Improving Customer Service at Deutsche Allgemeinversicherung

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Executive Summary

Deutsche Allgemeinversicherung (“DAV”) is a leading insurance company that prioritizes exceeding customer experience to retain and attract clients. However, one of their main obstacles is efficiently managing and retrieving accurate information and data across multiple divisions and locations. With competition on the rise, enhancing quality has become crucial. To enhance their customer service, Annette Kluck, the Head of Operations, initiated a Process Measurement and Improvement (PMV) project utilizing statistical process control (SPC).

The suggestion is to utilize online technology and implement a pilot program in the New Customer Policy Process department to enhance accuracy and improve customer service.

Regular monthly and quarterly meetings will be conducted to assess the effectiveness of the recommendations and ensure compliance with performance and productivity standards.

Issue Identification

Deutsche Allgegeinversicherung ("DAV"), one of Germany's largest insurance companies, is currently experiencing competition from industry rivals such as Allianz, Credit Lyonnais, and Aetna. Moreover, smaller insurance providers aiming to offer tailor-made services also pose as competitors to DAV.

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In order to stand out from the crowd, DAV has placed great emphasis on customer service, aiming to differentiate themselves within the market. Ensuring top-notch quality and error-free processing of customer information has been a crucial aspect of DAV's strategy to retain and expand their customer base.

Annette Kluck, the Head of Operations, embarked on a Process Measurement and Improvement (PMV) project to enhance the quality of customer service. The project aimed to address a 12% error rate in the process of documenting customer information, which involved forms filled out by both customers and representatives.

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Statistical process control (SPC) was chosen as the approach for improvement. However, it was challenging to determine whether the use of p-charts was the most suitable method. This was due to the unique characteristics of the insurance industry, where traditional manufacturing-style improvement techniques faced difficulties. One such challenge was the intangible nature of the service industry, making measurement more complex compared to the tangible aspects of manufacturing.

Despite the interest of different departments in the PMV project, there was a lack of education and training regarding SPC and its advantages. Some employees perceived the PMV project as a passing trend, while others were either not fond of the additional workload or did not grasp its purpose.

DAV faced another challenge in the form of inconsistent business volumes due to seasonal fluctuations. This created a capacity management issue, as transaction volumes would double on heavy days compared to lighter days. The corporate mandate of completing information on the same day resulted in long hours, employee frustration, and increased costs due to overtime. Furthermore, the quality of work suffered significantly during busy periods. To address this, management opted to hire more temporary employees to replace permanent staff, thus requiring additional overtime and reducing costs.

Environmental Issues

Approximately 51% of DAV's business in Germany originated from retail insurance. To apply for DAV's products, customers could either visit one of the eighty branches to fill out a form or contact an agent. These forms were then sent to DAV's Retail Transaction Processing ("VEG") division using intercompany mail. Alternatively, customers could fill out an application and send it via mail or fax to DAV, which would later be transferred to the Hamburg operation. Each employee at VEG worked a 7.5 hour shift, processing around 70 applications. If the information on the application was complete, a confirmation would be sent to the customer. However, 12% of forms contained mistakes which required an average of 20 minutes and cost DM 14.50/hr to correct.

All departments were required to have a minimum of 200 observations per week for sampling. However, some departments had to increase their sample size beyond 200 to ensure they had at least 3 incorrect forms. This increase in workload was not well-received by the departments. It is worth noting that each sample takes around 5 minutes to check.

Management was dissatisfied with the current method of delivering quality and thought that achieving 99% accuracy on forms was unlikely. By implementing Statistical Process Control (SPC), they can identify ways to improve their performance process. Testing the first 12 weeks using a p-chart will provide a measure of the correct/incorrect data range. Over time, the p-chart can provide insights into the direction and predictability of the process. This will involve analyzing the data.

With the data from the case, we utilize a 12-week period to assist in calculating the data.

  • Total sample size is 3600 (12 x 300)
  • Mean is 0.0522 (0.6267 / 12)
  • 1 – 0.0522 = 0.94778 or 94.78%
  • Error is 188
  • From the data used in the12 weeks, this means the average number of correct applications is at 94.78%.

The p-chart is used to measure quality and it is important to measure the lower and upper limits. If the measurements exceed these limits, there is a problem that needs to be addressed. By using the p-chart over time, DAV can predict and compare employee performance. Upper management should acknowledge that achieving results will take time due to the complexity of gathering information, conducting tests, and implementing process changes. Although the p-chart provides valuable information for control purposes, DAV should also focus on offering an attractive insurance package, training employees to be courteous, and encouraging customers to provide feedback for continuous improvement. It is crucial to reward employees in order to ensure successful performance.

Alternatives

Alternative 1 – Use Technology extend the ability to Apply On-line

  • Reduce margin of error - when filling out the application form, DAV can set fields on the application to “must be filled” in order to proceed to the next screen
  • Convenience - no need to wait in line or talk to a representative, customers can do it on their own time Less labour intensive, no overtime required for data entry
  • Ability to update information on-line instantly
  • Less processing work for department

Cons:

  • Cost and upkeep to run a website
  • Staffing of IT personnel
  • May lose that customer face to face experience
  • Not everyone maybe computer literate
  • Not everyone may own a computer

Alternative 2 – Focus on SPC pilot study for New Customer Policy Process before Rolling Out

  • Testing to see if SPC is applicable to all departments SPC wasn’t meant for all departments i.e. Laywers
  • Gathering information and building processes to provide to other departments
  • Building structure and documenting performance measures that are applicable
  • Defining the required skill set, knowledge, and competence that is needed
  • Strategically examining organization design and identify tasks to reach goal

However, there are some disadvantages:

  • Long process to implement SPC
  • One departments sample data is different from another
  • Departments are not structured alike and have different standards

Alternative 3 – Outsource a Process Improvement Team

Advantages:

  • Having a team to provide the correct methodology and technique to cater specifically to each department
  • Skilled and trained people with experience
  • Sets guidelines
  • Experienced team will be more efficient in applying their knowledge to problem areas

Cons:

  • Could be a high cost if DAV doesn’t follow guidelines once the process improvement team leaves
  • Departments may not be supportive of an outsourced process improvement team Lose a bit of control of your operations

Recommendation

The proposal suggests combining Alternatives 1 & 2 by incorporating technology into the application process. The focus would be on conducting a pilot study for the New Customer Policy Process.

DAV aims to provide quality customer service in an increasingly competitive industry. To achieve this, they have implemented a website for customers to enroll in the application process. This approach is efficient and convenient, saving both time for the customer and labor costs for DAV. By utilizing technology, DAV can eliminate or reduce the margin of error. For instance, they can set mandatory fields that need to be filled in before proceeding to the next section. Additionally, a programmer can incorporate a feature that ensures correct spelling, thus minimizing misspelled names. The data collected can be easily analyzed using compatible software on a computer. Alternatively, DAV can operate kiosks for customers who do not have access to computers, ensuring accurate data entry.

By supporting the SPC, we can enhance the efficiency and accuracy of DAV's operations, ultimately leading to increased productivity and reduced costs for the company. Additionally, customers will benefit from an improved customer service experience, resulting in higher revenues over time. One challenge in applying SPC to the service industry, unlike the manufacturing industry, is that customer interactions are more diverse and customer-facing. However, introducing a pilot program to the New Customer Policy Process department will enable Kluck to experiment and identify the appropriate skills and measures that align with DAV's needs.

Management should concentrate its efforts on the department where there is the greatest opportunity to enhance data entry accuracy. It would be simpler to establish a single control environment and implement a set of rules specific to that department, rather than assessing and comparing results across the entire company. While other departments expressed interest in participating in the improvement process, it was confusing for them because the criteria and rules, such as sample size, were identical. This lack of differentiation is illogical, considering that departments have varying levels of variability and some departments, such as lawyers, are not relevant to Statistical Process Control (SPC).

Implementation

Within a span of one month:

  • Technology - Source IT team and have them design and develop a functional website. Purchase a larger server that can sustain higher capacity
  • Pilot Program – Kluck to start developing measures and sample size and introducing to the manager of the New Customer Policy Process department. Kluck will need to explain the rules and sell the benefits of performing SPC to the employees so that they will be onboard with the PMV program.

2-3 months

  • Technology – Testing of the website will be performed to fix any issues and bugs. Once the testing meets all the standards, DAV and start directing people to fill out their application on-line. Radio and internet advising will be implemented to create flow to DAV’s website
  • Pilot Program – Employees will be trained on how to measure, chart and interpret the data; this will empower the employees and make them feel like they are contributing to a bigger cause to DAV.

The text "

4 months

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Since this is the quarter, Kluck should assess the performance measurements of the website and the pilot program to determine how accurate they are. If the pilot program is successful in the New Customer Policy Process, Kluck can then begin implementing SPC in other departments.

Monitor and Control

Kluck will evaluate the data entered by customers on their website to measure performance. Running reports will help identify any incomplete or erroneous information. Monitoring website traffic will also provide insights into customer satisfaction with the online experience. If the pilot program is successful, the error rate should decrease. Employees will be involved and encouraged to interpret data, aiming to increase engagement and enhance workplace culture.

Less errors and a positive customer experience both on-line and through the New Customer Policy Process department should lead to increased revenues. Monthly meetings will be conducted to review the SPC and address any issues that may arise. Suggestions for improving the process are highly encouraged.

Updated: Feb 16, 2024
Cite this page

Improving Customer Service at Deutsche Allgemeinversicherung. (2016, Sep 14). Retrieved from https://studymoose.com/deutsche-allgemeinversicherung-company-case-essay

Improving Customer Service at Deutsche Allgemeinversicherung essay
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