Ask someone in the insurance industry about errors and they might casually say: “Oh … It’s about three to four percent.”
Compared with other industries (where errors are less than 1 percent), this is very high error rate. Can you imagine if a medical device (example: a heart valve) failed three times in every 100 beats?
A high error rate means that the insurance industry is spending significant time and money:
- Doing something wrong the first time.
- Causing a spillover effect to clients and colleagues.
- Reworking to fix the original error plus any side effects.
If we can reduce errors, the industry can give more commissions to producers, charge customers less, retain more profit for reinvestment, etc. You get the idea. An error rate of three percent is big when the margins of insurance organizations are in the range of 12 to 15 percent.
“Okay,” you might say. “But how do we fix it?”
The first step is to use a common language and measurement that everyone in an organization can understand. (People behave as they are measured.)
But what is the language and measurement of quality? It’s ‘Six Sigma’!
‘Six Sigma’ gives the insurance industry a shared approach to improve quality and predictability.
The term “Six Sigma” refers both to:
1) A set of methods aiming to improve processes to the level of 99.999% quality
2) The measurable goal of only 3.4 errors per million transactions.
Using a common measurement and language for quality via Six Sigma allows our industry to improve operational excellence for everyone, from insurance manufacturers, to distributors, business partners, and clients.
At Vantage Agora, through our Club VA platform, our employees, clients, partners, all work with a common goal of improving Operational Excellence by using Six Sigma as a common language.
For example, in just the last month, Vantage Agora processed over 87,000 transactions for a client with only two errors.
With Six Sigma we can help you achieve efficiencies that was earlier thought of as impossible.
Harsha Chaturvedi is co-founder and chief operating officer of Vantage Agora.