What is Lean Management in Insurance?

Lorenzo Del Marmol

May 21, 2018

Insurers know that lean processes and dynamics pave a way towards customer satisfaction. However, many find the whole set-up a challenge to accomplish. The needs and requirements of insurance customers are fast increasing with regards quality of service and processing speeds. In addition, the payoffs from complying with these demands are also fast growing. Especially important are positive customer experiences and recommendations that are winning new businesses these days. Lean management in insurance is not only a vital factor in keeping costs down, but also the foundation for high quality service as well as long-term customer satisfaction.

The insurance industry is faced with a series of challenges in reaching these lean ideals. Several processes including administrative works, sales, and other extraneous aspects have developed over a long span of time and have become increasingly complex. Considering that insurance processing can be viewed as an assembly line, lean management techniques used in a manufacturing process can also be integrated to fit a lean insurance program.

Now comes the latest version – Lean 2.0. This is an update on production efficiency that establishes leaner, formidable, and far more customer-oriented processes. Lean 2.0 concepts develop a way of checking into activities within the enterprise so that wastage can be easily identified and where and how it occurs. This way improvements and developments may be integrated into their everyday work to enhance overall quality as well as customer experience. With the new concept, the internal organization and the end consumers are treated as Lean 2.0 customers. The most important thing is the process which is seen holistically by the group.

Using lean management techniques and tools in an insurance company allows the employees, participants and stakeholders a view of the big picture. They can step in at any time to help or to adjust, and they also have an at-a-glance view whole project. This helps assure that the stakeholders support the change, and the process. It also informs the stakeholders the current status.

 The lean objective

The goal of the lean insurance program is to bring about more process developments. They have to come up with prospects for trimming down the business model, the IT infrastructure, the organizational structure, and others. Programs without a concretely defined customer, financial, and employee objectives immediately lose momentum and may run the risk of losing effective traction in the long haul. Time is also considered as a resource, and avoiding time wastage is a big goal of lean management techniques.

In this regard, assessing priorities and translating the targets into sub-targets and smaller chunks are taxing for management. The techniques and tools for implementing lean management are designed to be easily learned and adopted. The usual problems that insurers face are often those that concerns about claims: including processing of claims to boost customer satisfaction, and ensuring that the claims they made are all valid. These are very crucial in lean insurance.

Reaching the entire organization

Following a successful pilot program, the expansion of the lean program can commence. Management has to make clear-cut decisions concerning which processes have high, medium, or low priority and should utilize benchmarks and expert judgments to be able to zero in on processes that are the most vital to the organization or those that needs improvement. As the program progresses, skills will be enhanced on the job, with personnel getting more acquainted and knowledgeable about the process, while actively working on projects. This will be a big boon for business.

Making substantial changes

Finally, the lean insurance program must be able to pay for itself. There is no need spending extra for something that will be unable to pay for itself. For this purpose, the insurance company has to have a dynamic group of employees who have in-depth experience with lean management, and a work infrastructure with the right tools and methodologies that will help simplify the overall work processes. This is the exact framework for success and can basically form the foundation for a comprehensive plan and constant talks on work quality vis-à-vis costs. Lean work environment is 100% achievable; all it takes is a positive execution.

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