About the Client
In this project, Procurato worked with a mid-sized insurance provider that operates within the domains of Pet, Motor and Household Insurance across the United Kingdom.
The client expressed their need for an end-to-end review of their Household supply chain, including all claims except for those classified as large losses (£100k+). The main objective was to identify potential areas within the supply chain where cost savings could be realised.
The client’s drive to achieve savings was accelerated by the rapid increase in costs associated with Household repair fulfilment, which most insurance providers have observed over the past 12 months and beyond. The cost rise can be largely attributed to two main factors – material inflation and the lack of suitably qualified labour – a combination which has put many insurers under pressure and forced them to develop new strategies in order to adapt to the shifting landscape.
Because of our profound expertise in the Insurance sector, Procurato were approached by the client to participate in an RFP and ultimately selected from a group of bidders to execute this project.
Prior to starting any activity, a collaborative discussion was held where the client outlined the following expectations from Procurato in terms of project deliverables:
Carry out detailed benchmarking analysis by using Procurato’s established and proven methodologies.
Provide a strategic view of the client’s supply chain and future target operating model.
Identify potential savings associated with delivering this initiative.
Procurato decided to initiate this project by focusing on data and hence carried out a data / benchmark-led opportunity assessment. This methodology has been proven in many of Procurato’s projects and included dissecting all information according to peril categories and value bands across multiple years, which allowed our team to closely track trends and determine where potential optimisations for the client could be achieved.
The optimisations included, for example:
Reducing Indemnity by going to market and enhancing controls for leakage.
Improving Operating Expenses by optimising average call handling time and automating call centre processes.
Reducing Failure Demand by providing better self-service options and enhancing agent training.
Once Procurato carried out this strategic review, a solution was formulated and involved the client’s adoption of an in-house supply chain. This approach was selected as it tackled the client’s challenge and enabled them to wholly own the direct relationship with their wider supply chain.
In terms of the team set-up, the project was led by our highly skilled Consultant Dan Austin who has over 8 years’ experience within the Insurance sector. Additional support was provided by one of Procurato’s Directors, Matthew Parker, who is a seasoned senior executive with a successful 18-year track record in procurement and supplier management across multiple industries including Insurance.
As for the timeline, the project spanned approximately 6 months, starting from the initial review and progressing through the RFP stage to the final decision-making process for insourcing. An additional 1 month was allocated for embedding direct contracts with the supplier.
All of client’s expectations were fulfilled successfully and the final outcomes of the project included:
The client gained a complete ownership of the supply chain, with direct relationships that facilitate smooth negotiation and the exchange of current market insights and trends.
Savings were established through the elimination of costs related to a third-party supply chain manager.
Costs were reduced thanks to the competitive tension that resulted from initiating the tendering process for supply chain.
Further enhancements to the customer journey were realised and a seamless claims process was accomplished, thanks to the supply chain that promptly addressed any necessary repairs and maintained consistent communication. In cases of delayed repairs, supply chain provided updates which led to decrease in failure demand.
In the long term, the client will be also able to develop comprehensive Supplier Relationship Management (SRM) frameworks and practices. This includes regular business reviews with the supply chain that will positively contribute to retaining control as well as enable constant awareness and understanding of the market.
The Procurato Way
Procurato consultants have over 30 years’ experience of managing issues like these and we are currently helping several clients to improve their supply chain. Speak to us to help you establish just how much of an issue this is going to be for you and how to fix it.
We have access to unparalleled data and insights from across the whole market meaning we can help you to quickly understand where you benchmark in the sector and provide recommendations to improve. We design, develop and procure solutions to give you the right strategy and software.
Please contact us to find out how we can support you.
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Strategic Review of Household Supply Chain for a Medium-Sized Insurer