Deutsche Allgemeinversicherung Case

8 August 2016

Deutsche Allgemeinversicherung (DAV) is one of the world’s largest insurance companies. The success of the company has been contributed to its product offerings and “an excellent group of insurance managers” (case page 2). The company provides superior “traditional insurance management” and excellent customer service. However, the company began to face stiff competition not only from larger competitors but also from smaller insurance firms that are able to provide customized service to each individual client.

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To keep its current position in the market DAV has decided to concentrate on quality of customer service which it sees as a core competency. The new project that Annette Kluck has begun to implement has two stages, collecting the data and using it to improve the customer service level. Currently the company does not know how accurate data of accuracy of their staff. Annette has challenges collecting accurate data through using Statistical Process Control (SPC) which is usually used in manufacturing, and might not be a good fit for her industry if not studied and implemented properly.

Employees are making errors because of the high pressure and fast throughput environment within organization when processing applications within the same day. Instead of fixing root cause problem the management ends up brining temporary workers and continuing to have lack of technology. If new online application created this would help to eliminate a lot of problems that exist with inaccurate entry of data. Issue Identification DAV is facing pressure from the competitors.

Not only larger companies that are trying to take DAV’s market share but smaller ones that are trying to provide customized service and now trying to enter DAV’s main market. In addition, customers are becoming intolerant of the mistakes that are made by DAV’s employees. Customers are expecting to have excellent quality service and for the company to retrieve data information they require in a timely manner. Entering and retrieving information was not easy for DAV since it “ran operations in numerous divisions in different locations” (page 2 case).

DAV customer service group faced with a lot of challenges because of the company’s size, diversity and its different locations. In addition it was a “high volume production environment” (case page 2). Another issue was that managers have increased in usage of a permanent labor due to business volatility and to keep costs down. Although, this practice kept costs down, the quality of the service and other important factors deteriorates with this practice. Since company did not collect proper data due to lack of technology it was hard to see the problem that temporary staff were creating.

Assumption is being made that temporary staff are not being well trained and quality of service provided is not the same as the full time staff. Next issue was the practice of same day processing for some of the transactions. Although the practice itself is an excellent tool to make sure customers’ requests were processed right away, it put a lot of strain on DAV’s employees. Number of transactions could double during pick seasons, example during tax-planning season. Management dealt with this by having overtime and brining on temporary staff.

Making assumption that since now employees have to work until 8 pm they would have to process paperwork much faster and therefore number of errors would increase drastically. Environmental Root Cause Analysis One of the main issues for DAV is the data entry problem by its employees. Environment that is contributing to this problem is company’s policy to process application the same day. This puts a lot of pressure on the staff and by having overwhelming amount of work errors are created.

Management addresses this problem by brining temporary staff, which also ends up in contributing to number of errors that are created due to lack of training and high pressure and throughput environment. Annette is trying to implement SPC throughout entire organization by collecting the data first and then using it to improve the processes. SPC method is used in a manufacturing sector and therefore is much harder to implement in the insurance industry. This is because in manufacturing sector you can have precise data where at DAV you have a lot of ambiguous data.

It is hard to measure this data unless it’s clearly outlined what needs to be measured and how. In our case it was not clear cut, for example, some managers started to select data that they thought it was relevant to them but in fact is still needs to be used in the process. It is hard to measure what values are acceptable and when a problem actually exists. These challenges with ambiguous data created a significant chance for a misuse of SPC. Without proper planning and clear implementation process with guidelines will hinder roll out success.

DAV is looking for forms that are being filled out by the customers and entered in the system by its employees. The forms can have different errors from the address to the phone number for example. Currently what qualifies as an error has not been outlined and therefore confusion arises between different departments. This also gives room for managers a chance to not count all of the mistakes that their employees make. Therefore they can manipulate collected data to their advantage. This leads me to believe that rolling out of SPC has not been done properly and the data that will be gathered might not be again accurate.

Although DAV used technology throughout various processes there were tasks were done by humans manually. Entering new customers and policies manually was a standard practice. DAV created simple forms for the customers. However, they were still not completed properly and had information missing. Employees had entered all of the information into DAV’s system which left room for an error. If forms were not completed correctly by the client they had to be passed to an expert for rework.

Due to hand written paperwork filled out by customers, DAV used double key entry system to make sure associate made no errors when re-typing the data into the system. This system still left room for error. Alternatives and Options First option would be for organisation not to implement SPC. Instead concentrate on rolling out better technology for the clients to fill out electronic forms online. It would have mandatory fields in which clients would have to put correct information to move to the next page or to submit the application. It would also have a phone number for assistance in case they had trouble filling out application.

Advantage would be less double entry work and this would also reduce room for error. Also in the long run it would give the company a great tool that can be used to its advantage. Disadvantage the company still doesn’t know real numbers of errors its employees make. This would make company more efficient but not eliminate other inefficiencies and problems. Second option would be to continue with SPC but slow it down. Annette should hire Certified Six Sigma Black Belt professional who can explain SPC philosophies, principles and benefits to everyone.

Entire organization should be convinced before roll out from the top down. The benefit is that you have professional who knows how to collect and work with numbers and can assist with implementation. The company needs to have very strong team to make this work because of the challenges with using SPC in the service environment. Disadvantage would be to spend more finances for the company. Also since DAV does not have anyone in its ranks, it might take a while to interview and hire the right person. Recommendations DAV should implement online option where the customers can fill out friendly user page.

It should be supported by a toll free number in case they have questions. This will save DAV a lot of money by not having its employee’s manual input the data and then verifying it by another person. In this case SPC rollout would not require since data entry would no longer require. Customers would fill out required data on their own, otherwise they would not be able to submit the application. Online technology should be easy to use and for anyone to navigate that would be supported by 24’7 staff on the phone. Implementation First step is to make sure that the top management gives 100% support.

Second make sure that a very strong team created for implementation. Hiring a firm to build a user friendly page and create tools to track customers’ completion time. Internal IT staff must be hired or taught on how to update the page and how to track customer’s experience. Results should be used to improve the page. Monitor and Control DAV could create a feedback survey questionnaire that the customers could fill out with their feedback. The company should reward the clients by sending them a box of chocolates or a movie passes for their time to complete the survey.

This is very valuable information especially in the initial stages during the rollout of online form. Positive incentive would keep the clients happy and they will not go to competitor. In addition building monitoring tools inside the webpage would help to analyse customer needs. Online application will be able to help DAV to capture valuable information that they can use for various purposes such us improving the application and the webpage, modifying its products and targeting customers for more business.

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