Unlocking >£20M in Increased Gross Margin at a Major Health Insurer
The issue
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Shrinking customer base
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13 legacy books and numerous policy variants causing customer and staff confusion
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Operationally complex to manage – high cost to serve
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Existing proposition and pricing created trigger points for customer exit
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Customers not segmented by value
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No differentiated renewal or save strategies
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Not pricing for risk or maximised value retention
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Poor customer journey: passed from function to function, advisors not empowered
Solution
- Designed and executed a pricing, product and service migration of all policyholders to one new modular product
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- Developed new proposition which drove retention of high value customers and higher return from lower value customers
- Built in upgrade/downgrade ‘right-size’ choices to mitigate competitor switching
- Created pricing engine enabling all business to move to NCD-based policies and set renewal premiums to optimise gross margin
- Cut expected IT lead time to launch from 12 to 3 months
- Changed customer communications and management processes to de-risk customer disruption and loss
- Engaged Legal and regulator on ‘automatic renewal’ plans throughout
- Piloted the transition on 2 highest lapse-risk books to ensure error-free process and no adverse increase in lapse rates
The results
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Exceeded the £20Mpa gross margin improvement target
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Reduced customer loss by 25%
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Improved operating cost ratio from 30% to 16% with greatly improved IT flexibility
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Excellent customer and FSA feedback
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Successfully rolled out from personal to SME & Group schemes
Find out how we can solve the key challenges facing your organisation
Leveraging effective negotiation to deliver up to 50% more value for a major international airport
The issue
- Frontline ‘negotiators’ not trained – Teams lacked clarity on effective, strategic negotiations
- Power balance leaning to suppliers – Although the airport had leverage, suppliers secured favourable contract terms
- Costs above benchmark – Costs were identifed as 20% to 40% above benchmark for critical success
Solution
- Benchmarking & Research
- Gained clarity on the as-is situation. Conducted supplier forum
- Build Strategy
- Tenders, direct negotiations, demand management
- Deliver Negotitations
- Reduced costs, and aligned supplier contracts with strategic goals
- Train Stakeholders
- Equipped them with best practices to ensure long-term value in contracts
- Operating Model Change
- Ensured cost savings are locked in the organisation for the long term
- Build Future Roadmap
- So the organisation can use the training and model to deliver further savings
The results
- Training and Development of Client Team
- Empowered the client team with strategic procurement and negotiation skills, resulting in more balanced contracts and enhanced decision-making capabilities
- Client – Supplier Power Dynamic Changed
- Rebalanced power dynamics, shifting leverage back to the client and achieving more favourable contract terms
- Cost Reductions Delivered
- Achieved over $7 million (AUD) in savings and improved negotiation outcomes by up to 50%