Operational Management
Improvement of an Automotive Claims Process at Flat Town Insurance
Introduction
Chris Donn, Manager of Claims Processing at Flat Town Insurance (FTI), was thinking about the upcoming Kaizen event to improve claims processing. Chris oversaw four departments in Claims Processing: Automotive Claims; Home Owners’ Claims; Business Claims; and Injury Claims.
FTI’s new CEO, Pat Jones, had developed and championed a new Lean Initiative not long after taking over. After achieving substantial improvements from the application of lean principles to the sales & marketing and the accounting functions, Pat felt it was time to apply the same principles to other functional areas. Given the importance of Claims Processing (CP) in maintaining customer goodwill and loyalty, Pat felt that the CP area, which had been experiencing increasing lead times for payment to clients, as well as complaints about incorrect payments to customers and repair shops, would be a good place to start.
With the top management directive of working on improvements in the Automotive Claims process, Chris scheduled a meeting to review the current situation. “Just look at this” Chris mused while pointing to a column of numbers in a spreadsheet. “Almost 8% of our claims are overdue for payment, and our customers are not happy about it! In a few cases, it’s even causing some of our customers to drop their coverage with FTI. We must get a handle on this!”
Overview of the Process
Following that meeting, Chris met with Mark Martin, Manager of the Automotive Claims (AC) Department, to better understand the specific process. AC was selected for the process improvement because it was the highest profit insurance FTI sold, but it was also the area with the least loyal customers. Mark provided a good overview of how the process should work, but Chris knew they would need to walk the process to truly understand the current state of things. She scheduled a walk-through of the AC Department,
Introduction
Chris Donn, Manager of Claims Processing at Flat Town Insurance (FTI), was thinking about the upcoming Kaizen event to improve claims processing. Chris oversaw four departments in Claims Processing: Automotive Claims; Home Owners’ Claims; Business Claims; and Injury Claims.
FTI’s new CEO, Pat Jones, had developed and championed a new Lean Initiative not long after taking over. After achieving substantial improvements from the application of lean principles to the sales & marketing and the accounting functions, Pat felt it was time to apply the same principles to other functional areas. Given the importance of Claims Processing (CP) in maintaining customer goodwill and loyalty, Pat felt that the CP area, which had been experiencing increasing lead times for payment to clients, as well as complaints about incorrect payments to customers and repair shops, would be a good place to start.
With the top management directive of working on improvements in the Automotive Claims process, Chris scheduled a meeting to review the current situation. “Just look at this” Chris mused while pointing to a column of numbers in a spreadsheet. “Almost 8% of our claims are overdue for payment, and our customers are not happy about it! In a few cases, it’s even causing some of our customers to drop their coverage with FTI. We must get a handle on this!”
Overview of the Process
Following that meeting, Chris met with Mark Martin, Manager of the Automotive Claims (AC) Department, to better understand the specific process. AC was selected for the process improvement because it was the highest profit insurance FTI sold, but it was also the area with the least loyal customers. Mark provided a good overview of how the process should work, but Chris knew they would need to walk the process to truly understand the current state of things. She scheduled a walk-through of the AC Department,