RSA: Claims Transformation

RSA is a leading multinational insurance group.

The company has operations in over 28 countries and provides its products and services to more than 20 million customers in over 130 countries. For 2007, the Group reported net written premiums of UK£5.8 billion.

In early 2003 a new Group Chief Executive Officer Andy Haste was appointed by the board with one main goal, to make RSA a stronger, higher performing business, one that customers and employees could again be proud of and one that delivered to shareholders. Following a comprehensive strategic review, he and his team drew up a demanding set of objectives aimed at turning the business around. These included strengthening the Group’s capital position, building a new management team, embedding a performance culture and transforming the operational performance of its ongoing business.

The operational transformation program had two elements. The first was to restructure and de-risk the ongoing portfolio by focusing on general insurance and by successfully exiting life and underperforming businesses.

The second was a demanding operational improvement program.

Two key targets were publicly announced: to cut the expenses of the Group’s ongoing businesses by UK£270 million and to achieve a combined operating ratio of 100 percent on average across the insurance cycle for the Group’s ongoing business (combined operating ratio is a measure of industry profitability).

Critical to the transformation program was a fundamental restructuring of the UK claims business. The objective was to improve claims performance by implementing a new operating model to drive reductions in claims indemnity costs and claims expenses.

Andy Haste brought in Accenture to team with RSA as the partner to implement this fundamental restructuring. This would exploit Accenture’s industry insights, transformation expertise, software assets and outsourcing capabilities. The two companies structured a contract with a risk and reward payment arrangement based on the delivery of the program benefits, within budget and on schedule. Both organizations stand to gain by making progress over the course of a three-year plan to transform the insurer.

The transformation program was comprehensive and included:

• Implementing a new operating model comprised of a Rapid Response Unit for claims notification and settlement of simple claims, and a segmented back-office for handling complex claims.
  
  
• Establishing an offshore claims processing center for claim notification and recovery processing.
  
  
• Implementing Accenture Claim Components Solution as the single claims handling system across the operations.
  
  
• Implementing consistent organization, team and job structures and reengineered business processes across the operations.
  
  
• Establishing supply chain arrangements with suppliers to optimize UK£500 million in spend across motor, commercial property and indirect spend categories.

RSA and Accenture staff have worked side by side in integrated teams to deliver the new Claims operating model. Accenture assembled a strong global team with extensive experience in large-scale program delivery, claims transformation, claims system delivery and outsourcing.

The Claims transformation program began in October 2003. Within three years, the target operating model and supporting system were fully implemented.

RSA’s UK claims operations now have a consistent organization and handle claims through a single system using a single set of best practice processes. Whether based in an RSA office or in the field, the Claims employees in the UK now work as integrated, virtual teams instead of the previous silos dictated by geography and systems functionality. Workflow with key suppliers is seamless due to supply chain system integration.

The Claims program is a significant contributor to RSA’s transformation program and strategic plans. At the end of 2005, the Claims indemnity costs were reduced by more than UK£130 million per annum, and Claims expenses were reduced by more than UK£5 million per annum.

Further long-term success for RSA will depend on consistent delivery against strategic objectives. One key part to this is its ongoing performance improvement program and its partnership with Accenture. For both companies the partnership is about more than reducing costs. It is about getting RSA ahead of the pack and enabling it to stay there through continued, sustained performance.