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How to maximize the chances of achieving your insurance claims aspiration

Elixabete Larrea

Brings a depth of experience in serving property-and-casualty insurers, specializing in designing next-generation operating models

Almost a quarter-century ago, research by John Kotter found that only 30 percent of change management programs succeed. And a decade ago, McKinsey research found that the needle hasn’t moved. As of today, it still hasn’t.

Transforming insurance claims operations is particularly difficult given its distributed teams, multiple stakeholders, and fast-paced operations. What’s more, the pace of change is accelerating. Claims will likely look completely different by 2030, shaped by advanced analytics, artificial intelligence (AI), and automation, as well as new ways of working thanks to the rise of the gig economy and other workforce shifts.

The good news is that there are plenty of success stories to learn from. And these organizations have one thing in common: they overcame a central challenge—employee resistance to change—by prioritizing the culture shift as much as performance improvement.

During transformations, most companies tend to focus on new tools and processes. As a result, too many ignore the critical need to identify capability gaps and change mind-sets. Leaders must delegate, be more agile, and trust their teams. Managers need to shift from putting out fires to being in control of their days. As a result, they’ll be able to focus on what really matters. In addition, the front line needs to embrace and adopt those new tools and processes. Mind-sets also need to shift in support functions, including HR, IT, compliance, and finance.

In June, I’ll be attending America’s Claims Executive Leadership Forum & Expo. I’m particularly excited to lead a session on how to tackle change management as we raise the aspirations for the claims organizations of the future—and work on the transformation journey to get us there. During the session, we’ll explore in depth the results of our research, namely four critical elements of people management during transformations.

  1. Creating a compelling story. Leaders should start by recognizing that every employee may be motivated by something different. Therefore, the transformation story—or stories—must appeal to a diverse audience. The key ingredients of creating a compelling story include giving employees agency in shaping their own change stories, spending ample time communicating the messages, and focusing on how the company is simultaneously problem-solving and pursuing opportunities.
  2. Modeling the desired behavior. Leaders sometimes struggle with transformations because they fear it’s an admission that they were doing something wrong before. Overcoming this hurdle, as well as purposefully fanning the flames of the entire workforce’s enthusiasm rather than putting all the responsibility on only a few executives or managers, is crucial to getting role modeling right. Furthermore, claims leaders tend to be close to the front line, so role modeling is even more crucial.
  3. Implementing reinforcing mechanisms. In addition to tying employees’ compensation to the change program’s objectives, successfully transformed companies take advantage of the nonfinancial rewards that reinforce desired behaviors among employees. For example, some claims organizations have offered adjusters the opportunity to grow professionally by taking on a leadership role in the transformation. These mechanisms should include high standards of fairness to avoid discouraging employees from participating.
  4. Building capabilities. Finally, employees need to feel capable of adapting to the new tools and processes the transformation brings about. As I described earlier, the goal is for claims managers to evolve from needing to put out fires to integrating both the technical and human aspects of their jobs. By way of example, those technical aspects will include seamlessly interacting with AI algorithms, while the human aspects will include showing empathy when answering a first notice of loss call. In all cases, employees need to be given clear, quantifiable objectives as well as the space to work on new skills and mind-sets.

Claims organizations play a crucial role in our society. Claims employees love what they do because it helps people get back on their feet, sometimes after significant catastrophes. That same spirit can and should be at the center of organizational transformation. Carriers that manage to systematically bring the “power of claims” to their day-to-day operations (beyond catastrophes) will have truly developed a competitive advantage.

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