Client Scottish Provident UK Challenge When Scottish Provident embarked on a major business change – moving out of the pensions market to focus on its core business of protection policies – it needed to review and re-style its internal processes and systems. Solution CSC worked closely with Scottish Provident for two years to re-engineer its processes. Together, Scottish Provident and CSC re-engineered the entire business, replacing outdated and inflexible processes with a business and technical infrastructure that no longer constrains development within its chosen market. Results Market share up from 5 to 30 per cent Costs cut by 40 per cent Greater choice for customers Reduced time to market Business users in control Multiple integrated channels Real time quotes Automatic issuing of low-risk policies. For more information: To learn more about CSC's offerings, please contact us.

When Scottish Provident embarked on a major business change – moving out of the pensions market to focus on its core business of protection policies – it needed to review and re-style its internal processes and systems. It worked with CSC over a two-year period to define and then refine the way Scottish Provident administered its lifestyle-based products.

Edinburgh-based Scottish Provident was formed as a mutual society in 1873. Today it has 1.2 million policyholders paying some £50 million in premiums a year, and 1,200 staff. Until recently, the society sold life policies and pensions. However, the wave of change within the financial services industry led to a radical re-think of its whole business ethos: what was it trying to sell and to whom.

“About four years ago we looked at what we needed to do. We’re not a huge company in life insurance company terms and it was clear that we couldn’t offer products in every market so we saw we needed to specialise,” explains Ralph Seymour Jackson, Scottish Provident’s Head of Operations.

Scottish Provident set about focusing all its resources on one element of its business. Its aim was to increase significantly its share of the lucrative protection policy market – life cover, critical illness and other products that are geared to offering customers protection against mishaps, illness or death. But such a focus was not without its challenges, as Ralph Seymour Jackson puts it: “As we only do protection policies it means we have to be the best at it.”

Win-Win Strategy
Scottish Provident’s underlying strategy was to market a new product – Self Assurance – that matched the changing lifestyles and needs of its customers. “People’s lifestyles change,” explains Ralph Seymour Jackson. “They may initially buy a mortgage protection policy then, if they start a family, they may want cover to ensure there is money if they become ill, or die. As their disposable income increases they may move house and get a bigger mortgage – or they may be left money and pay off a large part of the mortgage, and so no longer need the same level of protection.”

Scottish Provident wanted to build total flexibility into the system. The aim was for its customers not to end up with 15 different policies but one policy – one that would change over time to meet their changing needs. “Historically,” says Ralph Seymour Jackson, “you threw away your old policy and bought a new one. We believe a policy should be a menu of things you pick from and, as you go through life, you should be able to change that menu. You shouldn’t have to incur costs by starting again. This is win-win.”

Business Challenges
To administer such a scheme, however, requires a complex administration structure, as Andrew Kennedy, Scottish Provident’s Head of New Business explains: “We launched our Self Assurance range in 1996. It was an innovative product and at first we managed using the old systems and processes but we didn’t have a system that could support the more advanced lifestyle products.”

“Under the old system, policyholders could take a maximum of four elements – we wanted to offer an infinite number, but needed the system to administer it,” he adds.

The business had to meet other challenges. “We launched the product because we were looking to improve customer service, increase market share and cut costs. So it was also important that we explored different distribution channels such as the web,” explained Andrew Kennedy. But meeting the real time demands of the web-based direct channel meant the organisation had to ensure it could provide equal quality of service through traditional routes such as a call centre or IFAs.

Partner Organisation
To achieve this, Scottish Provident began looking for a partner organisation – one that could not only deliver the technical solution, but one that could help it re-engineer its processes and fit within the working styles of the organisation. Five suppliers started in the frame but it soon became clear only one was able to meet all the requirements: CSC.

CSC Associate Director, Christina Gianfrancesco, says: “Scottish Provident did an evaluation of who could best help. It wasn’t simply a question of supplying a software product; the company was looking for a partner relationship with an organisation that understands the needs and pressures of the financial services marketplace. It also wanted an intuitive system that could launch new products very quickly enabling Scottish Provident to react immediately to any developing market trends.”

Scottish Provident was precise in its requirements. The solution had to be flexible to enable new products to be brought to market quickly – it had to support a range of delivery channels and it had to reduce costs. “CSC had a product that could be customised to meet our needs,” explains Ralph Seymour Jackson. “That product was GraphTalk® A.I.A.”

CSC worked closely with Scottish Provident for the next two years to re-engineer its processes and tailor GraphTalk A.I.A. Christina Gianfrancesco adds: “Together, Scottish Provident and CSC have re-engineered the entire business. Outdated and inflexible processes have been replaced by a business and technical infrastructure that no longer constrains development within its chosen market.”

Speed of Response
With GraphTalk A.I.A, Scottish Provident can now automate many of its processes. For example, once a client has filled in an application form – as long as the answers fall within set parameters for risk – it can be accepted and a policy issued without human intervention. Previously each application had to be sorted and assessed by hand.

But the big benefit of GraphTalk A.I.A is that those parameters can be changed by business people without the need for input from IT specialists. This ensures changes in the law, in market trends, or in actuarial assessment can be instantly reflected in the GraphTalk A.I.A model without the need for costly and time consuming reprogramming. New products can be brought to market quickly gaining a crucial competitive advantage. The computer system isn’t the critical path for reacting to the needs of the market.

“We wanted to be able to enhance products or create new ones very quickly. This was a factor in the choice of GraphTalk A.I.A,” adds Andrew Kennedy. “In fact, the only viable option was GraphTalk A.I.A.”

Meeting the Strategy
Scottish Provident can now use a variety of marketing channels – call centres, the web, and IFAs – to give customers immediate quotes. Customers also gain from greater flexibility over the products they buy. With the price reductions resulting from increased competition, the cost of such policies has dropped between 10 and 20 per cent over the past four years.

Scottish Provident has now been selling its flexible lifestyle product for over a year and it’s a strategy that is working well. When the system was launched, the organisation was expecting something in the region of 1,000 quotes a day. It has since handled 25,000 quotes in a single day. The result has seen Scottish Provident’s share of the protection market grow from five to 30 per cent.

“CSC was the only company able to give us both the products and the expertise to achieve our aims. As a result, the centralised and automated processes have decreased our costs by 40 per cent. We had already achieved 35 per cent cost savings by switching from a paper-based system to workflow (using CSC’s product, Automated Work Distributor – AWD) so we were looking to make savings on an already fairly efficient process. The evidence is that we shall achieve this – and more. That’s pretty outstanding,” says Andrew Kennedy.