Endowment Queries - Solutions - June 2006
MEDIA INFORMATION 30 June 2006
ENDOWMENT INSURANCE PROVIDERS ALERTED TO IMPENDING IMPACT ON THEIR OPERATIONS FROM DELUGE OF FINAL MORTGAGE ENDOWMENT CLAIMS
- Two million borrowers still to claim compensation for potential mis-selling of endowment policies
- OEE are alerting endowment insurance providers to the potential impacts of this deluge in claims on their ability to maintain acceptable service levels
- The Financial Ombudsman Service (FOS) may become involved if providers fail to deal adequately with complaints
- Forward thinking providers are preparing for the surge in demand and embedding best practice into their operations.
- Following operational changes some financial services businesses are improving their process efficiency by a factor of four, and avoiding the need for outsourcing
With over two million UK borrowers still to claim compensation from their lenders with respect to the potential mis-selling of endowment policies, and with the possibility of action under consideration by mortgage claims specialists to allow those who have become ‘timed barred’ still to claim, operations improvement specialists OEE are alerting endowment insurance providers to the potential impacts of this final deluge in claims on their ability to maintain acceptable service levels within their affected operations.
Graeme Fry, Director at OEE, said: “We work closely with many of the leading endowment insurance providers. Research we have undertaken with them has highlighted that some life insurers have already experienced a five-fold increase in regulated complaints over a period of six months. With the anticipated late flood of complaints, this type of situation could be just the tip of the iceberg.
“We are finding that whilst many businesses prepared for the initial increase in claims following the regulatory review of endowment selling, many are not forecasting, or preparing appropriately for the massive final deluge of claims that is anticipated. Some organisations have responded by putting in place temporary processes, including expensive outsourcing to external agencies.
“However many of these arrangements are not robust or effective and will not adequately deal with the potential demands. The result of inadequate preparation is the potential for operations departments to be swamped, with large backlogs building up and lead times for decisions extended to the point where even higher levels of complaints may be generated and significant additional costs incurred.”
With the potential for the Financial Ombudsman Service (FOS) to become involved if endowment insurance providers fail in their obligations to deal adequately with complaints from borrowers, a number of the leading providers are taking a more strategic view of their operations around this issue. Many are taking the opportunity to prepare comprehensively for the impending surge in demand whilst, at the same time, working to embed best practice into their operations to improve long term efficiency and effectiveness.
Graeme Fry said: “We are advising a number of forward thinking organisations to help them introduce key operations management techniques that will enable their operations to more accurately identify the demand profile. We are also helping them to resource this effectively to meet the regulatory service level obligations, and to do this in a much more efficient fashion through process redesign and robust performance measurement.
“The key elements of this work include building and implementing improved demand forecasting models to more accurately anticipate future demand volumes. It also includes redesigning work organisation and workflow within the operation without expending major investment in capital expenditure or introducing major new IT investments. Many of the approaches we are advocating are utilised in the manufacturing sector where robust methods of dealing with major peaks in demand have been developed.
“Using these approaches some financial services businesses are finding that process efficiency can go up by a factor of four, and the need for outsourcing can be eliminated. A number of major banks are saving several millions of pounds on an ongoing basis by eliminating outsourcing in this area. Lead times can also be more than halved and, very importantly, contained within regulatory guidelines. In addition operations can flex capacity to meet additional demands with no backlogs.”
For further information, please contact Garry Hague at Paratus Communications
Tel: 01375-480844 / 07795-644284 | E-Mail: ghague@paratuscommunications.com
