PegaWorld Keynote – Mhayse Samalya – President of Farmers Insurance

Update – you can view the Keynote itself here (requires registration).

This division of Farmers deals in the small business insurance market – a $95B market. When Mhayse joined Farmers, they had just 2% of that market. He saw it as an incredible opportunity – where 47% of business in the small commercial insurance sector, are with small business insurers. The question is why these small players succeed against a big player – it’s because they know their local community, they are part of it and know how to communicate with their customers.

Mhayse described his approach that really started with a clear Vision … He set out with objective of becoming #1 in their industry, and then laid out a strategy of how to get there.

The vision was to:

  • Excel at the core
  • Build deeper expertise
  • Leverage predictive modeling
  • Expand the appetite and sophistication of the organization,
  • Create a targeted set of offerings for agents and their customers.

Only then did they start to think about how you deal with the small business opportunity and the efficiency end of things. Sure you need an efficient way of doing the business, but the primary focus of that vision was on growth and the customer experience.

He went on “You cannot expand the appetite for more … unless you can automate the way in which the business operates. I didn’t know what I was searching for – but I was looking for something that would help us … something that would give us a clear line of sight to the solution to the business problem. I had to understand what it was going to feel like. However we get there, we had to create the right sort of agent experience … we had to get them (agents) fully engaged to get the benefits of the gem we had in our hand. How do we reap the benefits … it has to be done in increments. I wanted to know where the short term goals and pointers were (pointers that would indicate we were being successful). Trying to get there all at once is probably going to end in disappointment. We had to do a set of projects, and do them quickly, while being flexible along the way.”

At this point I was really engaged … I hadn’t heard a business leader at this level talk about a BPM project in such an impassioned way. This was his project, and he had been driving it top down. Now I started recording the slides and some of the related phrases:

Create the right agent experience – we had to demystify that experience so that it really helps the agent – pre-filling information into forms and easing the user experience.

  • Eliminate the useless questions and options
  • Automated underwriting decisions
  • Automated pricing … it used to take us far too long to price a policy.
  • We had to increase the pass through rate … the time to get a bound policy.
  • We were looking at (touching) 80% of the business that was passing through, and were closing just 20%. That should have been precisely the other way around.
  • The question was how could we enable the local agent to be local in terms of how they work.

Focus first on Agent expansion and New Business Growth

  • First support environment was delivered in 5 months.
  • Restaurant product went countrywide in July 2007
  • Rolled out the Auto policy facility in Oct 07
  • And getting an “umbrella” policy available as an add on in June 2008

The results:

  • 14 days to 14 minutes
  • Close rate was up 5%
  • New business was up 70% “do you want Fries with that”.
  • Renewals up 60%
  • Added over 1000 new agents (later updated in the flow of conversation to 1500 new agents).

We focused secondly on efficiency … not how many people we could chop out

  • Endorsements
  • Renewals …
  • Focus on the desired business result
  • Eliminate all the non Value Add steps, take out the noise and red tape.

Put the business change in the hands of the business

  • Pulling together cross functional teams
  • Finger pointing is the wrong way to go …
  • Rapidly iterate
  • We don’t always know exactly what we want
  • We are sometimes representing other folks … like the agents that work for us
  • Test, monitor and respond quickly.

Building the right team is critical

  • Empowered … someone who is on my team that was also part of the IT organisation
  • Dedicated cross functional teams – jammed them together, locked them in a room and told them they couldn’t come out.
  • Wanted to have a partner with skin in the game. Developed a Customer Intimate relationship with Pega. Their compensation was linked to the delivery of our results. Now we really are on the same page.
  • Get participation and engagement – with the agents.

Farmers had gone from low on the food chain … to the fastest growing at Farmers, the most profitable at Farmers, acquiring over 1500 new agents. They acquired a business along the way and have now grown to around $3B, representing 3% of the available business out there. Tied for first place.

Questions – How do you change the culture? At the end of the day it comes down to individuals. The traditional solutions were not going to get us to where we wanted to go. We have 1000s of people and unless you start to align the objectives, their compensation, etc. then you will have problems.

There has to be a common and shared vision – one that get both business and IT people excited. Too often there is an assumption in the business mindset that IT folks don’t have that sort of vision – that they don’t respond to the challenge. Point was that with the BPM program (still ongoing) they had proved that wasn’t true.

The key point for me was that he focused first on the Customer Experience. They had a strong visionary leader who publicly aligned himself with the overall success of the program. Theydrove partnership and engagement through cross-functional teams to achieve results The business results speak for themselves.

I just hope that Pega and Farmers agree to put the video up on the web so that we can point others to this powerful case study.Its one that every COO and CEO should see.

 

 

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4 Responses to PegaWorld Keynote – Mhayse Samalya – President of Farmers Insurance

  1. Ian Louw says:

    I noticed Pega is again the leader in the BPM space. Access to the 2009 Gartner MQ for BPMS can be found here.

    http://bpmfundamentals.wordpress.com/2009/02/20/gartner-publish-bpms-magic-quadrant-for-2009/

  2. Ian Louw says:

    Pega have released some survey results highlighting some of the Insurance industry issues for 2009. The results can be found here.

    http://bpmfundamentals.wordpress.com/2009/02/21/survey-top-10-insurance-industry-issues-for-2009/

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