to share her experience and explain how her role has improved marketing and distribution at Country Financial.
Question: What is the specific operations project you have become involved with and what is your role on the project?
Kate Warren: Country has always prided itself on customer service but in recent years has identified that there was room for improvement in the customer billing process across the main business lines: Life/Health, Property Casualty, and investment products sold through Country Trust Bank. There is a desire to improve the execution and consistency of the customer and agent experience across the major business lines and reduce cost inefficiencies. The effort is both a Six Sigma Operational Excellence project as well as an important strategic initiative for the company. We will be striving for operations improvement in the midst of implementing new administrative and billing systems for some of the main business lines as well as improving the overall integration of the billing and payments systems across all lines. My particular role has been to lead the documentation of our current state of operations, identify both process and customer experience improvements, and create the roadmap/timeline of projects to get us where we need to be.
Question: Can you explain briefly how Six Sigma principles guide your project?
Kate Warren: Six Sigma is a process improvement methodology that has been applied in manufacturing industries for many years and more recently has been utilized by financial companies. A key component of the Six Sigma methodology is the statistical measurement of processes to create benchmark metrics. The metric could be a defect rate or an amount of time to process a particular transaction. For example, the time it takes to process a check or the total time spent in a queue before a customer service phone call is answered.
Question: I expect expense/cost efficiencies will be a tangible result for the project. What are the other goals of the project for the company?
Kate Warren: After the initial sale and underwriting processes are completed the billing process is the next, and also highest, touch point with agents and customers. Each touch point is an opportunity to build trust with both the customer and agent and we want the experience to be as positive as possible. Another very important theme of this project for Country is to increase our ability across the organization to make decisions based on data. We believe this will lead to faster and more informed decisions across the main lines of business. A number of the project goals include:
- Continue to improve customer experience;
- Make significant ease of business improvements for Country captive agents;
- Automate manual processes;
- Create a complete cost study of operational processes;
- Improve internal customer survey results and external customer benchmarking results such as JD Power scores; and
- Identify, define, and implement uniform process metrics across the business lines.
Question: How has your team defined success for the project? Specifically how will success be quantified?
Kate Warren: The cost study and process metrics will allow us to measure the improvement in speed and effectiveness in which operations transactions get completed. An important goal for the project is to make sure each major business line’s operations can perform at a similarly high level. We also expect to see improvement in our JD Power scores and internal customer survey scores.
How has your training as an actuary added value to the project?
Kate Warren: The Operational Excellence Black Belt certification training has a strong statistical component so having a statistical and analytical background is a definite plus. As a life pricing actuary, I obviously have a good understanding of how premiums and fees are set. Many times I’ve used that knowledge to help other areas understand why premiums are structured the way they are and what options may be available to make changes in response to customer feedback. My experience with pricing and expenses has really helped in creating the new cost study parameters.
Adam Vanevenhoven, FSA, MAAA, is a director at Prudential. He can be contacted at adam.vanevenhoven@prudential.com.