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For Insurers: A Change is Gonna Come

Robert Regis Hyle | July 29, 2014

Insurance projects are getting larger and cycle times are getting longer as carriers are forced to spend huge amounts of money on transformation projects involving insurance technology.

That means there’s a need to get results and what EY’s Charlie Mihaliak has learned is insurance executives are pressing to make sure the issues and risks that change management addresses are accounted for in these transformation projects.

Mihaliak, executive director leading the organization change management practice for insurance operations at EY, explains that to define change management you must start with the business outcome business leaders would expect change management to address: predictability of the business results.

“When changes are implemented they need to be done smoothly, so there is no bad effect on customer service,” he says. “We’re seeing an increased focus to draw better employee engagement. A few years ago businesses were worried about losing employees, now we see improved engagement.”

A second benefit to change management involves sustainability.

“With a lot of focus and energy, you can pump up results,” says Mihaliak. “When you take those outcomes and decide what needs to be done, to achieve those goals you get into the whole leadership space: clarity of what they are trying to achieve; how to do it in a language business people understand; and alignment with the different leaders that have to sponsor the transformation so they have the same goals and priorities, and reprioritize other things for the greater good of the transformation.”

Organizational alignment is a major part of change management, points out Mihaliak. The roles employees take, the workflow, the procedures, the measurements are all things that influence behavior.

“Business unit readiness has to be there on day one,” he says. “Make sure the technology is in place, training, and sustainability action, which is the performance management process to sustain behavior.”

Anthony Tempesta, senior manager, advisory services for EY, believes the insurance industry has gone through an unprecedented change and transformation is no longer an ugly word for carriers.

“Companies are making investments; they are swapping out legacy platforms and that new technology brings a lot of change,” says Tempesta. “It’s not just plug in the software and use it; it’s changing organizational structure, how people respond to clients, and how they work with each other. Customers want things faster and better with a higher level of self-service. Change management is imbedding that capability—that disciplined approach—within the organization.”

In the past, Tempesta acknowledges new technology platforms called for better communications and training. Those remain important factors, but with change management an additional priority involves embedding a disciplined approach that drives how the business engages with employees, customers, and stakeholders to ensure what the business users perform their tasks in a manner the change management team perceives to be the correct way.

Process management is important for carriers using new software solutions, but Mihaliak points out companies have different views on how to integrate process management discipline into the change management program.

“In some places, carriers feel like that’s part of the change management scope, but in other areas they have spun out lean development groups or Six Sigma,” he says. “What’s important is companies need to be sure they get a strong level of integration within the program. I know that sounds obvious, but when you are trying to compile skills to run a program it is a challenge. You have to make sure you have experienced program leaders familiar with all these disciplines so they can pull it together to work more effectively.

Tempesta adds that if an insurer is undergoing an organizational change or is plugging in a new system, the project touches several areas and process is just one of them.

“Whether that falls into the official change management workspace, that’s fine, but you are going to be touching the processes anytime you implement new technology and that needs to be addressed,” he says.

Mihaliak maintains it is rare to find a business leader that won’t agree that change management is important. The question is: How do they go about making sure it is applied in the correct way?

“In a world with so many resources, the first assumption a leader makes is there is a middle management layer that can be relied upon to make the changes,” he says. “A few years ago that was more of a possibility. The operations jobs are getting harder and to think operations managers will have time to bring their teams through that, frequently is not working. When you have a big transformation program, having a change management strategy up front allows you to proactively manage things.”

Change management doesn’t happen in a silo, points out Tempesta. What he calls the “change army” includes business leaders and stakeholders that are armed with new tools and techniques. They are the ones to sell the changes and empower people to make things happen.

“Change comes from the top down and it will be hard to find a leader who doesn’t think change management is a critical path, but being a good people manager is not the same as being a good change manager,” says Tempesta. “You may be transitioning people and that’s a combination of human resources and business leaders. It’s complex work. The essential core of change discipline needs to prepare business leaders to execute on the change plan.”

Mihaliak believes IT leaders are involved in change management even if it is not apparent. One example of this involves the increased value carriers place on their data.

“One of the things missing in these data programs is the change management needs are not attended to. Things like setting a governance process across the organization in addition to the adoption of new tools,” he says. “Something might be perceived as a technology-driven issue has change management needs and I believe we’ll see more of a rounding out there. As CIOs collaborate more with the business, they assume the trusted partner relationship that they aspire to, being able to engage their peers around what the leading practices are around change management and being the coach to help elevate that trusted advisor role.”

Mihaliak reports more companies seek to create a strong center of excellence and the next wave of emergence is around change. Tempesta adds there has been an uptick in insurance companies approaching transformational change programs—such as multi-year policy administration projects.

“Companies aren’t comfortable making that investment if they don’t have a guarantee of success and that’s why change management is on the table,” says Tempesta.

“The cycle time of these projects, is important,” adds Mihaliak. “When you are developing a new system like policy administration, these programs take a couple of years or more, so if you miss and end up without the outcome you want, that puts the company that much further behind their competitors that got it right the first time. If carriers are going to spend this much money they have to get some return on it.”



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