Identifying The Attributes Of The 21st Century Insurance Enterprise
Identifying the attributes of the 21st century insurance enterprise was the focus of a panel at a general session here at the annual meeting of the American Council of Life Insurers.
Saying that it was analogous to being on the outside and looking in, Richard Marx, vice president and North American industry leader, Cap Gemini Ernst & Young, posed a series of questions to three panelists, none of whom work for an insurance company.
Yet, as it turned out, all three executives–from a reinsurer, a technology company and a bank insurance firm–had insights about how insurers could operate more profitably and efficiently in the coming years.
The first question posed by Marx was what his panelists companies were doing or helping other companies do to get to and operate at the lowest possible cost and the greatest efficiency.
David B. Atkinson, president and CEO of RGA Reinsurance Company, said his firm was addressing the issue in several ways.
First, he said, was the way RGA staffed. “We are wary of adding any position that doesnt serve customers,” Atkinson said. “And we always add to staff after we need them.”
Atkinson said that the way decisions were made at RGA also was a key factor. The further you get away from customers, he said, “the easier it is to destroy value,” which, he added (half-jokingly), is why he makes relatively few decisions.
He described RGA as a flat organization, where 20% of the staff is authorized to make decisions up to $1 million. They audit themselves, he said, and it has turned out to be a system that works well.
Outsourcing is another way that RGA has chosen to lower costs, according to Atkinson. The company outsources investing, he said, which allows it “to gain economies of scale and to diversify in a way it could not do if it was in-house.”
Finally, as a relatively young company, RGA was not saddled with older technology, Atkinson said, and has tried to keep up with new technology over the years.
Doug Brown, director of marketing, IBM, solutions and strategy division, also spoke about outsourcing, of which he said there were “multiple levels.” But companies have to realize, he added, that “they cant outsource the responsibility for a quality experience with producers and customers.”
Tracy Foss, managing director, life insurance, Banc One insurance group, said that for her company productivity was a key factor in expense control. “We look at our agents productivity,” she said, “and if they are not as productive as they should be then we see what can be done in terms of educating them.”
Banc One takes a similar tack with the companies whose products it sells. “We try to get the companies to work with us, to supply product that meets our specific needs and standards.”
Regarding expenses, RGAs Atkinson said that insurance companies “should track expenses at the granular level.” But there is no point doing this and getting all this information, he added, “if they are not going to use it.