A leading UK Insurance company faced a challenging macroeconomic environment of rising costs and high inflation and had been trying to identify ways that they could reduce the cost base for their Menu Protection product line which had been increasing over the past few years at a faster rate than new sales, resulting in decreasing profit margins.
The Client had already deployed an internal team to review their existing customer journeys, processes, risk-appetite, product features, underwriting approach, and technology landscape; they were subsequently looking for external support to take a critical view of the work done to date, on potential options including: cost savings that can be realised, investment required, time to value realisation, and to provide further recommendations in order to accelerate, broaden and increase confidence in execution.
TORI proposed a 5 week engagement to carry out the assessment of the firm’s product and technology cost base. TORI also proposed an evaluation of the change initiatives to ensure that the change pipeline was fit for purpose, providing a critical view on: scalability, net savings, net sales impact, alignment to the long-term strategic objectives, and investment required to execute.
What We Did
- Deployed a team of Protection and Insurance SMEs to evaluate the technology and business cost landscapes.
- The team conducted a thorough review and assessment of the client’s existing journeys, processes, underwriting approach, resources, culture and other salient areas which had been driving costs up.
- This included structured interview sessions and workshops with key stakeholders to understand the baseline BAU costs of the organisation.
- In addition, the team looked at the market position to evaluate their cost base and to provide a comparison against other similar firms:
- Distribution: Continuing consolidation of distributors, either through acquisition or “networks” led to higher distribution costs (commission and marketing packages) for providers
- Competitors: Some competitors re-platformed in recent years to increase straight-through processing rates, underwriting automation, and broker/ customer self-service to improve sales conversion and reduce operating costs
- Regulation: The focus was on demonstrating fair value for customers and supporting vulnerable customers
- Product: The increasing expectation of value-added services being provided as part of the core product proposition
Outcome & Results
- Savings identified:
- Redesigning of Operational Processes – £1.9m
- CRM System replacement – £0.75m
- Resourcing Strategy – £0.3m
- Underwriting philosophy – £0.6m
- Protection Product Features – £0.3m
- Additional savings of £ >1m from outsourcing opportunities
Performed market analysis to position the Client against its competitors
Put forward an action plan and roadmap to realise the above savings and other benefits from redesigning the Operating Model
Change Portfolio Prioritisation – ensuring that the proposed initiatives are aligned with the long-term strategic business objectives of the business