Here’s the Problem… A Process Is Only As Good As Its Weakest Link!

Rob McIsaac

Recently, I decided that I needed to update my life insurance portfolio. With a range of life events taking place, and a 10 year term policy purchased in 2004 coming to a natural end, I was poised to take quick action. Suffering from mild OCD, I actually started the process a full 8 weeks before the anniversary date. Little did I know that I was dancing on a razor’s edge in terms of timing. This sort of “secret shopper” experience has been frustrating, humorous and thought provoking all at the same time. Does it really need to be this hard? If a process is only as good as its weakest link, this one sets a new standard on the low side of the scale.

In an era of instant access, and nearly instantaneous gratification, I went online to start shopping at an aggregator site. To my surprise, this was less functional than the site I recalled from 10 years ago but it did earn me a call back from a call center agent. After going through the medical questions, we landed on the need to “draw fluids”, a process that could take 2-3 weeks to complete. Given the green light, this process started. It took 3-4 weeks to actually schedule the blood draw.

Thinking the process had run amuck, I went to a second carrier directly. After completing their app online, I was called back in minutes for the medical questions. Because of how I answered one question, I was cautioned that I wouldn’t qualify for the super preferred rate and that the agent had no idea what the premium might be. The thrust of the conversation was that it would likely be around 50% more, but that this was just a SWAG. Clearly surprised that I wanted to proceed anyway (not a great trait in sales) we again marched into the need to draw fluids. A process that could take, I was assured, 2-3 weeks.

The third carrier was a traditional Agency company that I decided to test to see if the web site channel worked. Although it took several business days for someone to respond, when they did, the agent was effective and knowledgeable. She was able to share different premium scenarios and suggest which products might best fit the need. While the low end price was higher than the direct company super-preferred rate, the “likely” rate based on the medical questions was lower. And, of course, drawing blood would take several weeks.

Several interesting points in the process:

  • For all practical purposes, the questions the carriers asked were exactly the same. The only variations seemed to be in looking at my driving record (3 years or 5) and my parents issues with illness (before 60 or 65). Other than that, it was cookie cutter.
  • All three companies declined the opportunity to get medical records (fluids, EKG, chest x- ray) directly from my doctor, despite the fact that they were available as part of an annual physical done two weeks earlier. All wanted to have their own chance to stick me with needles.
  • All three carriers used the exact same service to do the fluid draw and on site visit. Some effect envy for me there, since I got a “three for one” deal on the fluids and the list time. Each carrier wanted their own EKG original so I had to sit through that multiple times, but only partially disrobe once.
  • The direct carriers are decidedly poor at staying in touch with process updates. With them it feels like I’ve fallen into an abyss. The agency carrier seems to be far more engaged through my touch point.
  • Across the board, the process seems broken … or at least archaic. I became a little worried about coverage gaps with the ’04 policy exporting, but I shouldn’t have been concerned. The old carrier indicated that it takes a calendar quarter to actually lapse the contract … whose premium would triple on the next anniversary barring action on my part.

    At a time when the balance of consumer’s financial lives is so readily available through self service and guided experience, this seems like a trip back in time to a different world. Actions are measured in weeks and quarters rather than minutes and hours. Rather than full transparency on information and pricing, the process feels both secretive and ill-informed.

    The process also seems to be intentionally inefficient. When my doctor did his version of the fluid analysis, we had results in 2-3 days. The paramedic firm used by all three carriers said it took 2-3 weeks. How could that possibly be?

    Left to a natural course, this process could run (in total) 6-10 weeks, by my estimation. At that point, I will be presented with “take it or leave it” offers from all the carriers involved. I will, of course, have a personal choice to make at that point, armed with full disclosure and valid pricing as inputs. In the end, it will have a happy outcome for some.

    This got me thinking about my own children and their Gen Y peers. They would be highly unlikely to participate in an exercise as slow and as painful as this one. Baby Boomers like me may now be closing in on purchasing their last life insurance contracts as other life events loom.

    For carriers, the time to think about the required paradigm shifts is coming quickly. Those footsteps you hear are future generations of prospects but they may be running away, rather than toward, you!

    Big data, mobile capabilities, access to a form of Telematics and other devices may all prove to be game changers sooner than we think. Remember what life was like before SmartPhone? I don’t either…

    Straight Through Chicago

    Rob McIsaac

    Last week’s LIMRA/ LOMA Retirement Conference in Chicago provided an interesting overview and update for what is happening in the industry today. Jim McCool from Charles Schwab noted the importance of having carriers move to establish trust with consumers, and the need to de-clutter and simplify products and business models. He highlighted the example of Apple as a company that has taken a potentially complex space and made it elegantly simple with a terrific user experience that inspires trust and confidence.

    This was a great build on a presentation I had an opportunity to deliver at the conference on Straight Through Processing.

    The reality in the United States is that 10,000 Baby Boomers are now reaching retirement every day, something that will persist for the foreseeable future. The opportunity for carriers to prepare for this is now. Further, with low interest rates and continued cost pressure, finding ways to reduce operational expenses while improving customer experience (for both agents and customers) is critical.

    Another reality is that customer experiences are increasing being set by companies like Apple, Facebook, Google and Amazon. They have perfected ways to make complex things simple, easy to use, innovative and “delightful” to customers. With expectations set there, business practices that are dependent on paper and rooted in the 1950′s are increasing arcane and inaccessible to agents and customers alike. The need to drive toward electronic applications and electronic signatures is crucial for carriers across lines of business. It is both a crucial step toward better customer experience now … and a precursor to bring able to deliver on meaningful mobile capabilities.

    This was an opportunity to highlight findings from a recent Electronic Signatures Executive Brief we published.

    When asked if there was a potential crisis due to aging in the producer community, the executive panelists at the conference’s main session noted that there is. Allianz, Schwab and Wells Fargo all acknowledged the problem and highlighted approaches they are taking to prepare for a new generation of advisors.

    In some places, the agent / advisor community is actually aging faster than the general population at large. This also highlights the importance of creating better and more compelling user experiences for both producers and end clients. Moving to simplify business process, allowing for the electronic execution of transactions and “going mobile” are all key to this. Carriers will continue to need to compete for advisor “mind share” which will require experiences that can be concurrently compelling to multiple generations of users. All of this, of course, ties back to the Hot Topics we see for insurers in the near future.

    The Apple analogy continues to resonate, particularly if carriers want to truly remain relevant in a highly competitive environment.

    While there are certainly complexities inherent to the life insurance, annuity and retirement plans segments of financial services, the future is clear: STP is moving from being innovative to becoming a “cost of doing business”. Hope is not a strategy and indecision is not a winning game plan.

    Tactical Versus Strategic Approaches on Projects

    Sarah Bogan

    Some of our recent advisory work has focused on working with project teams engaged in major initiatives. Some of the questions we use in our discovery work include:

    • What is currently preventing you from doing your best work?
    • What challenges are you experiencing?
    • What do you need from others in order to be successful?

    These questions typically cause folks to pause for a minute, and then laugh nervously. They commonly say that they have not thought about it. Many admit that they have been tactical rather than strategic, and reactive rather than proactive.

    We then ask them to go into detail about the challenges that they are facing. Our goal is to draw out their unarticulated issues. Some of the questions we use at this stage include:

    • What type of help do you need in order to feel successful?  What steps would you need to take in order to be proactive?  Are there additional steps that would help set expectations and support for your work?
    • Who has expertise in this area?  Who can help you be more successful?
    • How can you manage the people, processes or tools around you in order to be more effective?

    As a result of these meetings, we’ve seen folks go from focusing entirely on their own roles as individual contributors to seeing themselves as coordinating work and engaging with others in order to achieve common goals. It can be like watching an awakening when they realize that they really are part of something bigger and not just making sure their little piece of the project gets done.

    For more on our insurance consulting offerings, see our client case studies at http://www.novarica.com/clients/

    Adding a Resource to a Late Project Makes it Later

    Sarah Bogan

    It’s a common belief that adding more resources to a delayed project can magically fix a runaway project and help over-allocated resource meet their commitments. Unfortunately, relief is not immediate and may create unanticipated and undesired consequences.

    Timing is everything where project staffing is concerned. By the time a team realizes that that a new resource is required, it is often at a place when adding a resource would actually cause strain to the very individuals it was meant to relieve. In fact, adding a resource often has an adverse, and opposing short-term effect by requiring over-taxed resources to interview, train, and transition work to new team members–all while handling their overcapacity workload.

    IT lead project teams commonly underestimate their resource needs at two critical times: just prior to implementation and during implementation — especially when it comes to their need for business resources. Taking business resources out of their operational roles for User Acceptance Testing, Training and Production Support reduces their capacity to do their work, while work levels remain constant.

    Implementing a new system will require new processes and tools to be adopted and create a temporary lull in productivity. It may also require operational resources to problem solve and document production issues. Adding new resources during these times is especially likely to be problematic and create additional strain on the project. For that reason, project teams and impacted business areas should consider an increase in staffing levels in advance of the need in order to provide time for new individuals to come up to speed.

    Project Plans Have a Shelf Life

    Rob McIsaac

    Recently, while making a run through the refrigerator for a late night snack, I happened to notice that almost everything has a “use by date.” While I don’t suspect things become poisonous on that date, the quality does appear to trail off at some point, ultimately leading to the product in question morphing into something else. In reality, some of these changes can happen mighty quickly! Think about how fast fine wine can turn into something that more closely resembles vinegar. Both useful fluids, but hardly interchangeable.

    All of this got me to thinking about technology-dependent projects at insurance carriers. Regardless of how much time has gone into planning an effort, working to achieve IT/Business alignment, appropriate levels of sponsorship and the necessary architectural review–every project as designed and planned has a natural “shelf life.” If pursued outside of that window, the results of the initiative may well be significantly different than what was originally conceived and approved.

    How can this be?

    Projects are complex combinations of components that, when assembled correctly, lead to the desired outcome for a carrier. The elements that drive this include:

    • Technical: Versions of code change, infrastructure morphs and other projects that drive the core of the business can make assumptions invalid.
    • People: This has implications for both carriers and vendors. Having the right resources, at the right time, are crucial. Trying to field the B Team can add notable risk.
    • Political: Every significant change event requires executive sponsorship, organizational support and resource commitment. If an effort loses these elements due to changes in the political environment it can make a tough project impossible.
    • Vendor:  Vendors are in the business to make money and to keep things running on their end requires managing a pipeline of projects and a pool of resources. Delaying from agreed upon plans can lead directly to an effort to “crash” their plans. While a very large vendor may have capacity for this, small ones most certainly do not.

    Get these right, and the project has a reasonable chance for success based on all the best practices from program/project management. Alternatively, taking a project and allowing it to sit in a shelf to be picked up and executed at some future date can have wildly unpredictable results. Context can change, support can change, even the fundamental business problem can change which, in worst of all possible worlds, can lead to a carrier “solving a problem that nobody has–anymore.”

    In order to avoid this, carriers should have the courage of their convictions. Once a project is approved, organizations need to move smartly and efficiently toward execution. If an organization has legitimate reasons for holding up on an effort, they should take the time to re-plan and re-validate before pulling the trigger.

    Failing to do this can lead directly to truly unfortunate “Ready, Fire, Aim” events that can have adverse career implications.

    CIO To Do List: Have Better Meetings

    Tom Benton

    A common complaint I heard as a CIO from my staff was that we had “too many meetings.” In addition to a weekly staff meeting, we had project reviews, meetings with vendors, lunch meetings to review issues, performance review meetings, HR benefits meetings, and, yes, even meetings to discuss agendas for upcoming important meetings.  It felt at times like we were in the business of producing meetings instead of solutions for our business and services for our customers.

    Our weekly staff meeting had become a time of going around the circle with my direct reports and some others from their teams reviewing every project and issue, but we rarely would start on time or complete the meeting within an hour. It was the least favorite part of everyone’s week. After reading some articles on effective meetings, I began having “stand up” meetings (no chairs), shortened the time to a half hour, started on time with no exceptions allowed and limited topics to only those that required collaboration within IT. In short, we got focused on meeting an objective in each staff meeting: making sure that everyone was getting whatever help they needed on their projects and other issues.

    Some of the most effective CEOs hold meetings differently in order to get results. Jeff Bezos keeps an empty chair in the room to remind attendees that the customer should always be the focus. Richard Branson bans Powerpoint presentations, and sometimes has his meetings poolside or at some other non-boardroom location. Steve Jobs was famous for sending away the person least able to contribute to the meeting. (These and other great top leadership meeting tips are available at http://qz.com/94701/top-business-leaders-meeting-tips/)

    An article from boston.com lists 12 helpful tips for making your meetings more effective. The tips include not only the standard “have an agenda” and “start on time” suggestions, but also the ideas of “stand up” meetings, starting at an odd time, and bringing a token of some kind to pass around to the next speaker and others. Try something new with your meetings, but keep a focus on getting results from them. Your staff will thank you.

    You Get What You Pay For–Choose Wisely!

    Rob McIsaac

    I’m often struck by the notion of getting a “good deal.” What does that mean in practical terms, when we make decisions in our personal and professional lives? Many of us contend with this daily, whether it is in deciding small things (where to have dinner tonight), big things (which car to buy), or things that will have a direct bearing on the direction of our career (so, how much is that policy admin system in the window?). We need to make thoughtful calculations that get us to a better place by balancing risks, rewards, excitement and the fear of the unknown. And we need to do it with speed, given the pace of our experience today. Economic advantages can indeed be fleeting things.

    So what is the difference between “cheap” and “value”? In short, they are very different ideas when it comes to making investments. Confusing them can have many dire and long-lasting consequences.

    I came to this realization honestly enough. I grew up in a family that laughed about how my grandfather “could squeeze a nickel so hard that the buffalo would cry.” We all got the message: it was a lot easier to spend money than to make it, so have your wits about you when making important financial decisions. Being a smart, well-educated investor makes a huge difference when final outcomes are assessed.

    It is that outcome component that is really at the core of the difference between “cheap” and “value.” A low initial price tag may only represent the down payment on what may prove to be a decidedly poor investment. “Cheap” may mask ongoing support costs, issues with operability, or even the viability of the vendor bringing a product to market. If a price appears to be too good to be true, then one of two things is true: either you have supernatural negotiating skills, or there’s something hiding under a thin veneer that needs to be peeled away. I start peeling every time something fails a basic sniff test.

    Value gets at a different dynamic. It doesn’t look at the sticker price so much as it does the economic “puts and takes” over a lifetime of use. Understanding what that useful life might be, and how the investment is going to earn out over time, is critical to getting this calculus right.

    Some of the worst cars I’ve ever owned were the cheapest to acquire and the most miserable to own. Conversely, I got some of the best value from vehicles that had a higher sticker price, but were more engaging to use day-to-day, based on comparable functionality.

    Technical investments work much the same way. To get to a real “value” conversation you really need to understand both the TCO and the usability of the solution concurrently. At a recent ACORD conference, a presenter ruefully noted that we “overvalue what we can measure while undervaluing what we cannot.” This is why value calculations can be such a challenge. Moving forward, we will find ourselves grappling with issues that are difficult to put hard edges on today. On the other hand, presuming that our planning horizons extend beyond next Tuesday, that’s exactly what CIOs and their teams need to do. They need to help business partners bring the future into somewhat clearer focus and facilitate seeing around corners, while helping to quell the systemic noise and determining how finite investment pools can create best value for their carriers.

    Value is a much more exciting concept than cheap is. It requires real thought and the ability to demonstrate thought leadership in difficult economic times. The Great Recession may be over, but the competitive environment of the future shows no signs of lightening up. As the budget battles of 2014 start to heat up, it’s a great time to beware of the cheap–and extol the virtues of value.

    Slowing Down to Speed Up

    Sarah Bogan

    Over the past year I’ve been working with a number of our clients to assess projects that are in-flight in order to improve the odds of success. I often find myself in a room with project teams that are so execution-focused that they have not taken sufficient time to plan for their project, engage resources, and communicate to stakeholders. While this approach may yield temporary advantages in terms of ‘moving the project forward,’ it is at the expense of longer term planning, and frequently leads to inefficiency and increased project risk.

    Reasons for failing to allocate enough resources to planning may include a desire to avoid “analysis paralysis” or a genuine lack of understanding of the importance of planning. With the project already underway and tasks due, resources rush to execute. At this point in the project, it can feel like “real” work is being done and that taking time out to stop and plan project activities, create organizational change management plans, engage stakeholders, and ensure that roles are clearly defined will be unproductive and slow the project down.

    From my recent experience with clients and my past experience with program management offices, taking time to ensure that people and activities are properly planned for and stakeholders are correctly engaged can generally leads to an increase in project productivity.

    Fighting the urge to be tactical and moving to a more strategic approach can feel counterproductive. But “slowing down to speed up” is often more effective and efficient in the long term.

    Think Big, Act Small

    Martina Conlon

    I was speaking with a client yesterday about the technology they have rolled out in the past 2 years. It is a small insurance organization that has delivered a great deal of functionality in a very short time – a new policy system for several lines of business, agent portal with new business, policy change, online document delivery and mobile support, and coming soon, a new data warehouse environment. All of this on a low 7-figure IT budget and a handful of IT resources – and they now supporting and enhancing their technology themselves. Impressive, but not completely unique for small companies.

    There’s also the small multiline regional insurer that has delivered better technology in 5 years than many mid-size companies, with modern core systems, agent and consumer portals – and the small workers comp insurer with a trove of robust and widely adopted mobile apps and ongoing R&D efforts around new hardware appliances. What these organizations lack in funding, they make up for in agility. All of these companies have smart CIOs with vision. But the small company edge seems to be the intimacy of the executive teams and the resulting transparency and trust. These organizations make decisions rapidly, are pragmatic in their approach, recognize their financial limitations without making them obstacles and just do it. Certainly bigger companies may inherently have more complexity, but we can all take some lessons from these small but highly agile companies – think big, but act small.

    Congrats to TechDec IT All Stars!

    Matthew Josefowicz

    Novarica congratulates the newest group of Tech Decisions Insurance IT All Stars:

    • Thad DeBerry, Western World Insurance Group
    • Bryan Fowler, Oregon Mutual
    • Peter Moreau, Amica Mutual Insurance Co.
    • Rich Pedersen, National Life
    • Rick Roy, CUNA Mutual.

    We’re also proud to say that 80% of this year’s honorees are members of the Novarica Insurance Technology Research Council!