Becoming the Insurer of Choice in South Africa

Mutual & Federal engineers future agility with SAS^®

Recent world events, coupled with a lagging economy, have forced insurers to develop new business models to keep them competitive in a multichannel industry. To that end, Mutual & Federal Insurance Company, one of the largest insurers in southern Africa, provides insurance service to the personal, commercial and corporate markets in South Africa, Namibia, Botswana, Malawi and Zimbabwe. And Mutual & Federal is currently revolutionizing the insurance industry in the region.

"The truth is, the business model for the industry has been poor, and we as an industry have to change to keep other players from taking our business," says Jan van der Vlugt, Mutual & Federal's group manager of electronic business. "At the executive level in the industry, people are thinking functionally rather than strategically, and IT departments are coming up with inadequate solutions in a new world that requires products and services to be agile."

The key, he adds, is making the right strategic decisions swiftly. The challenge is bringing together – and gleaning real intelligence from – the volumes of customer, supplier and organizational data that are scattered throughout an enterprise. Using SAS Insurance Intelligence Solutions, Mutual & Federal now has a complete package for accomplishing its business objectives and for ensuring that customer relationships, marketing efforts and corporate strategies achieve optimal results – all without having to develop customized data architectures and analytic applications from scratch.

"With SAS' knowledge of all these topics, they can help us develop an architecture that allows us to think broadly so that we can begin to think big and deliver in increments, which is really ideal," van der Vlugt says. "In South Africa, we don't have the skills to build these solutions ourselves, and the cost would be prohibitive if we did. By working with SAS as strategic partners, we have benefited significantly."

Fast Track to ROI
SAS Insurance Intelligence Solutions encompass the SAS solutions for strategic performance management, marketing automation, customer retention and segmentation, cross-selling and up-selling, and claims prediction and procurement. Collectively, the solution includes prebuilt data models, processes and techniques that speed up both implementation and results, providing a fast track to significant return on investment.

"They provide us with the capability, say, to detect the propensity of our motor clients to churn. And they help us look at the propensity of our staff, suppliers or customers to defraud us," van der Vlugt explains. "That's powerful because the worldwide churn rate for motor insurance is 20 to 25 percent, and fraud is estimated at between 20 and 30 percent. So when you shave even a few points off either, your return on investment is certainly improved."

Increasing Share, Reducing Costs
Mutual & Federal's goal is to increase market share while reducing related costs from 12 percent to 10 percent of written premiums. "We could not achieve those goals without the framework that SAS is making available for us," van der Vlugt says. "With SAS, we have a powerful integrated business intelligence framework and we are learning new competencies."

The performance management, or balanced scorecard, component allows Mutual & Federal to gauge cost and ROI as it continues implementing the solution across the enterprise. That gives executive management the ability to determine strategy and streamline processes in a manner that is transparent to everyone.

"We'll have better information, which will make us more responsive to the market than our competitors," van der Vlugt says. "The average turnaround time for claims management in our market spans weeks; we're looking at the capacity to reduce that significantly in an automated world. One could then convert that type of responsiveness into meaningful ROI."

As Mutual & Federal rethinks the way it does business, so must its employees adapt to advances in technology by learning new skills. With the help of SAS and Atos KPMG Consulting, Mutual & Federal is aiming to retrain its 3,000 employees and absorb its 10,000 agents into its massive claims supply chains, while integrating with reinsurance suppliers. "There are a lot of challenges, particularly for human resources and our training department, to cope with some of these issues," van der Vlugt says. "It is essential that one tackles enterprise and industry change, or else one risks failure." While a massive undertaking, the investment will produce a competitive advantage by building a company that operates strategically rather than reactively.

"The challenge really is to gain superior information whether one is looking backwards, making a current decision, or whether you want to do predictive analysis, modeling or scenario planning," van der Vlugt says. "SAS covers all of those aspects and links them all to a higher-level, strategic view of the world, which will make us the insurer of choice in South Africa."

The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.

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