Description
balance scorecard can be used to measure the overall growth of the organization, how 4 parameters of balance scorecard can be quantified for insurance industry, What is success mantra of any BPR process and how insurance industry works.
CIGNA PROPERTY AND CASUALTY REENGINEERING (B)
THE PROPERTY AND CASUALTY INDUSTRY
? Industry has experienced cyclical activity. ? Due to losses, companies find it difficult to underwrite new businesses
or renew existing policies. (In 1991, 82% of P&C insurers had losses in their core underwriting operations).
? Companies gradually became dependent on financial markets as their
investment income surpassed losses.
THE PROPERTY AND CASUALTY INDUSTRY
? 1994:
? ? ? ?
Underwriting losses were 35% higher than 1993. Companies experienced 40% decline in net income. Investment income and capital gains witnessed 83% downturn. Combined ratio was 109.4(ideally should be less than 100).
Reasons: claims from disasters, product liability awards and environmental cleanup costs. ? 1995: Industry improved with investment income and net written premium increasing.
TRANSFORMATIONAL MAP CIGNA P&C PATH TO TOP QUARTILE SPECIALIST
FROM
RESTRUCTURE RENEW
TO
• Generalist •Performance problems •Internal Focus
•Customer Focused •Specialist mindset •Top Quartile returns •Learning and flexible organization
PROGRESS AND RESULTS FOR CIGNA P&C
1993 Combined ratio Operating losses 140% $680 million 1994 121.7% $239million 1995 117% $60million(for first 6 months) $6932million -
Premium fees Environmental losses
367million
$6810 million 179million
PROGRESS AND RESULTS FOR CIGNA P&C
KEY AREA JANURAY 1994 JANUARY 1995
Underwriting
Claims Producer Management Information Systems Desktop Technology Support Alignment Balance Scorecard
4
5 4 2 2 3 3
8
5 5 4 6 5 5
People now acted like specialists and accepted ownership. Losses reduced and ROE improved.
MAIN PROCESS: UNDERWRITING
? BEFORE REENGINEERING:
No consideration of risks. Firm took underwriting that generated premiums. Result: Boosted revenues but increased claims
? REENGINEERING:
Excellent Underwriting process should evolve around decision making. Result: Resistance from people stating no improvement required in the process.29 step inclusive process providing framework for applying concepts to new situations. Desktop implemented: It empowered the underwriter at each step of decision making. It helped perform process analysis, comparing action taken at each step with the predetermined objective.
MAIN PROCESS: UNDERWRITING
AFTER REENGINEERING: Tools included electronic form facility, access to underwriting guidelines, interactive business training modules, electronic reference material etc. Offered a service called „Consultant? which provided a list of resources searchable by topic or geographical location. Result: streamlined underwriters task, opened communications, facilitated knowledge transfer. „IMPROVED UNDERWRITING QUALITY’
MAIN PROCESS - CLAIMS
? Before Re-engineering
?
Growing volume of difficult and complex cases
? After Re-engineering
? ?
Alignment of department goal to company goal Use of the claim desktop to record and track claims
MAIN PROCESS - CLAIMS
? Before Re-engineering
?
Representatives tended to overpay claims to maintain good relations
? After Re-engineering
?
?
Representatives to analyze claim transactions on a continued basis Proposed to create “centers of specialization” with a network of remote representatives
MAIN PROCESS - PRODUCER MANAGEMENT
? Producer desktop (software) implementation
? Positive results
? Full rollout in CIS & SIS by end 1995
MAIN PROCESS - PRODUCER MANAGEMENT
Before
? Generalist strategy lead to
? ? ? ?
After
? Centralized database ? Identification of potential
Poorer business Low profitability Alienation of agents Poor information sharing
customers ? Online (anywhere anytime) access ? Street Intelligence ? Taking ownership of processes – customer focus
SUPPORTING PROCCESS - INFORMATION SYSTEM
• Earlier Legacy Systems were being used in the corporation. • Learning and knowledge building were needed to be integrated in
each of the redesigned core processes.
• The approaches used were: INSOURCING and CLIENT-SERVER
ARCHITECTURE.
• INSOURCING: Working closely with the internal team of CIGNA. • CLIENT-SERVER
ARCHITECTURE: Common resource to be
accessed by all workers with the help of a DESKTOP.
• The desktop was used to circulate knowledge. The unstructured data
was converted to structured data and then again cycled back to each workers? desktop.
SUPPORTING PROCCESS - INFORMATION SYSTEM
? The mainframe based systems that showed the potential of pure
transaction processing, got into the realm of SOFT DATA and were considered for migration to DESKTOPS.
? An Integrated Business Platform was developed and used for the 3
desktops developed. The IBP included a suite of access tools for providing shared access to DB2,SQL and Access Databases from
multiple desktops.
?
The desktops were integrated to the common desktop called P&C Insurance DESKTOP. The challenge was to figure out the kinds of
information that needed to be integrated.
BALANCE SCORECARD
? BSC was
Renaissance?s framework to translate individual progress into organization growth
Financial
Learning & Growth
Balance Scorecard
Customer
Internal Business
BSC – Lag Parameters
328 327 326 325 324 323 322 321 320 319 318 140%
327 134.40% 121.70% 97.60% 86.30% 97.60% 120% 100%
86.30%
80%
60% 1994 1993 1994 (%) 1993 (%)
321
36.80% 35.40%
36.80% 40% 35.40% 20%
CIGNA P&C REENGINEERING: BEFORE AND AFTER BEFORE REENGINEERING Organization Functional Management intensive Business Practice No common view of the customer No end to end quality focus Systems Architecture No common source of information Poor user interface AFTER REENGINEERING Self Managed customer focused team Ownership by employees Common view of the customer Enterprise metrics to measure quality Common source of information Graphical user interface
Redundant data preparation
Results Poor quality Lack of customer service
More responsive to business needs
High quality Superior customer service
High cost
Lower operating expenses
THE WAY AHEAD
Focus on Profitable Growth
Manage the A&E growths
Implement the Electronic BSC
Inspire and educate the employees
LEARNINGS
? How balance scorecard can be used to measure the overall growth of the
organization.
? How 4 parameters of balance scorecard can be quantified for insurance industry.
? For any BPR process to succeed ownership by employees is necessary.
? How insurance industry works.
THANK YOU
QUESTIONS*
* Avoid
doc_196594112.pptx
balance scorecard can be used to measure the overall growth of the organization, how 4 parameters of balance scorecard can be quantified for insurance industry, What is success mantra of any BPR process and how insurance industry works.
CIGNA PROPERTY AND CASUALTY REENGINEERING (B)
THE PROPERTY AND CASUALTY INDUSTRY
? Industry has experienced cyclical activity. ? Due to losses, companies find it difficult to underwrite new businesses
or renew existing policies. (In 1991, 82% of P&C insurers had losses in their core underwriting operations).
? Companies gradually became dependent on financial markets as their
investment income surpassed losses.
THE PROPERTY AND CASUALTY INDUSTRY
? 1994:
? ? ? ?
Underwriting losses were 35% higher than 1993. Companies experienced 40% decline in net income. Investment income and capital gains witnessed 83% downturn. Combined ratio was 109.4(ideally should be less than 100).
Reasons: claims from disasters, product liability awards and environmental cleanup costs. ? 1995: Industry improved with investment income and net written premium increasing.
TRANSFORMATIONAL MAP CIGNA P&C PATH TO TOP QUARTILE SPECIALIST
FROM
RESTRUCTURE RENEW
TO
• Generalist •Performance problems •Internal Focus
•Customer Focused •Specialist mindset •Top Quartile returns •Learning and flexible organization
PROGRESS AND RESULTS FOR CIGNA P&C
1993 Combined ratio Operating losses 140% $680 million 1994 121.7% $239million 1995 117% $60million(for first 6 months) $6932million -
Premium fees Environmental losses
367million
$6810 million 179million
PROGRESS AND RESULTS FOR CIGNA P&C
KEY AREA JANURAY 1994 JANUARY 1995
Underwriting
Claims Producer Management Information Systems Desktop Technology Support Alignment Balance Scorecard
4
5 4 2 2 3 3
8
5 5 4 6 5 5
People now acted like specialists and accepted ownership. Losses reduced and ROE improved.
MAIN PROCESS: UNDERWRITING
? BEFORE REENGINEERING:
No consideration of risks. Firm took underwriting that generated premiums. Result: Boosted revenues but increased claims
? REENGINEERING:
Excellent Underwriting process should evolve around decision making. Result: Resistance from people stating no improvement required in the process.29 step inclusive process providing framework for applying concepts to new situations. Desktop implemented: It empowered the underwriter at each step of decision making. It helped perform process analysis, comparing action taken at each step with the predetermined objective.
MAIN PROCESS: UNDERWRITING
AFTER REENGINEERING: Tools included electronic form facility, access to underwriting guidelines, interactive business training modules, electronic reference material etc. Offered a service called „Consultant? which provided a list of resources searchable by topic or geographical location. Result: streamlined underwriters task, opened communications, facilitated knowledge transfer. „IMPROVED UNDERWRITING QUALITY’
MAIN PROCESS - CLAIMS
? Before Re-engineering
?
Growing volume of difficult and complex cases
? After Re-engineering
? ?
Alignment of department goal to company goal Use of the claim desktop to record and track claims
MAIN PROCESS - CLAIMS
? Before Re-engineering
?
Representatives tended to overpay claims to maintain good relations
? After Re-engineering
?
?
Representatives to analyze claim transactions on a continued basis Proposed to create “centers of specialization” with a network of remote representatives
MAIN PROCESS - PRODUCER MANAGEMENT
? Producer desktop (software) implementation
? Positive results
? Full rollout in CIS & SIS by end 1995
MAIN PROCESS - PRODUCER MANAGEMENT
Before
? Generalist strategy lead to
? ? ? ?
After
? Centralized database ? Identification of potential
Poorer business Low profitability Alienation of agents Poor information sharing
customers ? Online (anywhere anytime) access ? Street Intelligence ? Taking ownership of processes – customer focus
SUPPORTING PROCCESS - INFORMATION SYSTEM
• Earlier Legacy Systems were being used in the corporation. • Learning and knowledge building were needed to be integrated in
each of the redesigned core processes.
• The approaches used were: INSOURCING and CLIENT-SERVER
ARCHITECTURE.
• INSOURCING: Working closely with the internal team of CIGNA. • CLIENT-SERVER
ARCHITECTURE: Common resource to be
accessed by all workers with the help of a DESKTOP.
• The desktop was used to circulate knowledge. The unstructured data
was converted to structured data and then again cycled back to each workers? desktop.
SUPPORTING PROCCESS - INFORMATION SYSTEM
? The mainframe based systems that showed the potential of pure
transaction processing, got into the realm of SOFT DATA and were considered for migration to DESKTOPS.
? An Integrated Business Platform was developed and used for the 3
desktops developed. The IBP included a suite of access tools for providing shared access to DB2,SQL and Access Databases from
multiple desktops.
?
The desktops were integrated to the common desktop called P&C Insurance DESKTOP. The challenge was to figure out the kinds of
information that needed to be integrated.
BALANCE SCORECARD
? BSC was
Renaissance?s framework to translate individual progress into organization growth
Financial
Learning & Growth
Balance Scorecard
Customer
Internal Business
BSC – Lag Parameters
328 327 326 325 324 323 322 321 320 319 318 140%
327 134.40% 121.70% 97.60% 86.30% 97.60% 120% 100%
86.30%
80%
60% 1994 1993 1994 (%) 1993 (%)
321
36.80% 35.40%
36.80% 40% 35.40% 20%
CIGNA P&C REENGINEERING: BEFORE AND AFTER BEFORE REENGINEERING Organization Functional Management intensive Business Practice No common view of the customer No end to end quality focus Systems Architecture No common source of information Poor user interface AFTER REENGINEERING Self Managed customer focused team Ownership by employees Common view of the customer Enterprise metrics to measure quality Common source of information Graphical user interface
Redundant data preparation
Results Poor quality Lack of customer service
More responsive to business needs
High quality Superior customer service
High cost
Lower operating expenses
THE WAY AHEAD
Focus on Profitable Growth
Manage the A&E growths
Implement the Electronic BSC
Inspire and educate the employees
LEARNINGS
? How balance scorecard can be used to measure the overall growth of the
organization.
? How 4 parameters of balance scorecard can be quantified for insurance industry.
? For any BPR process to succeed ownership by employees is necessary.
? How insurance industry works.
THANK YOU
QUESTIONS*
* Avoid
doc_196594112.pptx