Operational Excellence and Customer Satisfaction at Generali
“Operational efficiency will enable us to cut unnecessary costs and re-invest freed-up resources in the technology needed to better both customer journey and customer satisfaction,” says Paul Ruggier, Global Head of Lean Six Sigma at Insurance giant Generali and advisor to our upcoming PEX and Performance Excellence Summit this October in Amsterdam. “Increasing Customer satisfaction means stabilizing the customer portfolio and attracting new clients, thus increasing the business volume.”
In this PEX Network interview, Paul Ruggier discusses the major challenges confronting the insurance industry and elaborates on how the company’s operational excellence program is helping to address those challenges.
PEX Network: What would you say are the biggest challenges confronting your industry at the moment?
Paul Ruggier: There are many challenges our industry faces today, both structural and behavioral.
In Europe, the insurance sector has just completed a major overhaul of the system of regulatory capital requirements, called Solvency II - a highly structured system that took many years to develop, and which came into force earlier this year. Just as that is being bedded down, new global capital standards are slowly taking shape and these risk putting into question what we have already developed in many years of negotiations. The impact of persistent ultra-low interest rates and market uncertainty put us in unexplored waters. The weak growth in Europe means investment is suppressed and this impacts on the ability to invest in the real economy, a fact already hindered by high capital charges on assets such as private equity or infrastructure.
Other challenges are more related to a revolution in customer behavior. Customers are undergoing a revolution of their own. The tendency for customers to self-inform has led to an increased level of dissatisfaction with a 'one size fits all' approach. It is not surprising that, as a result, customer retention is one of the issues our industry faces today. Customers look for bespoke products, suited to their needs and relevant to their lifestyle. They want streamlined technical support alongside a personal face. They want simpler products available in smarter way. Customers expect us to keep up with technological innovation.
The final element is the enormous demographic shifts going on the impacts of which are multifaceted. The overall population is aging, but it is also getting more mobile. People are living longer but they’re also retiring later and working in different ways.
These two clusters are strongly connected in the kind of actions we must put forward in order to face them.
A macro-economic environment with ultra-low interest rates combined with the need to update the customer journey ultimately mean increasing our operational efficiency. We must provide the technical solutions to transform the customer journey using all available digital technologies and solutions.
Operational efficiency will enable us to cut unnecessary costs and re-invest freed-up resources in the technology needed to better both customer journey and customer satisfaction. Increasing Customer satisfaction means stabilizing the customer portfolio and attracting new clients, thus increasing the business volume.
PEX Network: How are those challenges affecting your operational excellence programme?
Paul Ruggier: First, those challenges clearly require that we continue to operate in a cost efficient manner to achieve our business goals, (e.g. low interest rates) which means we keep focus on costs and the importance of our Opex program is confirmed, meaning we need to expand the reach of the current program within functions, geographies or cost types.
Second, those changes will require that we invest more than we did in some areas (digital, data). The implication is dual: on one side we need to ensure we have enough savings to reinvest in those areas where we can grow and where additional investments are needed. On the other side it means to be sustainable that in addition (and this goes beyond OpEx) that a reallocation of investments should favor those initiatives that will sustain profitable growth.
In any case OpEx initiatives should always look at both efficiency and growth potential through fulfilling new customer needs or increasing satisfaction in what Generali offers.
PEX Network: Can you give us some insight into your OpEx programme?
Paul Ruggier: From an organizational perspective, the OpEx program is led by a specific unit responding to our Group COO. Our OpEx program is, as a basic concept, a matrix program where we look at opportunities and initiatives through country and function angles. The OpEx program is established to challenge countries in the identification and implementation of savings initiatives, and also challenge global functions to identify and global savings initiatives, as well as to support countries on local initiatives.
The program is monitored and steered through OpEx reviews (3 cycles a year), involving Operation functions and Finance at local and global level, and is formally reviewed In the Group Operating Committee.
PEX Network: How do you ensure that your program stays focused on helping the business deliver on its strategy?
First, the OpEx program is fully integrated into strategic planning and control cycle and activities, meaning that targets are aligned with other financial targets in a consistent way from the beginning of the cycle and for each country.
Second, the countries and flobal functions are working together to build a set of initiatives that are aligned with their own strategic imperatives. This plan and its execution are discussed 3 times a year at minimum to understand when and where there are issues in achieving all objectives.
Finally, we should not forget that the Group Operations function role goes beyond Opex, therefore Global Functions also support countries in defining global initiatives fully aligned with business goals, where globalizing or sharing makes more economic sense and give same service or functionalities to countries.
PEX Network: What’s the best piece of advice you’ve ever received about operational excellence?
There is no contradiction between growth and cost efficiency.