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OPERATIONSOPERATIONS LEVERAGING QUALITY TOOLS Session 30: February 28, 2006 Session Producer: Loretta Jacobs, FSA, MAAA Vice President & Actuary CNA Insurance.

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Presentation on theme: "OPERATIONSOPERATIONS LEVERAGING QUALITY TOOLS Session 30: February 28, 2006 Session Producer: Loretta Jacobs, FSA, MAAA Vice President & Actuary CNA Insurance."— Presentation transcript:

1 OPERATIONSOPERATIONS LEVERAGING QUALITY TOOLS Session 30: February 28, 2006 Session Producer: Loretta Jacobs, FSA, MAAA Vice President & Actuary CNA Insurance Company

2 OPERATIONSOPERATIONS 2 PANELISTS Van Beach, FSA, MAAA, Consultant, Towers-Perrin Tillinghast Alisa Murphy, RN, Director, Process Development & Audit, CNA Insurance Company Shannon McLaughlin, Operations Leader, Genworth Financial

3 OPERATIONSOPERATIONS Van Beach, FSA, MAAA Consultant, Towers-Perrin Tillinghast Operations Benchmarks for the LTC Industry

4 OPERATIONSOPERATIONS 4 Assessing operational performance SoA LTCI Operations and Technology Benchmark Surveys Operations benchmark samples –New business efficiency –Underwriting “leakage” –Claims efficiency –Administration efficiency Benchmarks presented here are reliant on data provided by respondents in 2004/2005 surveys

5 OPERATIONSOPERATIONS 5 LTCI Benchmark Surveys: 2004 SoA Operations and Technology SoA survey (Operations track) Point in time data as of June 30, 2004 Annualized data based on period from January 1, 2004 through June 30, % of the industry represented (as measured by annualized LTCI premium)

6 OPERATIONSOPERATIONS 6 LTCI Benchmark Surveys: 2004 SoA Operations and Technology Active writers and closed blocks Individual and group Functions surveyed include –New business- Underwriting –Administration- Customer service –Claims A very useful survey –Good participation –Insightful responses

7 OPERATIONSOPERATIONS 7 LTCI Benchmark Surveys: 2005 SoA Operations and Technology Good news and bad news The good news… –Improved questionnaire format –Several companies provided responses that did not in 2004 The bad news –Many that provided responses in 2004 did not in 2005 –Overall, insufficient participation for meaningful results What now? –Investigate reasons for lack of participation in 2005 vs –Carefully consider timing for next survey –Some limited results will be shared during this presentation

8 OPERATIONSOPERATIONS 8 Industry benchmark examples New business efficiency Underwriting “leakage” Claims operational efficiency Overall administration efficiency

9 OPERATIONSOPERATIONS 9 New Business efficiency: New Business budget Operational costs of underwriting Underwriting requirements Other new business administration and processing costs Does not include commissions or agency costs

10 OPERATIONSOPERATIONS 10 New Business efficiency: New Business budget per LTC policy issued 2004 total policies issued and new business budget were estimated based on the period from January 1, 2004 through June 30, 2004

11 OPERATIONSOPERATIONS 11 Underwriting “leakage” Cost associated with applications that do not result in issued policies Analyze as a subset of the New Business budget “Not taken or declined” = total applications – issued policies

12 OPERATIONSOPERATIONS 12 Underwriting leakage: Costs of not taken and declined policies Total 2004 applications, policies, and new business budget were estimated based on the period from January 1, 2004 through June 30, 2004

13 OPERATIONSOPERATIONS 13 Claims operations Clearly a focus for 2005/2006 –Over 50% of the 2005 survey respondents identified improved claims systems/processes as a top operational focus Quality has direct financial impact –Apply eligibility rules –Support care management Efficiency also important –Claims volumes are increasing rapidly

14 OPERATIONSOPERATIONS 14 Claims Operational Efficiency Total 2004 new claims per company were estimated based on the new claims per company through June 30, 2004 Open claims, and policies inforce were as of June 30, 2004

15 OPERATIONSOPERATIONS 15 Administration efficiency: Total budget per policy and per $1000 premium Total 2004 budget per company were estimated based on the period from January 1, 2004 through June 30, 2004 Premium inforce and policies inforce were as of June 30, 2004

16 OPERATIONSOPERATIONS 16 Summary Quality improvement is a worthwhile pursuit –Effectiveness is more meaningful when viewed in comparison with industry benchmarks SoA Operations and Technology Benchmark Surveys are a valuable tool –Provide context to evaluate company performance –Require an investment – broad participation –Benchmarks presented here are reliant on data provided by respondents Rest of the session will focus on tools to improve your company’s performance

17 OPERATIONSOPERATIONS Elements of a Successful Operational Review Program Alisa Murphy, RN, Director, Process Development & Audit CNA

18 OPERATIONSOPERATIONS 18 Why we have an active operational review program Maintain compliance Mitigation of legal risks Enhance performance Identify and control or eliminate weaknesses. Streamline resources Promote industry leading practices

19 OPERATIONSOPERATIONS 19 Elements that drive our program. Collaboration Collaboration with Division Team Annual Interdisciplinary planning session. Setting priorities based on risks and concerns. Share results across the disciplines. Collaboration with Operations Units Active consistent presence. Leverage current controls. Seek opinions and listen to concerns. Meet resistance with a matter- of- fact approach.

20 OPERATIONSOPERATIONS 20 Elements that drive our program. Span Avoid broad topics that provide little practical value. Focus – Attempt to narrow the scope to the smallest element that is logical for a given process. It is important to be able to identify and validate the effects of any post-review changes.

21 OPERATIONSOPERATIONS 21 Elements that drive our program. Timeliness One to three month maximum. Old data is not usually relevant. Allows for immediate feedback. Reinforces the consistent and active nature of the program and delivers secondary gains.

22 OPERATIONSOPERATIONS 22 Elements that drive our program. Practical Recommendations Be specific/avoid broad instructions. Ask for input from the operational area. Consider the factors of Span and Timeliness in the context of the recommendation. Drive for Industry Leading Practices – the old, the new, the best of all worlds.

23 OPERATIONSOPERATIONS 23 Final Thoughts Our success stories. QI yourself! Improve while maintaining consistency whenever possible. Balance structure with flexibility. Develop a program that meets the needs of your business. - Don’t conform to a textbook method.

24 OPERATIONSOPERATIONS 24 Disclaimers The purpose of this presentation is to provide general information about CNA's current LTC operational review strategies. Given the strategies’ unique fit with CNA, they may or may not be appropriate for use by other companies. CNA is a service mark registered with the U.S. Patent and Trademark Office. Copyright © 2006, Continental Casualty Company. All rights reserved.

25 OPERATIONSOPERATIONS QUALITY RIGOR DRIVING RESULTS: Taking Tools & Best Practices to LTCI Shannon McLaughlin, Operations Leader Genworth Financial Long Term Care Insurance

26 OPERATIONSOPERATIONS 26 Experts Developing Skill-sets Robust Training Offering Quality Tools Six Sigma Project Management Facilitative Leadership WorkOut LEAN Business Rigor Prioritization Resource Aligned to Support Priorities Release Management Disciplines Drive Business Results Quality Model- Setting Up for Success Keep It Simple... Use the Right Tool for the Job

27 OPERATIONSOPERATIONS 27 How Does It Work? Prioritize Initiatives Prioritize Initiatives Identify Skill-Set Required Identify Skill-Set Required Identify Resource “Expert” Identify Resource “Expert” Execute Leveraging Right Tool Execute Leveraging Right Tool  Determine the Type of Project & Skill-Set Required  Identify Methodology Approach  Business Priorities  Impact/Results  Assign Skilled Resource  Build Execution Team  Team Drive Project  Tollgate As Required

28 OPERATIONSOPERATIONS 28 Where Does It Work? New Processes: Game Changers Technologies Product Introductions Integrations As Is Processes: Core Operation Improvement TPA Partnerships

29 OPERATIONSOPERATIONS 29 Examples – New Processes New Processes: eQuick Request + Voice –Improved App Received to Policy Issued Cycle Time –One Customer Touch by the Agent –Easy Process for the Consumer New Group Product –Fast to Market –Simple Customer Processes As Is Processes: Vendor Process Improvements –Improved Accuracy –Improved Customer Response & Communication Frequency New Business –Improved Cycle Time –Improved Communication


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