Insurers Embrace the Concept of Change Management
Insurance projects get bigger as cycle times grow longer and carriers are forced to spend huge amounts of money on transformation. That means there`s a need to get results and E&Y`s Charlie Mihaliak has learned that insurance executives need to press to make sure the issues and risks that change management addresses are accounted for in these transformation projects.
Mihaliak, executive director leading the organization change management practice for insurance operations at E&Y, explains that in order to define change management insurers must start with the business outcome they expect to address: predictability of the business results. A second benefit involves sustainability.
“With a lot of focus and energy, you can pump up results,” says Mihaliak. “When you decide what needs to be done to achieve those goals you get into the whole leadership space: clarity of what they try to achieve; how to do it in a language business people understand; alignment with the different leaders that have to sponsor the transformation so they have the same goals and priorities; and reprioritize other issues for the greater good of the transformation.”
Transformation is comprehensive at Westfield Insurance, according to Robert Bowers, national claims strategy leader for Westfield. Changes included substantial process changes, reorganization of the carrier`s claims department to meet strategic objectives, and substantial technology deployments to meet enable those objectives to be met.
“For such a large initiative, and something much larger than we had ever subjected our staff to, it was important to have a strong change management plan to ensure the adoption and the acceptance of not only a new claims system, but new processes and procedures for the claims staff,” says Kerri Weaver, a leader in claims communication and change management at Westfield.
Westfield is in the midst of concluding tests on a suite of technology with the core solution being the claims management system it acquired from Guidewire, according to Bowers. In addition, the carrier has other technology to be integrated into that core, such as a payment system, and an electronic claims form.
“In all we have about a dozen major projects that together will integrate with this claims management system,” he says. “We are in the final testing and anticipate we will have it fully deployed in the field by the end of the year.”
To do this correctly, Westfield put together a strong change agent team scattered across the carrier`s operating territory, explains Weaver, with two or three individuals in each service office to provide feedback and gauge change readiness.
Those representatives will receive early training to support the deployment of the claims system. With over 30 service offices, Westfield also reaches out to discuss updates on the claims strategy. Weaver add that the company has a hands-on demo and exercise that enables leaders and change agents to get on the system and get a first-hand view of what the system will be like.
Organizational alignment is a major part of change management, points out Mihaliak. The roles employees take, the workflow, the procedures, and the measurements are all things that influence behavior.
“Business unit readiness has to be there on day one,” he says. “Make sure the technology is in place, training, and sustainability action, which is the performance management process to sustain behavior.”
Anthony Tempesta, senior manager, advisory services for E&Y, believes the insurance industry has gone through an unprecedented change and transformation is no longer an ugly word for carriers.
“Companies are making investments; they are swapping out legacy platforms and that new technology brings a lot of change,” says Tempesta. “It`s not just plug in the software and use it; it`s changing organizational structure, how people respond to clients, and how they work with each other. Customers want things faster and better with a higher level of self-service. Change management is imbedding that capability—that disciplined approach—within the organization.”
The old Westfield operational model was geographic, explains Weaver, with three operating territories. This was changed to a line of business model for the carrier`s three lines of business: casualty, property, and workers` compensation. Weaver points out things have changed significantly for the staff.
Prior to the operational change, Westfield representatives went to different service offices to gather pain points from the staff and what they would like to see in the planned technology upgrade.
“We tried to gauge their awareness of the need for change and then their desire to change,” says Weaver.
Operating with a geographic model meant there was a lack of consistency in how tasks were performed at different offices. With the new complexities of insurance, Weaver points out the carrier felt it was important to focus on the functional line of business.
“The lines of business we were writing and the expertise for those lines has been changing over the last decade,” says Bowers. “That contributed to the need for changes, plus the complexity within the lines of business.”
Tempesta acknowledges new technology platforms call for better communications and training. Those remain important factors, but within change management an additional priority involves embedding a disciplined approach that drives how the business engages with employees, customers, and stakeholders to ensure what the business users perform their tasks in a manner the change management team perceives to be the correct way.
Process management is important for carriers using new software solutions, but Mihaliak points out companies have different views on how to integrate process management discipline into the change management program.
“In some places, carriers feel like that`s part of the change management scope, but in other areas they have spun out lean development groups or Six Sigma,” he says. “What`s important is companies need to be sure they get a strong level of integration within the program. I know that sounds obvious, but when you are trying to compile skills to run a program it is a challenge. You have to make sure you have experienced program leaders familiar with all these disciplines so they can pull it together to work more effectively.”
Tempesta adds that if an insurer is undergoes an organizational change or plugs in a new operating system, the project touches multiple several areas and process management is just one of them.
“Whether that falls into the official change management workspace, that`s fine, but you are going to touch processes anytime you implement new technology and that needs to be addressed,” he says.
Bowers reports there were two directions Westfield took with process changes. The first involved the insurer`s overall strategy and how that strategy related to the new claims solution.
“We spent significant time with our senior executives to work through how we wanted the capabilities to be put in place and the processes necessary to support them,” he says.
The second focus involved a process study that was completed before the new claims system was put in place to identify some of the pain points in its processes. Bowers points out this involved dozens of substantial changes for each line of business.
“Some of the technology could improve the processes and we continue to tweak them,” he says.
Buy Into Change
Mihaliak maintains it is rare to find a business leader that won`t agree on the importance of change management. The question these leaders face, though, is: How do they go about making sure the changes are applied in the correct manner?
“In a world with so many resources, the first assumption a leader makes is there is a middle management layer that can be relied upon to make the changes,” he says. “A few years ago that was more of a possibility. Operations jobs are getting harder and to think operations managers will have time to bring their teams through that is not working as frequently as it once did. When there is a major transformation program, you need a change management strategy up front that allows you to proactively manage things.”
Change management doesn`t happen in a silo, points out Tempesta. What he calls the “change army” includes business leaders and stakeholders armed with new tools and techniques. They are the ones who have to sell the changes and empower others to make things happen.
“Change comes from the top down and it will be hard to find a leader who doesn`t think change management is a critical path, but being a good people manager is not the same as being a good change manager,” says Tempesta. “You may have to transition people and that`s a combination of human resources and business leaders. It`s complex work. The essential core of change discipline is the need to prepare business leaders to execute on the change plan.”
Mihaliak believes IT leaders are involved in change management even if it is not always apparent. One example of this involves the increased value carriers place on their data.
“One of the issues with data programs is the change management needs are not attended to. Things like the establishment of a governance process across the organization in addition to the adoption of new tools,” he says. “Something that might be perceived as technology-driven has change management needs. As CIOs collaborate more with the business units, they assume the trusted partner relationship that they aspire to, the ability to engage their peers around leading practices of change management, and to be the coach to help elevate that trusted advisor role.”
Weaver recognizes culture change is a significant challenge for carriers. In Westfield`s case, employees went through organizational changes as well as process changes.
“To keep the employees well informed has been important as well as to listen to them, understand their concerns, look forward to the way the industry will move, and why changes need to be made,” she says.
Bowers believe process changes were well received and people understood the need for consistency, accuracy, and simplicity. Organization changes, however, were more difficult as most employees express two major questions: What is my job? Who do I report to?
“We had to make difficult choices on when we were going to make the changes,” says Bowers. “We met with the executive leaders and advised them of the changes, but we also had to make a tough choice: Do we make the organizational changes before the technology deployment?”
The technology was going to support the organizational changes, and doing the organizational changes before the technology deployment would mean there were workarounds and additional work, according to Bowers.
“We decided it was best to make the organizational changes as soon as we could,” he says. “We made those changes about a year ago so people have been without the technology to support those changes. It`s worked, but there have been some bumps.”
Bowers feels the technology changes will be easier to deal with because the previous claims system was approximately 25-years-old and was homegrown.
“People who joined us from other carriers had to take a step back from the technology,” he says. “Our road shows helped build excitement around the technology and the desire has been strong to put the system into place.”
Center of Excellence
Mihaliak reports more companies seek to create a strong center of excellence and the next wave of emergence is around change. Tempesta adds there has been an uptick in the way insurance companies approach transformational change—such as multi-year policy administration projects.
“Companies aren`t comfortable with such an investment if they don`t have a guarantee of success and that`s why change management is on the table,” says Tempesta.
“The cycle time of these projects, is important,” adds Mihaliak. “When you develop a new system like policy administration, these programs take a couple of years or more, so if you miss and end up without the outcome you desire, that puts the company that much further behind their competitors who got it right the first time. If carriers are going to spend this much money they have to get some return on it.”
Westfield tried to communicate to everyone from the start that change management evolves and is not the end to anything. Bowers realizes there will be continual changes both with regards to where the business grows and with how the newer, more flexible technology responds much quicker than in the past.
“We`ll continue to invest in our technology, we`ll continue to make tweaks to our organization, and we`ll continue to work on best practices,” says Bowers. “We have people established within the organization to undertake that continuous improvement.”