Ready for the future with the right organizational design

By News, Organizational transformation

A (re)design of the organization accelerates the realization of the (digital) strategy, provided that it is properly tackled and implemented!

Do you recognize the feeling that the current organization prevents you from realizing strategic goals and plans for the future? Do you feel that tasks and responsibilities are sometimes divided in a superfluous or completely fragmented way, or that they’re not divided at all?

With changes following each other at an ever-increasing pace (digitalization, in- or outsourcing of business units, or disruptive innovations), having the perfect fit between the organization’s design and ambitions is a growing challenge for organizations. The moment your organization does not adapt to internal and external developments, you create organizational debt: an ever-growing heap of changes the organization should have implemented but hasn’t.

Establishing and implementing a successful organizational design requires a thorough process in which management is actively involved. This article shows you how to establish an optimal (re)design in four steps (see figure 1) and describes decisive success factors.

Phase 1: Designing the organization encompasses more than drawing an organization chart
A frequently heard statement about the design of an organization is, “We already have an idea of the organization chart, so all we need to do is draw and include the people.” A missed opportunity, if you ask us. An organization’s design process requires a lot more than knowing who will be in what place. It all starts with understanding why the current setup of the organization has a restrictive effect on realizing the strategy. The result is a shared sense of urgency.

After that, it’s important to determine a direction by establishing starting points and translating these into design principles. Not only do these principles ensure a consistent course when (re)designing, they also provide a clear, explainable story as well as a mainstay for future decisions. With this context in mind, a core team joins forces to create a clear outline of the desired design, including required functions, responsibilities, and processes.

Organizing the design process like this with one of our clients in the insurance sector made it easy for us to settle difficult (political) issues and discussions based on content at a later stage in the process. This didn’t result in a simple drawing, but in a well thought-out organizational design.

What does it yield?

  • Objectives and frameworks for what can and can’t be changed
  • Clear design principles with starting points for the (re)design to direct choices and to let ratio predominate over politics
  • A detailed design that goes down to the team and business-function levels so all activities are included
  • A clear division of tasks and responsibilities (RACI) and associated objectives (KPIs) so as to clarify how the various teams contribute to the organization’s ambitions
  • All relevant input for drafting a request for a recommendation for the works council to complete an efficient consulting process with the works council

Phase 2: The impact of the design goes far beyond FTE numbers
Major steps need to be taken before the new organizational design is also the new reality. A typical statement in this phase is, “Our new organization chart says a lot about the changes going on in our organization, but the real impact is evident at the level of the individual employee!” It’s because the employee can end up elsewhere in the organization, needs to work in a different way, or is assigned other responsibilities.

To ensure this goes as smoothly as possible, it is crucial to determine the impact of the organizational design on people, processes, systems, physical design, and management. Devising all this helps draft an implementation plan.

Logically, it requires the involvement of several parties within the organization – for example, for cost centers, physical design, and FTEs. To tie all parties and components together, it’s useful to designate one directing party.

At an organization in the financial sector, for example, we put HR in charge. This resulted in an overall picture of the impact, in all parties being the true owners of the IST-SOLL transitions in their respective fields, and in a grip on interdependencies.

What does it yield?

  • Impact on formation (FTE), functions, competences, and way of working, included in IST-SOLL overviews, so as to see the required changes
  • Insight into the way in which the IST-SOLL transition impacts existing processes and systems within the organization
  • Concrete and time-bound implementation plan so as to be ready for a proper rollout in phase 4

Phase 3: Decision-making is the result of a solid process rather than an obstacle

A question we often hear at organizations that want to realize a new organizational design is, “How can we complete the consulting process with the works council in a smooth and effective way?” Organizations that involve the works council at a later stage often encounter a huge heap of formalities as well as delays in decision-making. This means the desired implementation can’t take off until later, resulting in higher costs and a lower return on investment.

Rather than considering them an impediment, you should involve them early on and collaborate properly so you’ll have a good brainstorming partner. When working with a client from the retail sector, we contacted the works council as early as in the design phase, which initially yielded a surprised response. During the process, however, they also noticed the difference. This approach turned the works council into a constructive partner rather than an obstacle. We were able to test any choices made early on, which, in turn, provided additional insights. Ultimately, we used these to increase support. Moreover, this approach resulted in a fast, smooth, and timely consulting process.

In other words, involving relevant stakeholders at an early stage helps you create support for the organizational design and, on top of that, acceleration during the implementation. Organizations which, for example, involve the works council at a later stage often encounter a huge heap of formalities as well as delays in decision-making. This means the desired implementation can’t take off until later, resulting in higher costs and a lower return on investment.

What does it yield?

  • Grip and influence on the main stakeholders in the decision-making process to complete the process smoothly
  • Support for the new organizational (re)design among the various stakeholders, which supports the spreading of the story to the organization
  • Constructive and efficient consulting process with the works council, which contributes to a good relationship and a higher quality of the (re)design

Phase 4: Implementation determines the success of the organizational design

Often, the previous phases have already taken quite some time and effort, while the actual implementation still needs to be performed. A frequently asked question is, “How do we ensure the design lands successfully in the organization?”

For one of our clients in the banking sector, we made the conscious decision to approach the implementation in a positive way with a lot of energy. Freeing up time and capacity throughout the organization, paying great attention to communication, and celebrating successes ensured that the implementation became part of everyone’s job.

Making sure a new (re)design lands well forms the key to its success. In doing so, paying attention to how the message is conveyed is at least as important as the message’s content.

What does it yield?

  • Employees understand why the change is taking place as well as what it means for them and can therefore contribute to the transition
  • Grip on the execution of the implementation plan from phase 2, ‘Determining Impact,’ so the transition proceeds in a controlled manner
  • Ownership among internal stakeholders for the realization of a transition and/or implementation plan, so everyone contributes actively to the transition
  • A dialogue with the organization on the progress of the implementation, so there is a constant stream of input to tighten up the implementation plan

Success factors for the (re)design of the organization
You can’t roll out the four phases overnight. For many, the thought process surrounding the (re)design of the organization seems to be the biggest challenge, but the real challenge is to pay attention to the content as well as the change process and the way people are affected. This can be realized using the following eight success factors:

  • Create an organization-wide understanding of the mismatch between strategic ambitions and the design of the organization and the underlying causes
  • Use design principles to ensure that rational substantiation predominates over politics and pragmatism
  • Include responsibilities (RACI) and objectives (KPIs) in the new design
  • Put one party in control of the change process – from head to tail, from design to implementation
  • Have a compact, diverse, and content-focused working group research the design process content-wise
  • Involve the organization actively in the change process, but only communicate about content-related changes and impact after final decisions have been made
  • Involve stakeholders who play a role in the decision-making process (works council, supervisory board, et cetera) early on
  • Map out what needs to be done to ensure the new organizational design lands successfully and incorporate this into a roadmap

All this takes time, but you’ll regain it because the implementation will actually work and land in the organization. Taking shortcuts and opting for a sloppy process often boomerang in the form of poor support, delayed decision-making, and an incomplete execution of the strategy. A good preparation and well-considered steps lead to a first-time-right implementation.

Distinctiveness of IG&H: what can IG&H do for you?
In addition to adopting a thorough and proven approach to achieve an organizational (re)design that is supported, we tackle every organizational transformation based on our Make Strategy Work principle. We believe that any transformation only has a true chance of success when there is a balance between content, process, and people. We consider an organizational (re)design to be a part of the overall (digital) organizational transformation – not an isolated component. Such a transformation requires the integration of various competences, which is an area IG&H specializes in – from leadership development to innovation, from process optimization to culture change.

Contact
Peter Hardy
E: peter.hardy@igh.com
T: 06 509 29 204

Eline Reurik
E: eline.reurik@igh.com
T: 06 187 45 737

Stijn Driessen
E: stijn.driessen@igh.com
T: 06 381 62 289

2019 – Q3 | Mortgage market revival

By Banking, Mortgage Update, News

Utrecht, November 7, 2019 – The revival of the mortgage market results in the best third quarter since 2007. Mortgage revenue grows across the market by 15.1% compared to the previous quarter to €28 billion. This marks the market’s recovery from the shrinkage in the first six months of the year.

“The strong third quarter ensures the market comes close to the level of top year 2018 on an annual basis,” says Joppe Smit from consultancy firm IG&H. Revenue growth in the past quarter is caused by a rise in the number of mortgages as well as a mortgage loan increase. Compared to the second quarter, the number of mortgages increased by 12.8% to 85,000. The average mortgage loan rose to a new record high of €324,000.

Download the IG&H Mortgage Update (in dutch)

Growth among first-time homeowners
Remarkably, the number of mortgages among first-time homeowners also increased (+1.8%), while revenue even rose by 17.2% compared to the previous quarter. This is caused by a strong mortgage loan increase for first-time homeowners. “A possible explanation is that first-time homeowners are older, which means they can afford a higher mortgage loan,” says Smit.

Existing homeowners remain the largest group of those who take out a mortgage with a 46% share. Furthermore, those taking out refinancing and additional loans once again contribute significantly to the growth of the mortgage market (+ 16.5% compared to Q2). Therefore, this group continues to grow, which means it is increasingly important for mortgage lenders to focus on it.

Growth in market share of ABN AMRO and Florius
The market share of banks as a whole, as well as that of the Top 3 Bank Holding, grows at the expense of investment funds enabling non-bank lending. With a 65.9% market share, banks reach the highest market share since 2013, despite a shrinkage of ING and Rabobank. Determining factors for this growth are the increase in banks’ market share among those taking out refinancing and additional loans as well as the substantial growth of ABN AMRO and Florius in the past quarter. A possible explanation is that ABN AMRO has an above-average share of production in the growing group of those taking out refinancing and additional loans.

You can read more about these developments in the appendix, where you can also find the Mortgage Update. We hope you enjoy reading it and welcome your response!

Sincerely,

Joppe Smit
Director at IG&H
E: joppe.smit@igh.com T: 0031 6 2035 2438

IG&H Mortgage Update – authors & data analysis performers:
Niels Roelofs (niels.roelofs@igh.com); Annelies Stemfoort (annelies.stemfoort@igh.com)

How process mining and low-code increase flexibility and reduce costs

By News, Technology

Many organizations are facing exciting challenges as a result of increasing digitalization. To stay relevant, it’s ever-more important to quickly respond to new opportunities. Unfortunately, old IT systems, entrenched organizational structures, and outdated outsourcing contracts usually offer little room to properly respond to such opportunities. The combination of the ‘Superfluid Enterprise’ concept and IG&H’s unique ‘Make Strategy Work’ approach helps solve this challenge.

According to leading research and consultancy firm Gartner, companies currently spend 80 to 90 percent of their IT budget on maintaining their existing systems. To increase differentiation, innovation, and flexibility, it is recommended that this percentage is reduced to approximately 50 percent. Additionally, the organizational structure of most companies is mainly focused on maintaining the status quo. As a result, it is often unable to move along with the market in a sufficiently flexible manner.

In their value discipline model, Treacy & Wiersema state that an organization should perform in at least 3 areas. These are:

  • Operational excellence
  • Product leadership
  • Customer intimacy

In other words, for an organization to be viable, its customer friendliness, its efficiency, and the quality it provides should be sufficient.

As these areas are opposing forces, Treacy & Wiersema state that the organization needs to pick an area in which it wants to excel and make a difference.

However, as a result of increasing digitalization and technological innovations, the Superfluid Enterprise doesn’t have to choose. It excels in all these aspects!

Why is this relevant?
IG&H’s proven approach ‘Make Strategy Work,’ combined with the modern technologies that facilitate the Superfluid Enterprise, redesigns the organizational structure while tackling IT challenges. As a result, flexibility is increased and costs are reduced. This leaves more money and resources for differentiation and innovation to pursue new market opportunities.

The Superfluid Enterprise is based on two core technologies: process mining and low code.

What are the benefits?
Combined with a new look at business operations, Process Mining provides a clear picture of how your company is currently functioning. Sometimes, the outcomes may be little painful at first, but they’re always instructive. Also, remember that competitors are in a similar situation. By way of illustration, according to you, how many processes follow the standard-defined step-by-step plan in your organization? When we ask this question, the usual answer is 80 to 90 percent. In reality, the percentage is nearly always lower – sometimes even as low as 8 (!) percent… This (significantly) impacts your operational costs and lead time, as well as customer experience and satisfaction! This insight is provided by hard data gained through Process Mining. However, it’s perfectly possible to start in places where your gut feeling tells you a certain process could be improved.

Based on those hard data, you can start by improving individual processes, which will result in an improvement of the entire business process. Subsequently, it is possible to look beyond individual processes to determine a company-wide approach. Therefore, the key is to first break the familiar vicious circle, indicate points for improvement in small chunks, and demonstrate success, after which you can include the organization in an overall business improvement.

In addition to staff instructions, this improvement often requires adaptation of (existing) software. By using low-code technology, the maintenance costs for applications can be reduced step by step while delivering the required changes and additions. This makes it possible to keep using your old systems while quickly adding new functionalities at low cost from the start. No need to throw your existing systems out of the window at once – you can reuse them and phase them out step by step (this is also referred to as application rationalization). This results in major cost savings and allows you to safeguard your current operations as well as reduce risks.

Low-code also provides a solution to the risks, costs, and lead time of replatforming, as well as the discontinuation of certain packages/subscriptions. Moreover, it solves the issue of a supplier acting like a monopolist (working with unconscionable contracts). It takes less time and reduces the risks of errors while adding new, required functionality, which would take considerably more time during a replatforming project. In addition, it will also be cheaper to upgrade standard software packages used by the organization to a newer version in the future (for example, SAP Hana), and user license fees can often be reduced.

How do I get there and how do I go about it?
Your company can only be successful if it can respond effectively to the continuous changes in the market. Therefore, it’s very important to start by organizing processes in an optimal way: hire or build the right skills and experience.

In doing so, it is essential to clarify the leadership role that management needs to play in the various parts of the process. One thing is certain: an orchestration role will become increasingly important within your organization. For example, which products and services will the organization purchase, what will it build, which subscriptions will it take, and what will the company integrate?

To help make the right decisions, we use Process Mining tooling, supplemented with developments by our data science experts. The use of existing data will provide insight into how your processes actually go and help identify good potential starting points for the continuous improvement process. As mentioned, in reality, your processes often differ quite significantly from the way in which they were written down.

This instantly creates an impact list and a hard business case to make the required change negotiable in the organization. Now that you have a clear visualization as well as figures, this is a lot easier than before. Good to know: the number of interviews required to properly chart the organization is thus greatly reduced, so you can achieve results faster and with less interference of day-to-day operations. A few interviews with key individuals in the organization so as to get access to data and discuss connections will suffice.

These steps form the foundation for the transformation to a Superfluid Enterprise. Alternatively, you could, for example, start from a new business opportunity or a (major) system’s end of life notice. In all cases, it’s important to have the right partner on board that possesses all required knowledge and experience while being small enough to operate as a single company. This is what makes IG&H unique, and it’s the reason why major financial service providers, retailers, and healthcare institutions, among others, make us a preferred partner increasingly often.

Next steps
Who will realize the first successes in the organization? You can, for example, deliver a working prototype in a pilot – a so-called minimum viable product (MVP). In this case, priorities are determined based on impact, considering the departments and processes in which the highest profit can be made. With the right people, the right focus, and our support, it is easy to take the first step towards a Superfluid Enterprise!

Want to know how this could work for you? Feel free to contact Aernoudt Bottemanne to explore your opportunities.

Written by Tom Jongen, data scientist, and Aernoudt Bottemanne, technology & innovation director

Consultants deem innovation of income products necessary

By Insurance, News, Pensions

The income insurance market is becoming more complex due to the growing focus on sustainable employability. Yet according to consultants, insurers mainly concentrate on standardization. A mismatch between customer demand and product offer is brewing. IG&H spoke with several market parties in the insurance sector and provides concrete tools for product innovation.

It’s undeniable: currently, ‘sustainable employability’ is a trendy term. But the attention it receives seems appropriate. Not only should employers get a grip on the (financial) risk of rising absenteeism, the tight labor market also forces them to double down on being a good employer. This is difficult, so employers expect ‘customized’ support. At the same time, insurers focus on simplicity and cost reduction, which leads to less innovation and more homogeneity. As a result, income solutions tend to be suboptimal, and not all employers can realize their ambitions.

We’ve observed three axes for product innovation:

  1. Sector differentation

Conversations with employers have shown that their needs often depend on the sector in which they operate. Of course, all insurers use sectoral premiums, but other than that, consultants still find the sector-oriented offer insufficient, despite the success of (former) ‘pension subsidiaries’ Loyalis and NV Schade. For them, the sector approach results in lower premiums, less absenteeism, and a higher penetration rate.

What elements does such a sector proposition consist of? We’ve listed the three main ones:

  • Insurance conditions focus on the collective labor agreement (which is especially relevant to the WIA (Work and Income Act) supplement), so employees’ financial risk is optimally covered.
  • Additional services are focused on a sector’s issues. This starts with targeted solutions for the main causes of an inability to work, but it can be expanded to other relevant HR domains. An example includes services which promote older employees’ labor mobility.
  • An attractive risk profile is created by a broad inflow (via covering agreements or even collective labor agreements) and by building unique data on a well-defined group of companies. The result is that premiums can be reduced and/or returns can be increased.

Most sector propositions have been created by building reactively on a solution for one customer. But it’s also possible to adopt a proactive approach. In that case, a sector is selected based on several criteria (such as scalability, the collective labor agreement, available data, commitment to the sector), after which a proposition is created with specialized consultants. Not as a replacement for the existing offer, but as a valuable addition to it.

  1. Premium differentiation

Usually, premiums are determined based on historical absenteeism data. As a result, premiums are volatile and investments in vitality barely pay off. On top of that, the use of sectoral premiums means SMEs are ‘punished’ for absenteeism at the companies of competitors/colleagues. Of course, the ‘MKB Verzuimontzorgverzekering’ (absenteeism unburdening insurance for SMEs) will lead to premium stability, but it will ultimately have a price tag. Therefore, we believe that a more ‘customized’ premium contribution rate has potential for many employers, both small and major. Not to refute the solidarity principle, but to make investments in a healthy company more worthwhile.

Insurers struggle with the use of predictive data. The challenge lies in legal limitations and the complexity of data warehouses, but also in the unfamiliarity with the predictive power of customer and risk data. A good first step to detecting predictive elements is to have consultants and insurers bring together anonymized data. Historical absenteeism data don’t have to be abandoned: the flexible premium model forms a great intermediate alternative. In this model, historical absenteeism determines the basic premium, and the premium surcharge depends on investments in sustainable employability and short-term results (such as a reduction in absenteeism and lifestyle changes).

Furthermore, consultants believe a vitality budget may encourage employers to pursue a more conscious policy. Of course, the amount may depend on the scope of the contract and the risk profile. If the effectiveness of investments is proved, this can be translated into a premium discount.

  1. Flexibility of conditions

More and more often, an insurance is the closing entry of a vitality solution, and the conditions hardly vary between insurers. Consultants believe more flexibility is required to keep covering the growing financial risk. There is a particular demand for an automatic link to the rising state pension age. Furthermore, there’s a need for a more flexible contract term – standard options of 1 and 3 years, for example. Finally, consultants wish to see more options with respect to self-retention (stop-loss) and a higher maximum insured amount, especially for large employers (invalidity pension).

Solution guidelines for digital innovation
Product innovation doesn’t yield much if there’s no solid foundation. Therefore, we will provide concrete tools for improving digital services in our next blog.

Written by: Bob van Opstal (Manager Pensions) en Idriss Abdelmoula (Consultant Pensions).
More info: bob.vanopstal@igh.com

 

Income protection market: Dutch consultants call on insurers to raise the bar

By Insurance, News, Pensions

The Dutch collective income market is booming – its social relevance is greater than ever and margins are improving. Foreign insurers enter the market and several Dutch insurers make strategic acquisitions throughout the value chain. At the same time, consultants and insurers are increasingly at odds. IG&H spoke to several parties in the market to determine how they can break the tension and join forces to work on effective customer solutions together.

There is a strong consolidation in the income protection market. In 2018, for example, the 50 largest consultancies accounted for half of the total production – 60% without sick leave insurance. All insurers are fully committed to this leading group and are improving their services. Nevertheless, they don’t always hit the right note: insurers’ average NPS among income consultants is -15 in mid 2019. The average performance score is 7.1.

Gradually, the consequences are becoming clear. For instance, >5% of the total WIA/WGA premium is placed with foreign insurers, elipsLife being the main example. Their success primarily results from ample underwriting capacity, sharp pricing, and an equality-based collaboration model with room for services offered by the consultant. In addition, we’ve observed a development we’re familiar with in the non-life market: substantial growth of mandated brokers. By now, 35% of the sick leave portfolio has been placed with mandated brokers (2016: 25%) – with service providers (including Felison, Nedasco, and Mandaat) making a name for themselves. Often, they turn out to be the go-to solution in the SME segment: they offer administrative convenience and quickly arrive at a market-wide price comparison. Between 2016 and 2018, their portfolio grew by more than 50%, and their market share in the intermediary sick leave market has increased to as much as 12%.

We believe insurers can improve their services on three axes:

1.    Mismatch between customer demand and product offer

Sustainable employability is high on employers’ agendas: absenteeism costs are rising, and in this difficult labor market, all attention goes to being a good employer. At the same time, income issues are growing more complex, and customer needs increasingly diverge.

A common observation is that many insurers opt for standardization – which, of course, results in simplicity and lower costs. But it also leads to a limited response to sector-specific needs and a lack of product innovations. Furthermore, consultants believe predictive data are still underused. For example, they are open to a model in which investments in sustainable employability lead to lower premiums. After all, it improves the risk profile, which means the insurer can benefit from a decreasing claims ratio. Finally, they indicate that the risk appetite of Dutch insurers seems to wane, making it difficult to insure a growing part of the market.

2.    A lack of digital innovation

As a result of consultants’ professionalization and cost pressure from the market, they place increased demands on digitalization. A much-heard adage is, ‘Stagnation means regression’ – which concerns administrative processes, among other things. Requesting information during quotation processes is often time-consuming, and the lead time for customized quotations increases. Furthermore, consultants expect more digital insight into customer and risk data so it can support their consultancy and serve as an additional service for employers.

3.    Declining trust due to conflicts of interest

Both consultants and insurers support employers in improving sustainable employability through consultancy and various prevention & reintegration services. This often leads to conflicts of interest with consultants and insurers ‘competing’ for access to the customer and the associated revenue. To many consultants, recent acquisitions by Aegon, a.s.r. and NN also fit into this picture. They fear that insurers will become competitors in an increasingly important part of their business model. Therefore, their message is clear: actively seek collaboration so the customer ends up getting the best solution.

In-depth solution guidelines

Our conversations yielded more than a problem analysis. In fact, they’ve provided concrete tools for a better collaboration between consultants and insurers. Curious? We’ll explain them in our next three blogs.

Written by: Bob van Opstal (Manager Pensions) and Idriss Abdelmoula (Consultant Pensions).
For more information, contact Bob: bob.vanopstal@igh.com

2019 – Q2 | Further mortgage market shrinkage in the second quarter of 2019

By Banking, Hypotheekupdate, News

Mortgage revenue (-9.1%) and the number of mortgages sold (-12.5%) fell sharply

Compared to the same period last year, mortgage revenue fell by 12.5 percent in the second quarter of 2019, as consultancy firm IG&H’s Mortgage Update points out. Since the average mortgage loan only grows to a limited extent, mortgage revenue is also considerably lower than a year ago (-9.1 percent). As a result, this is the third consecutive quarter in which the mortgage market is shrinking on an annual basis.

In the past quarter, the average mortgage loan rose to a record amount of 317,000 euros – only a slight increase (+0.5 percent) compared to the first quarter of 2019 and a clear indication that growth of the mortgage loan is decreasing.

“There are signs across the board that the trend of strong growth in the mortgage market, which has persisted for years, seems to be broken,” says Joppe Smit, who works at consultancy and implementation firm IG&H. “This is the third consecutive quarter in which we observe shrinkage on an annual basis, although the second quarter of 2019 was better than the first three months of the year. Record year 2018 seems to remain unparalleled, which will put an end to the consecutive growth of the past five years.”

Mortgage refinancers grow increasingly important
Most mortgages (more than 31,000) are still taken out by existing homeowners. This is an 8-percent increase compared to the previous quarter. Mortgage refinancers show the strongest quarterly growth with 13 percent. “The number of mortgage refinancers continues to grow,” says Smit. “Mortgage lenders and consultants that specifically target this group can take advantage of this. On the other hand, it makes banks with large mortgage portfolios vulnerable. They will need to do more to retain these customers.”

Mortgage is one click away with an app
A notable trend in the mortgage market is the growing interest of banks and insurers in simplifying mortgage applications. The market is in the early stages of a digital data transition. “Right now, it’s not yet possible to take out a new mortgage on the sole basis of digital data,” says Smit. “Several sources with reliable and verified data have now been unlocked, but the number of sources should be increased. In addition, mortgage lenders should adjust their processes and systems in such a way that digital applications can also be processed immediately. It’s simply a matter of time before we can submit a complete mortgage application with a few clicks.”

IG&H is one of the initiators of ‘Handig!’ (Handy!). The purpose of this partnership between HDN, ING, NHG, Florius, ABN Amro, Rabobank, De Hypotheker, and IG&H is to make the process of applying for a mortgage as fast and complete as possible based on digital, validated source data. “We see that more and more parties are exploring digital possibilities,” says Smit. “DUO, for example, experiments with possibilities to make government data easier to share, but other parts of the government also follow these developments with interest. Developments will accelerate once they get on board, too.”

Sincerely,

Joppe Smit
Director at IG&H
E: joppe.smit@igh.com T: 0031 6 2035 2438

IG&H Mortgage Update – authors & data analysis:
Niels Roelofs (niels.roelofs@igh.com); Sophie Dijkkamp (sophie.dijkkamp@igh.com)

Foreign insurers spread their wings on the Dutch non-life market

By IGH, Insurance, News

In the past three years, foreign insurers have managed to increase their premium volume to more than 10% of the Dutch non-life market, according to a study conducted by IG&H. More and more foreign risk bearers enter the Dutch insurance market without reporting to DNB, helped by a mismatch between customer demand and offer, rising premiums, harmonizing legislation, and consultants who professionalize.

The newspapers are full of press releases about foreign risk bearers that enter the Dutch market, but exact figures on their size are difficult to find because new entrants don’t report to DNB. Now, it’s possible through a combination of interviews as well as public and IG&H data.

Whereas Dutch risk bearers have grown by barely 3% a year in recent years, foreign risk bearers have managed to record an annual growth of more than 10% up to approximately €1.6 billion GWP in 2018. This means they now hold more than 10% of the Dutch non-life market (note: this 10% concerns foreign risk bearers that have never reported in the Netherlands and therefore don’t include Allianz and Amlin, for example). The premium volume is still highly concentrated – approximately 80% of this premium volume is still provided by risk bearers that have been active in the Netherlands for a long time (e.g. Chubb, AIG, and Lloyd’s). However, this division is expected to become less concentrated in the coming years.

New players such as Starstone, China Taiping, and CNA Hardy expand the number of mandated brokers step by step, focusing primarily on corporate non-life insurances at the larger, professional consulting firms and service providers. In doing so, they indicate their specific desire to grow as well as their assiduous search for larger limits. Furthermore, interviews point out that risk bearers organize themselves with the long term in mind – by implementing Dutch management with market experience, among other things.

Impact on the Dutch insurance landscape

This expansion of foreign risk bearers has a major impact on the Dutch insurance landscape. Traditional full-service insurers are coming under further pressure. Whereas in the past, successful and profitable activities could be realized in the Dutch non-life market through one of the three value chain roles (full-service insurer, mandated broker, consultant), the mere role of underwriter has been successfully established now, too.

This means insurers are now being attacked in a part of the value chain where they used to operate relatively unopposed. On top of that, foreign parties can reap the benefits of international diversification and a position that’s often stronger in financial terms, which means they hold strong cards for this position.

This doesn’t directly sideline traditional full-service insurers. In the search for distinction, though, many Dutch insurers will be forced to delve deeper into specific target groups and risks. While doing so, it’s important that they truly provide added value through an in-depth understanding of local customer needs, through (data-driven) expertise, and by expanding the offer with related services. Instead of mere insurances, they should offer complete solutions, which provide a distinctiveness that is difficult to match for foreign competitors. For foreign risk bearers, the Dutch market represents a relatively small share in the total portfolio, and they often lack specific (target group-related) knowledge about the Netherlands.

If you want to read the full paper in Dutch, please find it here.

Written by: Jan Pieter van der Helm (director insurance), Jeroen Enthoven (consultant insurance) and Remon Balster (consultant insurance)

Digital transformations; how companies can quickly test whether the latest technology is of value

By News, Technology

More often, organizations notice that their old IT-systems are an obstruction for innovation. To meet changing customer wishes, it is important that they can adapt and innovate at a rapid speed. Anyone who wants to work with the best available new technology, faces a difficult challenge. How do you test which technology is valuable?

In the area of IT, organizations are often faced with a dilemma: while systems based on old technology make for long development lead times, the transition to new(er) technologies requires an investment. That is why an organization should first identify the biggest bottlenecks in the current IT landscape. More than once, these bottlenecks will not only be IT related, but involve of the business(processes) as well.

A Proof of Concept (PoC) can, in a few weeks, demonstrate how modern technology eliminates organizations’ bottlenecks while usually requiring less labor. It is a chance for the entire organization – including both business and IT – to experience what it’s like to work with new technology before making a final decision. As a result, the new technology will be more logical and enjoyable to work with for the user afterwards. Upon approval, the old technology can be decommissioned in small steps.

What is a Proof of Concept?

Organizations can use a PoC to shorten a time-consuming selection process with months-long lead times. By experimenting with new technology in a short period of time, concrete results are instantly visible. Moreover, this allows the entire organization to familiarize itself with the associated new way of working, which increases internal support.

Three aspects are crucial to determine whether new technology fits the organizations needs:

  1. Functionality: What will the new technology ultimately be used for? Do the functionalities match the business and customer’s wishes?
  2. IT architecture: Does the new technology fit the existing IT landscape? Does it provide enough options, such as security and scalability?
  3. Operability: Can a developer work smoothly with the new technology? Does it enforce the digital transformation, and does it improve the collaboration between business and IT? Does the organization become more flexible, and does it facilitate an Agile working or DevOps method?

Based on these three aspects, the organization draws up a list of epics. An epic outlines the main functionalities an organization wishes to include in the PoC. Usually, these are formulated based on current bottlenecks, which may include issues with certain calculation rules or a system that can’t properly handle the current amount of data. A PoC helps proving the new technology can fulfill the business and IT requirements.

The first MVP’s in a few weeks

When providing organizations with guidance on PoCs, it’s best to implement the PoC development process in the most realistic possible way. This gives the organization the clearest idea of the usage of technology.

A full-time dedicated team is structured as follows:

  • A Scrum master who facilitates the PoC team
  • Experienced developers for product’ development, who will also serve as trainers to unexperienced developers
  • A few enthusiastic developers (from the organization) for product’ development, who can contribute knowledge gained within the organization

Optional:

  • A product owner for product qualification, who can also write and test user stories

If the organization is fairly unfamiliar with the technology in question, a suitable bootcamp will be organized first. This will ensure every developer has sufficient basic knowledge to help develop the product from the beginning. Once the team is complete and ready, it’s time to start the PoC.

During a planning session, we determine which user stories will be tackled first, working according to the Agile method – in sprints. At the end of this period, the partial product (or MVP; Minimal Viable Product) will be shown to a larger audience. All stakeholders are invited. Often, these demos are more extensive than the normal sprint demos. They contain a clear introduction, and the use of the technology is discussed – by sharing developers’ experiences, among other things. A good demo creates understanding within the organization. The business gets a full picture of the platform’s potential and can aim more accurately for tangible results. This will ultimately lead to more freedom in its product innovation.

After each sprint, it’s time for a retrospective. This is the moment to evaluate the collaboration and technology. By being open and honest with each other, you can make the PoC even more effective. In addition to the bootcamp and demos, a deep dive is also advised. Through one or two sessions on the possibilities, developers, IT architects, and other interested people fully understand the new technology. Each question is asked and/or every concern is voiced (e.g. regarding interfaces, testing, security and integration).

PoC results

After the last demo, we enter the decision-making stage. The decision to introduce new technology has proven to be difficult, but it is now supported by the various layers of the organization and tangible results of the PoC. Ultimately, the coordination and commitment of important stakeholders and departments will determine the total lead time of this decision-making process.

In experience, developers do not wait for a decision to be made. During the time they have worked with new technology, they have made significant progress. As a result, they have often developed an enormous drive to proceed – which makes a PoC so sought after. In addition, the added value for the end customer is readily apparent, which motivates employees and ensures they do not want to stop. In other words, it is built for success!

‘Flevoland healthcare landscape has all ingredients to continue to deliver high-quality and accessible healthcare’

By Health, News

The current Dutch Flevoland healthcare landscape has all the ingredients to continue to deliver high-quality and accessible healthcare – now and in the future. That’s the main conclusion from a report by Bas Leerink, explorer of the future and partner at IG&H.

Download the full report here (in Dutch).

In the past few months, Leerink and his team of IG&H consultants have defined a vision of healthcare in the Dutch province Flevoland from 2020 onwards. To this end, they’ve had extensive talks with residents, healthcare providers, health insurers, and the local government. They’ve also made extensive calculations and analyses of all scenarios. Moreover, regulators NZA (Dutch Healthcare Authority) and IGJ (Health and Youth Care Inspectorate) have been actively involved and have responded to the report. They don’t have any objections.

As an explorer of the future, Leerink recommends a step-by-step improvement of the current healthcare provision as the best approach for Flevoland. The province shouldn’t seek to restore the situation that existed before the bankruptcy. Therefore, the emergency room and acute obstetrics will not be reopened in Lelystad.

This is a difficult matter for many parties involved, but restoring the situation that existed before the bankruptcy doesn’t offer a solution for future demand. Furthermore, it’s neither realistic nor feasible in the short term. In the report, Leerink makes several recommendations. If this Agenda for Healthcare is realized, it will turn Flevoland into a leading region in the sector.

Importance of close collaboration

The bankruptcy of the former MC IJsselmeer hospitals has damaged the citizen’s trust in healthcare (parties) and the extent to which they’re able to really put the public interest in available, accessible, and good healthcare first. Now, researchers observe that healthcare (particularly the networks of healthcare professionals) is being restored in terms of content. The trust of citizens – reflected in local governments, the Flevoland Patient Federation (FPF), and Stichting Actie Behoud Ziekenhuis Lelystad (foundation to promote the preservation of a general hospital in Lelystad) – is still fragile.

Therefore, the explorer of the future proposes to keep analyzing and monitoring the situation carefully, and to continue consulting with all parties involved through Zorgtafel Flevoland (healthcare table Flevoland) in the coming year. The latter is supported by a progress meeting, chaired by the Ministry of Health, Welfare, and Sport. It also offers the option of addressing bottlenecks and escalating progress-related problems. The Ministry of Health, Welfare, and Sport can use the outcomes of the meeting to inform the Dutch Lower House of Parliament.

Acute healthcare

One of the issues that damaged trust encompasses concerns about accessible emergency care. Before the bankruptcy, patients with an acute, life-threatening condition, such as a heart attack, were sent to the Zwolle-based hospital. This procedure will be maintained. Because of the emergency outpatient department in Lelystad and the local emergency room in Emmeloord, it’s possible to provide care in the area in the case of low-complex emergency conditions.

To relieve pressure on these surrounding hospitals, it’s important to set up an acute care data science team in Flevoland. The team can contribute to the improvement of processes, which can increase the availability and effectiveness of emergency rooms. Currently, the St Jansdal hospital provides the emergency outpatient department at the Lelystad location and the emergency room at the Harderwijk location, which means it’s logical to start with this hospital.

By deploying data and new technology in the right way, ambulance care in Flevoland can take the lead in data-driven process improvement in the short term. This may serve as an example for other regional ambulance facilities in the Netherlands in the long term.

Obstetric care

The disappearance of acute obstetrics in Lelystad means that part of the people in Flevoland need to travel a longer distance in acute obstetric situations. The increase in travel distance means it’s easier to use an ambulance.

A new type of collaboration is needed to keep providing good birth care. Carefully organizing the unchanged demand for care within the context of the altered care provision – both primary and secondary care – is a priority. Recently, new partnerships have already been established between all care providers involved. They have given tremendous effort to reach additional agreements, which has strengthened cooperation and mutual trust.The explorer of the future also recommends that birth care in Lelystad is supported for one year.

The starting point is to offer birth care in the pregnant woman’s area if possible, and to provide it in a clinical setting as quickly as possible if the case in question so requires. Birth care providers are obstetricians or obstetrically active primary care physicians, secondary and tertiary care obstetricians and gynecologists, the regional ambulance facility (only in the case of acute obstetrics), and maternity care.

Care and support for vulnerable groups of people

The growing number of vulnerable elderly people with a complex, often cross-domain demand for care and the increasing health differences between socio-economic groups require far-reaching cooperation between care and welfare organizations and municipalities.

An adapted form of the neighborhood clinic in Amsterdam would be an interesting initiative for Lelystad. This clinic’s target group consists of patients with a combination of geriatric problems and, for example, pneumonia, COPD, heart failure, a bladder infection, or neurological symptoms. The results are positive – patients experience less loss of function, and the number of readmissions and emergency room visits is reduced, among other things. Several parties have now entered into discussions, and the first plans for such an initiative in Lelystad are being developed.

There is also a demand for primary care plus in the Noordoostpolder. Chain partners have signed a letter of intent for the new health plaza to be built in Emmeloord. This care concept will offer room for day treatments, convalescence, and observation beds, among other things. The various parties’ involvement enables far-reaching cooperation.

Furthermore, the number of residents with a chronic condition, which is already relatively high in Lelystad, is expected to increase sharply. One of the numerous action points that should be implemented according to the explorer of the future is the deployment of e-health initiatives. However, it is essential to pay attention to the limited digital and health literacy among part of the population. Finally, it is important for health insurers to support these initiatives – that is, if they don’t already.

Vision for the future of healthcare in Flevoland

In January, after the sudden bankruptcy of the IJsselmeer hospitals last fall, minister Bruno Bruins appointed Leerink. The disappearance of the emergency room and obstetric care caused much unrest in Flevoland. As an explorer of the future, it was Leerink’s job to make a thorough inventory of the healthcare market in Flevoland and to subsequently outline both short-term and long-term needs.

Healthcare vendors want less market and more cooperation

By Health, News

Purchasing and selling between healthcare providers and insurers is increasingly a strategic activity. New mutual agreements do not merely consist of budgeting and enabling expense claims. On the contrary, both parties contribute their strategic intentions. As a result, healthcare contracting becomes the starting point for joint projects. IG&H conducted a research among hospital healthcare vendors and found that healthcare contracting is increasingly at the heart of the healthcare system. To cope with core healthcare issues, however, more cooperation is required.

Download the Zorgverkoopmonitor 2019 (healthcare vendor monitor 2019) here (in Dutch).

In the Zorgverkoopmonitor 2019, IG&H takes stock with healthcare vendors and looks at the future. Nearly 25 healthcare vendors and finance managers at hospitals and clinics participated in the research. Together, they represent a total revenue of approximately €8 billion.

It turns out healthcare vendors want to set aside twice as much time to discuss policy themes and quality with insurers. Currently, price and volume still dominate more than 60% of all meetings. If it is up to healthcare vendors, 50% rather than 25% of meetings will be about substantive themes, such as the right care in the right place, meaningful care, and a vision of the region.

Approximately half of the respondents have concluded long-range agreements with the largest insurer – and a quarter of them with nearly all insurers – laying a solid foundation for a different type of meeting. ‘Unfortunately,’ not all of these are cooperations between providers and insurers. Part of the long-range agreements are simply concluded because banks require financial security. However, these long-range agreements provide peace of mind and room for a different type of meeting.

There’s a reason why healthcare vendors appreciate insurers bringing their own vision of healthcare to the table. You may disagree on this vision, but it is the main reason why 45% of healthcare vendors consider Zilveren Kruis the most professional of healthcare purchasers, and 25% believe it to be VGZ. According to healthcare vendors, they have set up a proper foundation for healthcare purchasing, and it is now time to give healthcare purchasers more authority and room for customization.

Ultimately, 30% of healthcare vendors consider the affordability of healthcare as the main challenge – especially the gradual transition (25%) to a different healthcare landscape (25%).

Healthcare vendors mainly want realistic financing, and they are willing to contribute to a financial transition. They, too, realize that healthcare should remain affordable for everyone. At the same time, they also need to deal with fixed accommodation and staff expenses, which means they can’t rush into cutting costs.

The art of concluding contracts in a new era

Even though they seem to have conflicting interests at times, healthcare providers and insurers face the same task. Of course, it can be completed through harsh negotiations, but lowering revenues and costs together requires a substantive cooperation.

The latter starts with mutual trust, which is created by truly empathizing with the other party.

The next step is for both parties to define a shared ambition that serves each party’s interests. Develop a vision of the region or certain types of healthcare, look beyond your own organization, and determine what it is you want to achieve together. Set up a joint project group, allow each other access to data, and perform the analysis together. Joining forces will automatically eliminate old behavioral habits. Discussions will no longer be about each letter in the contract but about what is good for the patient, the policy holder, and society. This will ultimately benefit insurers and healthcare providers, too.

By Walter Kien, Senior Manager Healthcare