Lean Service Ops / Bancassurance

A leading life insurance company turns its business strategy into a reality through transformation management

Our client is one of the largest life insurance companies in China. After a decade of fast growth, it now faces significant challenges. First and foremost, the market has become more competitive; the client’s traditional mode of opening new branches with quick, extensive recruitment followed by significant staff attrition can no longer be sustained. Second, the client’s overdependence on low-margin traditional life products and low-income mass customers has caused its new- business value and margin to lag far behind its competitors’. Third, regulations have become more severe; rules that prevent insurers from selling inside bank branches threaten the client’s bancassurance channel, the source of the majority of its total premium income. Finally, the client has put much less effort into its back office (operations, IT, finance, risk management, etc.) than in the past, and these functions therefore face greater difficulty supporting further business growth.

Approach

We applied a “Realizing Strategy through Transformation” approach. To start, we did a deep diagnosis and designed a new business strategy (approved by the board, management team, and investors) focused on customer centricity and value creation. We also helped the client establish a transformation management office (TMO), now the company’s true change engine and chaired jointly by the top leadership of both the client and the McKinsey team.

We used an integrated, three-part approach to the TMO. First, from a planning perspective, we made a high-level recommendation for how the TMO should be positioned and developed in the company, aligning it with the client’s top leadership team.

Second, from a content perspective, we started with an integrated framework that captured the most significant business areas and management functions urgently in need of change, including customer management, corporate culture, liability and asset management lines of business, and support functions. For areas that needed realignment with overall strategy, such as customer segmentation and operations, we helped design a functional strategy and five-year roadmap for implementation. For businesses needing immediate change, such as bancassurance, we designed detailed recommendations and helped the client pilot these for quick successes and the design of scalable business models.

Third, on capability building and developing the client’s next-generation leaders, we have been directly involved in recruiting staff for the TMO to ensure its quality. We have also been building McKinsey problem-solving skills in the client team through an intensive weeklong training at the TMO kickoff and, on a daily basis, by embedding ourselves among 40 client staff members.

Impact

We have successfully completed the first TMO phase. We built a data capability to map existing customer segments, enabling the client to develop segment-specific product and service strategies that generate higher business value. The client is currently designing a holistic customer management system with data model foundation, analytics platform, and sales support tools.

In addition, we helped the client create its first-ever “management dashboard” for the risk management function; and helped design a new bancassurance business model to address regulatory changes and a new sales engine for the renewal business. The first pilot has more than doubled premiums and significantly boosted productivity in branches. The team is now redeveloping the services and IT backend to sustain the new sales momentum.

Capability-building efforts have been recognized by the client’s president and have become a top agenda item for the client’s next TMO phase, which has already begun, and which we expect to help the client create substantial incremental value.