By Elisabeth Boone, CPCU
This is the second article in a two-part series that explores the origins, objectives, and programs of the wide-ranging Best Practices/Continuous Quality Improvement (CQI) effort spearheaded by the Independent Insurance Agents of America. In the first segment, published in our December 1996 issue, we outlined the history of this undertaking, examined its goals, and explained how it's structured to bring programs and services to agents across the country. In this concluding installment, we describe the array of tools available to help agents implement Best Practices/CQI, then talk with agents who've been involved with the program from the ground up and find out specifically how they--and their insurers--are benefiting from making the commitment to Continuous Quality Improvement.
"Sounds great--but how does it work? And how can my agency benefit from getting involved?"
That's a logical question, and one that might be asked by any agency owner or principal who's heard about the IIAA's Best Practices/Continuous Quality Improvement initiative, but before jumping on the bandwagon wants to know how theory translates into practice.
Last month, in the first installment of this series, we explained how Best Practices/CQI is supposed to work. Now we'll find out exactly how it does work--by describing the BP/CQI tool kit, then by talking with agents who signed on to the program in its early days and who can share their experiences from the front lines.
First, a brief review is in order. As outlined in last month's article, the Best Practices/Continuous Quality Improvement effort was initiated by the Independent Insurance Agents of America, in cooperation with agents, insurers, the Alliance for Productive Technology, IVANS, and ACORD, and with support from insurance agency consultants and the Westinghouse Productivity and Quality Center. The IIAA's Commission to Enhance Agency Value was created in 1992 with this mission: "To strengthen agency values through agency-company-vendor-regulator combined expense reduction and sales/service/productivity improvement." The desired result is twofold: to create the lowest total cost for the consumer and increase market share for the independent agency system.
As a first step toward achieving its mission, the Commission retained the insurance agency consulting firm of Hales & Associates and the Westinghouse Productivity and Quality Center to conduct a study of successful independent agencies and identify the methods, techniques, strategies, and business practices they employed. The Commission then would use this information to develop a checklist of strategies agents could use to improve their own operations.
The resulting study, titled The Best Practices of the Leading Independent Insurance Agents in the United States, was published in 1993 and has been updated by Hales & Associates each year since then. In examining agencies whose revenues range from $250,000 to more than $5 million, the study identifies the factors that clearly account for agency success; these are the nine Best Practices (summarized in the first installment of this series) that serve as benchmarks for the ongoing four-phase, 10-step process of Continuous Quality Improvement (also summarized in the first installment of this series.)
Based on the Total Quality model developed by the Westinghouse Productivity and Quality Center, the Continuous Quality Improvement process can be visualized in the form of a pyramid (shown on page 63) whose building blocks are the 12 "Conditions of Excellence," or requirements for total quality. The pyramid is a key component of the Westinghouse Total Quality Fitness Review, used by some agents to evaluate their agency operations as a first step in the Best Practices/CQI process. (The Commission to Enhance Agency Value uses "Continuous Quality Improvement" in place of "Total Quality" to underline the ongoing nature of the effort.)
Power tools
The organizations and individuals who spearheaded the Best Practices/ CQI initiative knew that undertaking the essential operations review and improvement process could be a daunting challenge for many agencies, not to mention the branch offices of their insurers. Some agents and branch managers might hesitate to embark on this venture, fearing the venture might be too complex and costly. That's why the Best Practices program offers both agents and their companies a set of tools, workshops, and resources to help them achieve top performance in their organizations. Many resources are available free; others are provided at a nominal cost. Much assistance is offered through the IIAA's state affiliates, which receive training and support at the national level that they then can share with local agents and company branch offices.
First, agents can use the Best Practices Study itself as a tool to help them move through the four-phase, 10-step Continuous Quality Improvement process. The Best Practices Study volume contains easy-to-follow instructions and worksheets for each phase: analyzing agency operations, identifying benchmarks for comparison, evaluating and streamlining procedures, and creating a performance improvement action plan. Designed as a companion document to the Best Practices Study, the Self-Diagnostic Tool is a more comprehensive approach to evaluating and improving agency results.
Another useful tool is the Agency Performance Analysis (APA) developed by insurance agency consultants Reagan & Associates. Each year subscribers receive a data collection disk they can use to enter relevant operational and financial information. The consulting firm analyzes the data and prepares a customized report that measures the subscriber's performance against that of comparably-sized Best Practices firms, then identifies any performance gaps that need attention.
The Best Practices program also developed the Joint Agency/Company Planning Tool, created with input from both agencies and companies to address the issues and relationships between the parties. Based on his experience in pilot programs with seven of his agency's carriers, agent and BP/CQI advocate Joe Feitelberg has high praise for this tool. "Agency-company planning is a disaster," he declares. "One side pretends to talk, while the other side pretends to listen." Using the Joint Agency-Company Planning Tool, he explains, both the agency and the insurer's branch office gather information about their operations, then "disclose to each other what previously had been smoke and mirrors." Coming soon: an electronic version of the tool that will speed the data-gathering process.
In 1993 the Feitelberg Agency, the D. Francis Murphy Insurance Agency, and the Nashua, New Hampshire, branch of Continental Insurance Company used this tool when they started a pilot program to implement Continuous Quality Improvement and Best Practices. ACORD became an active participant in the pilot and in 1995 introduced its Power of Change program, which uses the Westinghouse mapping process. ACORD and IIAA subsequently formed a strategic alliance to create Model Office Reality Pilots for Personal and Small Commercial Lines. This year the Best Practices program will introduce a Producer Development Track, whose purpose is to create increased sales power within the independent agency system and bring new blood to agency sales forces.
An agent's-eye view
Through pilot programs with branch offices of their insurers, a number of agents have taken the lead in implementing Best Practices/CQI in their agencies. Now we'll share the experiences of three such agents, looking at the challenges they faced, the steps they took to meet them, and the results of those efforts.
Unquestionably, the one agent whose name is most closely identified with Best Practices/CQI is Joseph Feitelberg, CLU, who owns the Feitelberg Agency in Fall River, Massachusetts, and is a tireless advocate for--and participant in--the effort to bring both agents and companies on board with the initiative. Since the IIAA's Commission to Enhance Agency Value was formed in 1992, Joe Feitelberg has chaired it; he also serves on the board of the Council of Insurance Agents and Brokers and is the IIAA-sponsored board member on the Quality Insurance Congress. At IIAA's annual convention last October, Feitelberg received the prestigious Woodworth Memorial Award for his leadership in the Best Practices/CQI initiative.
Also strongly committed to and deeply involved in CQI are agents Dennis Murphy, Sr., of D. Francis Murphy Insurance in central Massachusetts (who participated in an early CQI pilot with Feitelberg and Continental), and Phil Eifert of the Eifert, French & Ketchum Agency in New York.
Implementing CQI--
one step at a time
As noted earlier, Feitelberg's agency has participated in seven pilot CQI programs with insurers it represents. What's more (with some help from Alan Cooper of the Westinghouse Productivity and Quality Center, a partner in the IIAA's CQI initiative), he was the original author of the four phases involved in implementing a Continuous Quality Improvement program:
* change leadership;
* benchmarking;
* mapping; and
* customer input.
The initial phase, change leadership, has two elements: first, management and leadership to develop buy-in from the one-third of employees whom the other two-thirds perceive as leaders; and second, involvement in the process to secure employee commitment and promote creation of a CQI "culture." Focusing on the first part of this step, Feitelberg says is nothing less than essential to the implementation of a successful CQI initiative. "Without that one-third commitment, you can't make this go," he asserts. Even with strong leadership, however, the program won't work unless there's buy-in from employees at all levels.
For the $30 million Eifert, French & Ketchum Agency, "The key to getting commitment is involving everyone," Phil Eifert says. That's no mean feat in an agency with 47 employees, he acknowledges, commenting, "Right now we're in our pre-season phase, forming teams and letting everyone take a turn at leading. Once we get real commitment from everyone, we'll be ready for the big leagues."
Involved in the Best Practices/CQI effort "from the get-go" is Dennis Murphy, whose family-run agency dates back 60 years and employs 65 people. Ideally, he says, the actual implementation of CQI "is from the bottom up, not from the top down." At his agency, "I didn't implement CQI myself; instead, I encouraged people to empower themselves to improve our operations."
"Starting with a prayer"
As noted earlier, Murphy and Feitelberg participated with their branch of Continental in an early Best Practices/CQI pilot, with help from co-sponsor ACORD. How confident did Murphy feel when embarking on this venture? "We started with a prayer," he responds candidly. "Basically, we didn't know what we were doing." As a first step, his agency conducted the Westinghouse Total Quality Fitness Review of its operations (see pyramid on page 63).
This process, which took between three and four months, Murphy describes as "an experience in eating humble pie." The wide-ranging analysis produced more than a few unexpected results, he says. "Almost all of our discoveries were surprises." One key finding was that communications were a weak point--both within the agency and between the agency and its insurers. "We were communicating well with our premium-paying customers," Murphy says, "but we weren't doing as well with our staff and our companies. We thought we knew what they wanted, but in many cases we didn't."
As a participant with other agencies and companies in a pilot for the Power of Change product, Murphy attended training sessions conducted by the Westinghouse Productivity and Quality Center to learn mapping techniques. "We learned how to map a procedure step by step, determine the cost, the length of time, and the people involved," he explains. His agency then began to create cross-functional teams comprised of employees from different departments and with varying levels of experience. These teams evaluate agency processes on an ongoing basis with the aim of identifying and eliminating unnecessary steps and reducing the error rate. "We know we have to be more efficient and get the friction out of the business," Murphy says. "We have to get it right the first time. We don't get paid anything for correcting mistakes; we just give the customer an excuse to look elsewhere."
Murphy sees signs that team members are working as a cohesive unit, and that open dialogue is helping individuals develop more appreciation and respect for each other. Difficulties arise, he acknowledges, but he thinks that participating in Best Practices/ CQI is helping employees two ways: "working more efficiently, and having more fun." As for agency-company relationships, he says, "We've definitely seen improvements." Some insurers are more serious about Best Practices/CQI than others, he adds, "but more are becoming serious about it."
Mapping makes dollars--and sense
Cutting the error rate is also a key focus of Best Practices/CQI at the Feitelberg Agency. "One-third of all the work done in the United States is rework," Joe Feitelberg says. One way to reduce mistakes is to reduce the number of steps required to perform a given procedure, he points out. Here's where mapping comes in. "For example, a cross-functional team of producers, CSRs, and claims and audit employees can use ACORD's Power of Change mapping tool to flowchart a procedure. They may determine that the procedure involves 60 steps. At each step they ask, 'Why are we doing this step?' By doing this, they can identify unnecessary steps, and they may be able to take those 60 original steps and reduce them to 30." This kind of mapping exercise, Feitelberg says, produces at least two positive results. "First, the customer gets a more affordable product; and second, the agency spends less to generate that product."
Mapping has another strong advocate in Phil Eifert, whose agency participated in a pilot program to test the Power of Change product. His commercial lines manager and operations manager both attended training sessions on the product, which gave them the tools to lead other agency employees in workflow redesign. A major achievement in this area was a restructuring of the marketing department's new business procedures, based on the work of a cross-functional team with three key players: a data entry employee, a commercial lines CSR, and the marketing manager. Each of these individuals, Eifert notes, brought important strengths and skills to the table. As a result of their efforts, "There's a chemistry (in that department) we've never had before," he says. "It's really fostered an esprit de corps." What's more, he notes, employees in other areas can see the successes being achieved in the marketing department, and that's helping build enthusiasm for and commitment to the Best Practices/CQI initiative throughout the agency.
After successfully completing two workflow redesigns, Eifert says, the two managers began to conduct classes so that all employees could learn how to use the tools. To help streamline operations, the agency installed a computer network and upgraded its workstations, so that now almost every employee has a Windows-based PC.
Best Practices/CQI is serious business at Eifert, French & Ketchum. "We do the entire agency analysis each year," Eifert says. "We complete the Best Practices surveys, analyze the results, and establish priorities. In September of 1996 we developed a strategy document for addressing these priorities."
Growth, change, and challenge
As emphasized in the first installment of this series, Best Practices/ Continuous Quality Improvement is no mere quick fix or public relations ploy designed to change the public's perception of the independent agency system without changing the reality. As we've seen, it's a comprehensive, intensive, grassroots effort to streamline delivery of the insurance product, reduce costs and errors, and build market share on the basis of commitment and excellence. Gone are the days when insurance buyers bought coverage without asking questions or com-paring alternatives. "We no longer have an uninformed, captive audience," Dennis Murphy points out. "Consumers now have plenty of alternatives."
Best Practices/CQI offers agents and companies a set of tools they can use to help ensure that, for savvy insurance consumers, the independent agency system is the number-one alternative. To agents who may hesitate to embark on the "cultural revolution" that must occur for Best Practices/CQI to take root and flourish, our three pioneer agents offer encouragement and advice.
"Best Practices/CQI gives people ownership in the process," Phil Eifert says. "Best Practices methods get everyone involved in developing their own solutions, and provide a track for doing that: 'Here's what other agencies are doing; here are the tools; let's get started.'"
Using Best Practices/CQI to reduce errors and streamline procedures in his agency, Dennis Murphy observes, "gives us more time to grow." To agents who haven't yet signed on to the program, he says: "Don't be afraid. Take it one step at a time. The worst that can happen is that you learn and grow."
And from Joe Feitelberg come these measured words about the initiative in whose creation he has been so intimately involved: "Best Practices/Continuous Quality Improvement will give the independent agency system its best opportunity to survive and thrive. It's a worldwide phenomenon, and the insurance industry must become involved. Agents and companies must be willing to try something different." To this advocate and innovator, the choice is clear: "If you always do what you always did, you'll always get what you always got," he cautions. "Implementing Best Practices/CQI takes time, patience, and perseverance--but it works."
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