Introduction: Quality Tools Discussed In the Article
The main quality tools discussed in this article are SIPOC, fish bone, pareto, brainstorming and benchmarking. SIPOC is an acronym that refers to Suppliers, Inputs, Process, Outputs and Customers. It is a process improvement tool that helps team members agree on a common course of action in quality management. Fish bone is used to identify a different cause to an existing problem. Benchmarking involves comparing an organization’s quality policies to industry standards. Pareto analysis is used to indicate problems that need more attention than others do. Brainstorming is a process of generating multiple ideas about quality problems (Schindler, 1994). All these quality management tools are used to develop an integrated system of controlling core business functions to ensure quality. The paper that follows describes the use and application of the above tools to the implementation of quality management in an insurance company.
Business Background
Max Life Insurance Co. Ltd (Max Life) provides life insurance services. The company was founded in the year 2000 as a joint venture between Mitsui Sumitomo Insurance Co. Ltd and Max India Limited. Although relatively young, Max Life enjoys great popularity in the Indian market where it controls a substantial share. Currently, it is the fastest growing and largest non-life non-bank-owned private life insurer in India. Quality management is important in the insurance industry because consumers are becoming increasingly aware of the quality of services offered. This has made it essential for insurance companies to implement quality improvement tools such as Six Sigma with an aim of ensuring conformity with customer expectations. In fact, insurance companies all over the world have adopted different quality management measures to ensure compliance with set standards and customer satisfaction. In large countries like India, the increasing number of companies offering similar products has compelled insurance companies to differentiate their products through quality management (Heckman, 1993, p. 73).
Objectives of Using the Various Quality Management Tools
What are they trying to achieve/improve or prevent?
The main issue in this case was poor business performance due to gradual decrease in customer base and expiry or lapse of policies. This made the business to lose its competitiveness in the market. There was a need to revert this in order to save the business from losing all customers. To overcome this problem, the company used the various quality management tools highlighted above to jump-start the customer recovery process.
How did they make the tool work for them/have it achieve its objectives?
The SIPOC tool was used to identify the involvement of cross-functional units in the entire process of regaining customers. This quality management tool helped the company in building a robust multichannel distribution platform. The platform was responsible for a rapid increase in the number of customers the company was able to acquire in the subsequent years. In a way, SIPOC proved to be a structured approach for reversing the company’s dwindling fortunes at a time when the company was determined to increase market share by acquiring more customers. Without applying this tool, it could have been quite difficult for the company to survive given the kind of the challenges it was facing (Wise, 2014).
The company used Pareto analysis to zero in on the lapse recovery process. As already highlighted, policy lapse was the main problem facing the company. However, the company also had several other problems such as decreasing profitability and strong competition from rival industry players. To avert these problems, Max Life used Pareto analysis to gather and analyze data about the frequency and relative importance of various problems. The company then resorted to addressing each of the identified problems individually by focusing on the root causes. The result was a realignment of product strategies with customer needs (Wise, 2014).
The fish bone strategy was used to brainstorm over a list of causes and effects of different problems that led to the high lapse rate and loss of customers. Fifty-seven causes were identified with most of them being found to have similar effects. Some of these causes included low agent engagements, data management issues, service issues and ineffective incentives. To address these causes, the company employed the strategy of benchmarking, which involved visiting other organizations in the industry. Through such visits, Max Life learned about strategies used by other companies and gained insights into the latest trends in the insurance industry. The company then employed these solutions to improve its services. Besides improving lapse rate, the fish bone strategy helped the company to improve its decision-making process. The problems which were identified served as the basis for future business decisions (Wise, 2014).
What can further be done to improve the problem?
The company can further improve the issue by employing alternative quality management technique such as Total Quality Management (TQM). TQM is a structured and comprehensive management approach that seeks to improve product quality through ongoing collection of feedback from customers and refinement of business processes. The company can also improve its customer service sector. This will enable it to be informed of customer’s feelings towards their products as well as customer expectations and desires.
Key Lessons Learnt From The Case Study
The most important lesson I have learnt from this case study is that quality is an essential parameter that differentiates organizations from their competitors. Use of quality management tools ensures positive changes in business processes which eventually results in superior services. Another lesson is that the various quality management tools – SIPOC, pareto, fish bone and benchmarking - have a common goal of improving quality standards. These tools help companies to develop quality products that not only meet but also exceed customer expectations.
Conclusion
The case study has highlighted how Max Life employed various quality management tools to achieve excellence in policy administration and customer satisfaction. By using these tools, the company was able to grow its customer base and increase premium revenue in a very short time. As evidenced by the company’s outcome, the use of Six Sigma led to numerous positive changes. This can be attributed to the fact that all the quality tools that the company used focused on process orientation. This in turn helped the insurance company to identify key business processes that were necessary for recovering lapsed policies and gaining more customers. In a nutshell, the use of six sigma helped Max Life to improve quality and reduce costs of the various services it offers.
Max Life’s success story with regards to the application of Six Sigma in its operations is a clear indication that quality management can be used as an effective turnaround strategy in the insurance industry. It sounds quite impressive that despite Max Life being the youngest player in saturated the industry, it was able to counter competitive forces and gain a prominent position in a very short time. Without such a strategy, success could not have been achieved, considering that the Indian market consists of many insurance companies including large and well-established multinationals. Perhaps, Max Life’s success story is a wakeup call to other insurance companies to reconsider their business strategies in terms of quality management. This is essential for companies offering life insurance products because of the long-term nature of their relationships with clients. Quality assurance is the primary mechanism for maintaining productive relationships with clients for longer periods of time.
Bibliography
Heckman, P. E. 1993. Total Quality Management In Property/Casualty Insurance: An Actuarial Perspective. Chicago: Ernst & Young. Retrieved from https://www.casact.org/pubs/dpp/dpp93/93dpp073.pdf
Schindler, R. M. 1994. Consumer Motivation for Purchasing Low-Deductible Insurance.
American Marketing Association, 147–155. Retrieved from http://business.camden.rutgers.edu/files/Schindler-1994.pdf
Wise, A. 2014. India-based Life Insurer Improves Customer Retention Through Six Sigma, Quality Tools. New York: ASQ. Retrieved from
http://asq.org/knowledge-center/case-studies-max-life-improves-customer-retention.html
