validus management consultancy UK

Financial Services Case Study

Division of major insurance cover provider


Division losing £200k per annum
In 18 months the division produced a profit of £1.1m

THE ORGANISATION

  • A division of a major insurance cover provider to motorists to cover the legal costs of pursuing a claim against a third party driver
  • Employs 130 staff in 7 claims offices
  • Had grown by 80% in 2 years and was expecting a further increase of 100% in claims in the next 3 years
  • Marketed both own products and 3rd party brands

THE ISSUES / PROBLEMS

  • The division was losing £200k per annum
  • There was a major disparity in the caseloads and cost of settled claims between each office
  • The forecast growth was unlikely to improve profitability, as historic growth was replicated by a parallel growth in staff costs
  • Inefficient systems which cultivated a culture of 'walk and talk'
  • Unclear definition of roles and responsibilities
  • No means of measuring broker performance
  • Lack of product costing and pricing
  • Lack of capacity planning to balance caseloads between offices

PROJECT ACTIVITIES

  • Analysis of structure in order to understand decision making process
  • Study of document flow, which was replaced by faster and more cost effective processes
  • Analysis of broker performance, resulting in variable pricing which would reward efficient brokers and penalize the inefficient
  • Cost analysis by product group, to enable contribution to be assessed and unprofitable products to be eliminated from the portfolio
  • Initial closure of 3 claims offices, eventually moving to a single office in a low cost location
  • Creation of a management and supervisory structure, thus providing for clear definition of roles and responsibilities
  • Empowerment of claims negotiators thus reducing requirement for supervisors to review all cases

PROJECT RESULTS

    Clear definition of roles and responsibilities Improved morale and job satisfaction Balance between available capacity and demand Faster case settlement Elimination of unprofitable brokers and products Improved client satisfaction. In 18 months the division produced a profit of £1.1m - a return of 87 times the investment of the project.

 
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