Case Study

American Express Property Casualty Company
Improving loss costs, expenses and customer satisfaction in claims

A common challenge facing p/c insurers is the battle of controlling expenses and loss costs in claims operations. Operations plans and redesign initiatives are often abandoned, and improvement programs sometimes fail to reach their goals. Attempts to reduce expenses can indirectly increase loss costs and vice versa. There are, however, some business process changes that can positively impact expenses and loss costs while improving customer satisfaction.

Client Background

AMEX is located in the Midwest, and writes $269M DPW in 36 states. Through a combination of direct marketing efforts and affinity associations, they have seen a consistent, 20 percent growth rate in recent years. The market they serve demands better-than-average service and competitive premiums.

Creating an Optimal Claim Cycle

The company established a goal to improve the performance of their claims operation while managing rapid growth and controlling costs. This would involve significant process changes to improve productivity and loss costs results. The company engaged the Robert E. Nolan Company to help them achieve their improvement goals.

Through the years, the company’s processes have evolved to reflect internal changes, changing market needs, new regulation requirements, etc. The company had developed a strong cultural bond to their current process structure and was, understandably, resistant to change. Working with the client, Nolan consultants were able to provide an outside, objective evaluation of the company’s processes.

Nolan consultants developed an optimal structure of the “claim life cycle” and compared it with the client’s current cycle. They successfully constructed a new process that:

Employee Buy-in and Ownership

Technology changes were kept to a minimum in order to stay on track within the timeframe.

Nolan consultants helped to foster an understanding of the gaps between the old and new processes in order to motivate employees to venture out of the status quo. To bring about rapid and significant change employees needed to buy into the new structure and, in turn, deliver better results. The methodology of the Nolan consultants stresses the importance of “ownership,” and spending time on making changes rather than resisting them. The employees would need to understand that they are the vision of the company’s future.

Results

The initial results of the project appear to be dramatic and solid. Specific results include:

With help from Nolan, the client built a process that delivers improved results, and they learned the project management skills needed to move the pilot into full implementation. By changing the process, the client can now deliver superior customer service while controlling loss costs and expenses.