Customer-Centric Digital Transformation: Zurich’s Digital Initiatives for 2020 and Ahead

[0:00]Anchor:

Okay, so thank you for joining us for today’s session on how Zurich digitally transformed itself and what its future goals are. Today we have Tisha Clausell with us, she serves as a vendor performance manager and Gail Mengeling, she is a governance manager. They both work for Zurich Insurance. And, Zurich is a Swiss insurance company, and Tisha, Gill, the stage is all yours.

[0:28] Gail Mengeling:

So we’re going to talk about the journey that we’ve had with HighRadius in trying to transform our cash processing and really then how it had affected our customers and the full customer experience because we were running into some roadblocks. So my businesses are naysayers to risks and change is tough. The second one would be our masterstroke for success, the priority for looking at our customers, and how valuable their feedback was to us. And then our wishlist for the way forward.

[1:03] Gail Mengeling:

Why are business naysayers? So, oftentimes, we all get into a comfort zone, it doesn’t matter if you’re at work or if you’re at home, you get into a comfort zone or routine. And it feels really good. And you know, you heard it maybe yesterday in their presentation with Sashi and Tiger saying that you know, the companies that are really going to continue to move forward are those that are open to change. And we get in our comfort zone, our cozy little blanket, and we don’t want to change, we’ve got our procedures, we’ve got regulation, maybe around our industry and standards. And so we don’t really look for change all the time. But the only way that we’re going to continue to succeed is to push forward and make changes and streamline it. So that was what we did all the time. We actually embrace the lean philosophy. And so it’s really looking for incremental change, to improve and so you don’t have to make a big change all at once, but you can do just incremental change and it will take you further.

Comfort zones are really deadlier than the unknown. If you don’t make a change, there’s going to be a competitor out there that will continue to make the change and will forge forward for their customers. So I moved to the south about four years ago, I was always in the north and when I got to the south, there was this grocery store called Publix and I had never been to a Publix. We don’t have those up in the north. And I always dreaded going to the grocery store. It was like you walked in and you had to grab your item off the shelf, put it in the cart. Then when you get there to the line, you have to take it out of the cart, put it on the conveyor belt, and then they put it in a bag you put the bag it in your cart, you go out to your car, you pick the bag up, you know then you get home you have to put away. When I got to Publix the first time I went through and the store was gorgeous. Right? Everything looked beautiful on the shelves, fresh products, fresh veggies, it all just really looked nice. And so I go through it and I have my shopping experience. I pulled my card up to the conveyor belt, and there was a man there to greet me. And he said I got this premium. And he lifted every single item out of the cart and put it on the belt. And then, of course, I bag my groceries. And then when they bagged them, they put him in. And he immediately grabbed my cart. And he said, “I’ll take this out for you, ma’am”. And he took my car out. And then when we got to the car, he loaded everything in my car. So that experience where I was over and over having to do all of these things. And it was normal, right? That was my status quo. That’s what I did as a consumer. It changed that day. And Publix is a little pricier than the other options I have, I could go to Walmart, the superstore where they have the groceries and they’re cheaper but I would much prefer to go to Publix because that experience changed the way that I feel as a consumer and how I want to spend my money and that’s what Sashi and Tiger were talking about yesterday, folks.

[4:08] Gail Mengeling:

But I think that’s what we embrace in Zurich and, and that’s what we did with our cash operations. So, we kind of broke through our comfort zones, we decided to get rid of the manual work that we were doing around cash processing. And Tisha will walk you through the journey that we took on that. We like to really think about doing experiments and looking at different initiatives on how we can make those small changes and move forward. And all along the way, we were really about involving our customers and really looking at what we can do in this process and how will that make their experience with us better. And so that’s really what we’re trying to do so that they pick us as their insurance carrier over our competitors.

So we decided to go down this path of outsourcing our cash. And so we went to a third-party vendor to do the cash application. That was offshore. And so we got several things from that we ended up with some cost savings, we optimized our working capital, and we increased our cash flow with that move. But there were certainly some challenges along the way when we did this, and that’s when we decided we needed to partner with someone to help us improve even further and where HighRadius came in. And with that, I will turn it over to my colleague.

[5:37] Tisha Clausell:

Hi, I am Tisha Clausell. Can you hear me? Okay. So I’m going to talk about our journey at Zurich and where we started and where we are today. So prior to 2006, we did our cash process and in house and I actually manage that group. And all our cash was done. We didn’t have a lot but we didn’t have a key-in. So my team was responsible for keeping all the data for the checks that came in. And also for our wires and ACHs. In 2006, as Gail mentioned, we outsourced to a vendor, actually in India. And we had to train those individuals on our cash processing that we were doing in the house. But what happened in 2007, we moved from our old legacy system to SAP. So we just had trained his vendor on how to use our legacy system. So we had to learn a new system and train them on how to use it. So that was a little complicated, but we managed to do it. Train the vendor, you may have to go to their location. So you may if they’re in Poland, India or Hawaii or wherever they are, you may have to go to them or they may have to go to you. So we spent time doing the training to make sure that they were up and running. And so that’s how I became a better performance man. So now instead of me having a staff right there with me, I’m governing the work that my team is doing that outsourcing. And in 2009, I worked with my colleague who’s in an audience, to get us lockbox key-in, actually so what we did with that we worked with Bank of America who does the key-in for a lot of us at the time. We were receiving 70% of our checks processed automatically, but nobody had a touch. About 30% of that was processed by my team that was outsourced at that time.

[7:34] Tisha Clausell:

But that wasn’t enough. We didn’t want to stop there. 70% is great, but we could do better. We want to focus on wires and ACHs too. So we learned about a new product called Global advice. And that allowed us to see additional ACH and wired data. So like if a customer does a CTX-ACH instead of them just sending the amount, they can give you the invoice number or a path to detail. The bank was able to let us see that, and my team was able to apply to cash a lot faster. But that still wasn’t enough for us for our wires and ACHs. We also had 100% manual processing for our wires and ACH. And that was done automatically. We didn’t have the bank doing a key-in for that. So we implemented an electronic lockbox and what that did for us, the bank was able to send us a file that at least not SAP system, would apply to payments. It wouldn’t apply to the policy detail, but at least we got the payment in the system, and that avoids us not balancing or may be missing a payment that could occur when you mainly do the processing. But that was still not enough for me. I want to see how we can approve more. So at a conference, I found out about HighRadius and learned about their cash application process, and that was what we implemented in 2016. So next, I will talk about some of the pre automation cash application challenges that we experienced.

Of course, when you have manual processing, some payments may get missed. So we had errors and dunning. So customers were complaining that they were upset that maybe they got it later, but their payment was already in our bank account. But when you have manual people doing it, of course, you’re going to have some delays. So we also had a lack of cooperation with the teams. So we didn’t get the information from the broker on how to apply for that payment. We had to work with our collection, we had to try to obtain that information. And so sometimes that took some time to get the payment process.

[9:36] Tisha Clausell:

So in this slide, I’ll talk about in detail some steps we went through. We had some key items we want to improve with a solution. So we want to improve our time we spent on applying for the payments, time we spent researching, the time we spent on calling our broker for sending some additional information, saying that, “I got this payment, but I don’t know where it applied”.

We have some big brokers, they may be applying, sending money for over thousands of insurance. So if we get a payment from like March, we don’t know they’re paying for my policy or one of your policies without that information, so we had to contact them. So we want to also apply for payments faster. So that’s when we implemented Global Advice. So some of the key benefits were reduced payment time, less contact with our broker, so we didn’t have to call them because we can see in the system now- I’m paying for invoice 1234 versus on the column that I asked them. We also identify how many customers are paying via check, or how many customers are paying via wire/ACH. That was important to us. Because what we want to do is try to encourage our customers to not send a check and maybe send ACH and wire where we can get the payment process faster and the money in our account a little bit faster as well.

The next solution that we’ll talk about is Electronic E-box. And so I know a lot of people may
not have that. But what we did for us at the time, we wanted our payments to get sent to us automatically about a bank and at least post payments to our bank account, and to receive a ledger. So one of the things we had was a 100% manual process, so my team was having to apply everywhere in ACH, into the system first, then it had to go in and move it from the header level and put it to the detail policy level. And we were having some trouble with balancing because maybe they missed it. We may have had 100 and somehow they applied 99 and maybe skipped one. And you wouldn’t know that until you start working on your reconciliation. So that’s why we wanted this E-box that would actually at least get us out of payments and we know exactly how many payments we received.

[11:48] Tisha Clausell:

So we were able to reduce payment postings we were able to allocate, automate our payment posting and our GL ledger was a lot cleaner because we didn’t have out of balance as we had before. And we also reduce some expenses with our outsourcing team, because we didn’t have to pay 10 people to apply for auto payments manually because we get the payment plan initially. Next is the HighRadius solution. With HighRadius, we were looking to reduce the amount of manual key-in. We want to improve our agency’s goals. We want to reduce those customer complaints that we were receiving from our brokers and agents. And we also want to reduce those internal meetings because of course, if the customers are complaining, they’re not just calling us they may be calling our underwriters, our managers. And so then there were internal means to complain about, “Hey, what is this group doing? My broker is unhappy. He said he paid two days ago and he got it later”. So we want to improve that because he wants to get the payments processed on the same day. And with the HighRadius solution, we were able to do that. So that was one of our key benefits.

So we also reduced our bank fees, so we don’t have to pay the bank the key-in anymore, which were fees that were, you know, significant that we were able to reduce. And we also were able to improve customer satisfaction, because a lot of customers were unhappy. After all, they were not getting that soon saying, “I paid you. But I got this later.” But they are not upset anymore. So that was one of the biggest benefits that we received with the HighRadius solution. So we had same day posting, improved customer experience, automated reporting, and more visibility across the workflow. And we were able to reduce the work low on my team. So now Gail will talk about our customer care team that focused on improving our customer relationships.

[13:53] Gail Mengeling:

So the next slide, so this is just an interesting little fact we found. So 80% of executives that are asked how the customer experiences for their customers will say it’s great, right? But only 8% of those customers agree with that, that they’re having a great experience. And another little fun fact is for every one customer that escalates a complaint to you and voices their displeasure with whatever experience they had. There’s 26 more in the waiting room that are holding that thought and not saying anything. So you think about, you know, your sales team is out trying to win business. And every single time they run into a complaint, there’s 26 more that don’t want to bring business to us and so we needed to cut down the noise on this incorrect flow of late notices for non-payment of their premiums. And then, of course, the worst case is that direct notice of cancellation when we tried to cancel their insurance policy, because they hadn’t paid us something and in actuality they had and it was in our account five days ago. That’s really embarrassing and hard to explain. So, just a little fun fact on how important it is to listen to your customers. And so as Tisha said, we kept seeing improvement, but it was never enough. And it’s still not enough, I think, you know, we are now running around 85% of our payments are applied immediately, the moment they come into the bank, but we still have 15% that we can improve on. And so we’re always looking and trying to improve that.

So we put the priority on what our customers were saying to us. And another area that we focused on was- we were getting emails and, and responses and correspondence going to all 50 of my collection representatives, and it would go to their personal email box. So you know, “Hey Gail, I’ve got a problem with what you sent me”, and I would have to reply. The problem was if I didn’t reply, Right? So my customers now sent it to me. They’re saying, I’m upset. And then on top of it, I don’t reply. So we found that we were hearing complaints about that scenario happening. And so we forged forward with a new idea. And we built a team of 10 that we call our customer care team. And they are the initial point of contact, we changed all of our correspondence that was going out the door, we changed all of our letterheads, to have the customer care team show up on it. So just like I fly United Airlines a lot. You know, United Airlines has its customer care team, you don’t get a person’s name ever, right? And we took that same concept and said, “Well, why are we doing anything different in insurance”, we probably need to go down that path. And so we partnered with our vendor, and we used some technology that they had to create a ticketing mechanism, and it actually has some really good reporting in it as well.

[17:00] Gail Mengeling:

So we can see the analytics of where a ticket is at any point in time. And we have already moved from 50% of our inquiries being handled when they were going to those individuals. We’re all the way up to 80%. Now, obviously, I’m sure you got the hint now of the way we work, but that 20%, we’re still going to continue to close it on. That’s really what we want to get to as 100%. And so for the customer care team, in order to set that up, we needed to give them some very clear instructions. We call them the RNR- the roles and responsibilities so that they know exactly which items they can actually handle the first time right now and resolve for the customer. They go through an entire process, when we’re hiring one of these individuals that they are the ones that speak well on the phone, they know how to talk to a customer, to show empathy, to really give that care so that the customer feels like that he reached someone today that wants to make it better for me. They want to give me this experience that I felt at Publix.

And so we give them some very clear roles and responsibilities. If it’s outside of that, they then create a ticket in their system. And they escalate it on to the next representative that actually can handle that type of inquiry. And so we found that to be very successful. And, again, if you don’t think that customer feedback is important, you’re going to miss out on a lot of opportunities that you can do to improve your value stream. And I would very much encourage you to take every bit of feedback and analyze it and make sure that you’re focusing on the root cause of the problem that your customers bring in forward. Sometimes they might tell you one thing, but when you dig into it, you find that there’s something else in the process that was broken before it even reached your team and there are areas to improve. And so I would just really encourage everyone to, to think about that as you’re doing any sort of transformation.

[19:08] Gail Mengeling:

And our future wish list. So we are certainly going very digital. Go to the next one. So we’re putting together some dashboards now. So we’ve got all this data now that we’ve created, not only from what HighRadius does on the cash application but now what we’re doing in our customer care team. And so we need some dashboards that can help us to pinpoint things quicker, so we can even react quicker on those. Obviously, continuous improvement is in our DNA. That’s what we do. We need to be there to cover risks for our customers and help them with their insurance needs. And so we are continually trying to improve on every aspect of that every day. And we will use that data, we will leverage that to continue to drive for improvement and certainly for better customer experience.

Thank you.

[20:10] Tisha Clausell:

So now we’ll help with questions if anyone has some.

[20:16] Questioner:

Does the customer care report to the AR department? Because we have customer service but they’re separate.

[20:23] Gail Mengeling:

Yeah, we need to actually. So yes, this was the customer care team right within our cash and collections of our whole AR group.

[20:35] Questioner:

The cash application project to show is just for the U.S. or you have an alliance in U.A.E.?

[20:42] Tisha Clausell:

But right now it’s just in the U.S.

[20:50] Questioner:

[Inaudible]

[21:08] Tisha Clausell:

No, it was actually standing. I think we heard about it at a round table. So we didn’t know that the bank offered that service. And when we heard about it’s like, “Oh my god, this sounds so great”. So we were together to get it implemented. And we were getting so much data that we didn’t know that was available to us. So the customers already were sending the invoice thinking, “Hey, Zurich knows this. I’m sending my stuff. But we never were receiving it because we didn’t have global rights. But in global advice, we got a lot of customers that sent CTX and we got the invoice and it tells you that invoice ABC is paying $1,000, DEF is paying $10,000. So now we can apply better and faster. Any other questions?

[20:48] Gail Mengeling:

I think it’s frustrating for that customer. So every single time we were calling them saying, “You didn’t give us any data ”, and they’re thinking like- what is wrong with this service company. So, again, that feedback really helped us to continue to dig until we found that through the roundtables.

[22:07] Questioner:

So my senior when she implemented electronic lockbox back then, all that data set over uniformly, the ACH, checks, and wire.

[22:18] Tisha Clausell:

Well, what happened with the electronic lockbox but we got the payment, we still didn’t get the detail and that was why we wound up going with HighRadius. So we got the payment, we can see the details in Global Advice entry and enter it manually ourselves. The electronic lockbox allows us to get the details. That’s what we wanted with that. And so at that time, our bank wasn’t ready. And so we did at least that step to get the payment portion, the header information then we went to HighRadius to get that detail put into the system.

[22:51] Questioner:

So, what is the difference in the electronic lockbox?

[22:58] Tisha Clausell:

So the electronic lockbox, what it does for us is that we get a file from a bank, and we can feed it to the SAP system. And so automatically it lists all the payments in our system, so we don’t have to enter notes manually. So before it was two steps, you have to enter the payment. And then you also have to enter with a scholar broker report that applies to detail. So before the electronic lockbox, my team had to do both steps- they would do answering the payment first, and they had to go in and do the detail, which is two separate steps that took time. So once we got the electron lockbox, we got a file from the bank that automatically posted the payment. So now we know that we have auto payments, so we got 100 center banks that handle the system automatically. Whereas before, I would have to reconcile and make sure my team did not miss a payment. And there were times where they did because it was manual. So maybe we get 100 as I mentioned before, and they only applied 99. And we didn’t figure it out until maybe a month later that, “Hey, they forgot to enter their payment, now go and enter it”, so that customer could have been affected by that because it wasn’t entered time like so that was key for us to have that electronic lockbox.

[24:06] Questioner:

So you tried to have your electronic lockbox on SAP. Did you do any changes when your lockboxes went straight into hiding?

[24:15] Tisha Clausell:

Yes. So now what we do. So initially, before we hit HighRadius, we would just put it to SAP. Now, we get the file from the bank we sent to HighRadius. They enhance that file and include the checks, wires, and ACH and send it back to us. So we still got the electronic lockbox but we compile all these details. This is a new file with everything together.

[24:44] Questioner:

So one of the choices infiltrated HighRadius or came to your system and you had ideas and saw how to work with the Treasury department. Right? So you found how HighRadius works and Treasury works. Is it a copy or something?

[25:00] Tisha Clausell:

Actually, our account is more accounts payable department, asset accounting. They get a BAFL tool that works separately. So you can do it both ways. So we don’t have to send anything to them. The bank sends them according to the county needs and we just get the file from HighRadius that we need.

[25:21] Questioner:

So your bank is Bank of America. Do you have other banks too?

[25:24] Tisha Clausell:

Right now, this solution is just for Bank of America.

[25:32] Questioner:

So you have the cash app process where it’s just purely posting cash if you’re mainly able to take it. You had a couple of solutions with HighRadius. But then you said further like another layer within that is applying the cash to like a specific policy or details within there which still require the manual labor, the electronic lockbox didn’t take care of that. So when you work with HighRadians, was there design A.I. or bots that took care of that second layer?

[26:06] Tisha Clausell:

Yeah. So we already had some rules, which was good. So I wrote down rules in one of the lockboxes. I shared those rules with HighRadius. We went to several sessions, we have to blueprint, you know, states like she’s going through right now. We had the blueprinting phase, we had the testing phase. So they wrote rules specific for Zurich. And they’ll write rules specific for your company where we have policy and invoice, you may have other different categories, but they have rules to say, for example, the policy comes with seven digits, we need 8 digit policies, they pin the leading zero and make it according to what we need, and they’ll add that to the file and send it to us. So you’ll have a lot of time to figure out what rules work best for your company. And then you’ll test it, you get your proof of concept saying- this will work. That was what was key for us seeing it where we sent them some invoices. And all our customers don’t send invoices, some people send us emails, some people send us to excel, some people send a PDF, they are able to use all those different categories and still process to work for us.

[27:15] Questioner:

So yeah, the subscription is one time or is it monthly?

[27:21] Tisha Clausell:

So, I think that maybe the same for most people. But there’s a setup fee that you pay to set it up. Then after that, you pay a subscription fee. That to keep it monthly.

[27:38] Questioner:

One part of obviously like my company is to reduce the 80s. So you said we’re having a piece of the digital age, we were able to get away from it.

[27: 52] Tisha Clausell:

Yeah, so with our solution, we were able to eliminate the key-in with the bank for the lockboxes that we’re going to tie us with the SAP system. So we don’t do any of that key-in anymore. So we went to reduce that completely for those particular lockboxes for the SAP system. Now we do have other lockboxes that are not on the HighRadius solution because they are part of different steps because our departments here have different business units. So that’s separate from that. So the bank does key-in for those lockboxes for them but with the solution, we don’t do that anymore. I do a scan and check and send that file with the image and a check detail that goes to HighRadius and they read it. And for the wires and ACHs, they get the electronic lockbox.

[28:36] Gail Mengeling:

And I’d say one more thing and we didn’t really have it on this slide. But when we first started going down the path. We found that we had eighty-four lockboxes and stuff. And it was insane. Like every time one of our business units in the field at a location. You know they say well I want my location in Pittsburgh to have a lot of lockboxes so I know what they’re doing. And then I want to know what Denver is doing and Dallas and they would set up new lockboxes every single time and we were paying that every month, but we reduced from, like I said, like 84 lockboxes down to, I think we’re two now. Right?

So there’s definitely steps in that process to where we’ve been incremental.

[29:28]Anchor:

Okay, perfect. I just want to announce that this session has officially ended. This room is free. If you have questions for Gail and Tisha, you can stick around but there are panel discussions and more sessions on the field right before lunch.

Okay, thank you, guys. Thank you both.