Why Deming Matters in Insurance

When it comes to Deming, I have noticed that there are three categories. Firstly, they are superfans like me; secondly, they have heard of him but don't know why he matters; and thirdly, they have never heard of him. According to my conversations, most people I meet fall into the second category. Deming's Journey to Profound Knowledge covers his life and learning journey. I thought a simple overview "Why Deming Matters" series in different industries would be a helpful at a high level to educate people about his management philosophy.

Deming and Insurance

Deming's principles can help insurance companies focus on quality, efficiency, and continuous improvement, leading to better outcomes for both parties. Deming's ideas are relevant to insurance in the following ways:

Reducing variation

A product is made up of many parts and assembly processes. Deming advised companies to minimize variations throughout the process. Insurers and insureds can benefit from this principle by reducing variations in the claims process.

Eliminating numerical quotas and goals

Deming suggests eliminating numerical quotas for employees and numerical goals for managers. Insurance companies can focus on quality rather than quantity by eliminating quotas for salespeople and goals for claims adjusters.

Continuous improvement

It emphasizes continuous improvement in insurance processes to ensure efficiency and effectiveness.

Post-renewal checkups

Deming Cycle, which involves planning, doing, studying, and acting, can be applied to conducting post-renewal checks to ensure the insurance package is implemented as agreed and to address improvement areas.

Claims quality assurance

In claims quality assurance, a dynamic, subjective, and often flexible set of guidelines follows Deming's principles of reducing variation and continuously improving.