Unleashing productivity in the front and back-office
“Our goal is that by 2025, we’ll write $1bn of GWP.” These types of business target drive budgeting cycles provide clear metrics to measure performance and are the sharp end of any overarching strategy. However, there is often little thought put into what these targets mean in terms of operational capabilities; Can the business we are today support the business we want to write by 2025? Establishing where your capability gaps are and closing them is vital for success.
In very broad terms, this core question can be split into two:
- Can our front-office deliver the number of risks needed to hit the premium numbers?
- Can our back-office process the number of transactions necessary to write those risks?
Insurers will need to unleash productivity in their front and back-office teams to acquire the clients needed to hit their GWP target and have the processing scale to handle it. Growing at scale isn’t proportional, and what got you to today doesn’t guarantee getting you where you want to be in 2025. Breaking down what growth means in terms of transactions will allow you to forecast where your resources will come under strain and where your business capabilities are not up to scratch.
Quantifying the target
Using your existing book will allow you to forecast what you can expect growth to look like. If your average premium is $10k and your hit ratio is 33%, you’ll need to be able to quote 300 policies for every $1m of GWP. In real terms, that’s more than one new quote every business day in a calendar year for each $1m of premium. This raises some interesting challenges and allows you to build an accurate picture of what that means:
- Do your current brokers have that amount of extra business to show you?
- Do your underwriters have the capacity to quote that many extra risks?
Interrogating the target like this will give you a clear understanding of potential problem areas and capability gaps. Once these problem areas or gaps are known, they can be tackled.
Let’s assume that this business target equates to 20% growth in GWP. To achieve this, the answer isn’t to simply scale everything up by 20% – 20% more underwriters, 20% more back-office staff and a clean 20% increase in expenses does not equal the ability to grow by 20%. Unfortunately, the market isn’t as simple as having 20% more clients that perfectly fit your target risk profile ready and willing to change carriers. Added to that, to carry out the work involved in acquiring and servicing those clients isn’t as simple as having 20% more people to do it. A mixture of approaches and technology is required, all underpinned with a focus on moving internal work away from Underwriters to push them out into their markets and increasing productivity and flow through your back-office functions.
Digitally enabled business rules-driven through sharp workflows will reduce the manual work involved for internal processes. They will allow you to redirect work to the right teams, making sure that work moves around your organisation in the right way, with team members focusing on the right kinds of tasks with the right amount of urgency. Having visibility of how risks and tasks flow through the business will enable you to identify bottlenecks, and adjust and decrease cycle times. Ultimately, taking internal work away from your front-line staff allows them to focus on staying out in the market and dealing directly with brokers and clients.
Automation allows you to dramatically step-up productivity and liberates Underwriters to focus on those high-level, income-generating activities. No longer will you need lots of people being process doers, touching each and every transaction multiple times; you can shift your model to have process custodians dealing with exceptions and process changes. Less manual involvement means more capacity.
The ultimate goal of increasing productivity is giving your Underwriters the time and space to deliver the risks needed to hit your targets.
Increasing market share or entering new markets may pull you away from your core brokers, client profiles, and, in the case of wholesale business, to different parts of a programme. Ensuring that your Underwriters are equipped with the data from inside and outside of your organisation delivered to them when they need it will give them a solid foundation in the science of underwriting a risk to be able to execute the art of growing your existing book profitably. Leveraging APIs to bring all the required data into one place allows Underwriters to quickly make the right decisions backed by facts to ensure that these forays away from your core are done intelligently and consistently.
Launching new products, accessing new distribution channels, or onboarding new teams requires a degree of flexibility and agility to be able to be both strategic and opportunistic in your approach. Making sure that your organisation is physically and technologically ready for this is vital and requires a solid foundation augmented by a modular approach to allow you to continue adding capabilities without creating a monster.
If I have a target to make a roast dinner on Sunday, I need to break this down to ensure that I have the right equipment, buy the ingredients and go to a store that will stock them otherwise it’s just a nice idea that won’t happen. Your business goals are the same, and breaking it down into its practical components will give you the best chance to source all the right capabilities to make it happen.