The company's sales operation was sold at the start of 2000, effectively closing Abbey Life to new business. It was more important than ever to cut unit costs, increase efficiency and boost staff morale at a time of uncertainty.
Done.
A business process outsourcing strategy which involved the transfer of administration of the company's 1.75m policies to UISL, a subsidiary of Unisys. More than 1,000 staff members were also transferred as part of the 10-year contract.
Business process outsourcing
UK life and pensions company, Abbey Life, was under pressure to cut the cost of maintaining and upgrading legacy processing systems. By outsourcing its processing and administration systems to the specially formed Unisys Insurance Services Ltd (UISL), the company believes it will achieve savings of about 20% over the best in-house solution.
For any life and pensions company, the pressure to deliver excellent service to customers while increasing efficiency and cutting costs is greater than ever. Abbey Life is no stranger to these issues. But the company faced an even greater challenge in February 2000 when it sold its sales operation to Zurich Financial Services/Allied Dunbar Assurance – effectively closing its doors to new business.
Neil Tointon, director business relationships, Abbey Life, describes the situation faced by the company. "It was essential to maintain an excellent level of service to our existing customers, but their numbers would naturally decline over the coming years. We also needed to provide staff with a positive future. In a situation where business is no longer growing, more able employees often look for positions in other organisations."
At the same time, the company was keen to increase the efficiency of its client and administration legacy systems which handle more than 1.75m policies. Tointon continues: "We have about 18 systems. Integrating all that technology was achievable, but at what cost? When we considered the options, migrating all these policies to a single system hosted by a third party made much more strategic and financial sense."
Outsourcing on this scale requires a partner with the experience, skills and technology which minimise disruption to customer service. In addition, the transfer of staff to the partner organisation requires efficient planning to ensure that any sensitive employee transfer issues such as salaries and relocation are handled carefully.
An intelligent approach
Abbey Life invited seven companies to tender for the running of its client administration and IT work. The response was extremely positive from these organisations and following presentations and delivery of tenders, the list of candidates was whittled down to three.
Tointon says that the decision to select UISL, a newly formed subsidiary of Unisys, was made based on the organisation's clear understanding of Abbey Life's requirements and an intelligent and realistic approach to the outsourcing process and the transfer of staff. "Some of Unisys competitors had similar levels of process and industry knowledge, but few were prepared to match the commercial challenges."
He continues, "Unisys was the only organisation able to offer a credible track record in building a strong business in a demanding market. They were also the clear winners when it came to understanding and adapting to our culture."
This kind of outsourcing transaction is relatively immature so it was essential for Abbey Life to choose an organisation with the experience and flexibility to make this project a success. "There was no attempt to impose a pre-conceived solution on Abbey Life. UISL came to us with a strategy which would adapt to our business, not the other way around," says Tointon.
UISL also recognised the need to learn from Abbey Life's experience. "They listened hard and fast so that the final strategy used the best of both companies' skills. They also didn't flinch from the commercial challenges and demonstrated plenty of courage and long-term vision in a relatively new business area."
Minimising risk
Abbey Life has signed a 10-year contract with UISL. It will require three years to transfer all of the life and pensions policies to UISL's own system, but already the solution is starting to deliver real business benefits which could not have been achieved by an in-house operation. "We believe that cost savings over the best in-house option are going to be about 20%," says Tointon. "Unit costs are guaranteed, customer service turnaround times are better than before the handover and the vast majority of operating risks have been handed over."
At the same time, the transfer of more than 1,000 staff has been remarkably smooth. UISL had a full understanding of the Transfer of Undertakings Protection of Employment (TUPE) regulations, governing the transfer of staff from one organisation to another. Staff now have a clear view of their future and are now working in an organisation where their careers and personal development prospects are much brighter than before.
An outstanding response
Overall Abbey Life is delighted with the level of service and support that UISL has provided. "We presented them with a unique industry challenge and didn't compromise on the key requirements throughout," says Tointon. "The response was nothing less than outstanding. UISL worked hard to meet all our success criteria with the result that substantial benefits are immediately available, while residual business risks have been reduced."
John Connor, business development director, UISL, comments, "Abbey Life is keeping ahead of a competitive industry by streamlining its business and focusing on providing existing customers with services of optimum efficiency and reliability. We are proud to be a part of a solution which is innovative and embraces the future with such confidence."
