With 2011 net sales of $58 billion, United Technologies Corporation (UTC) is one of the world’s largest companies. Providing high-technology products and services to the global aerospace and building systems industries, UTC does business in approximately 180 countries and has more than 4,000 locations in some 71 countries. In 2011, sales outside the United States accounted for 61 percent of UTC’s total net sales.
Given the scale of the company’s international operations, it’s not surprising that UTC’s corporate Risk Management team is focused on the risk and insurance needs of UTC entities in locations worldwide. Yet UTC Risk Management is not satisfied with merely meeting the needs of UTC’s international entities and its customers. To the contrary, UTC Risk Management takes a customer-first approach to its work, as evidenced by its focus on continuous business process improvements that enhance customer service as measured by key servicing metrics.
We spoke with Connie Bartels, Cindy Regan and Jennifer Giantonio of the UTC corporate Risk Management team about an important example of their team’s focus on continuous improvement: the premium-tracking tool in RiskConsole, rolled out in January 2012 to automate the invoicing and payment process for UTC’s international casualty and global transit/marine programs. Developed collaboratively by UTC Risk Management, David Moon of the New York City office of Aon Risk Solutions, and Aon eSolutions, UTC’s D&O and property programs are next up for inclusion in the premium-tracking tool.
“We needed a tool that effectively monitored the servicing provided to local entities by the underwriter and broker, so that we could be sure that the invoicing process wasn’t an undue burden on the local entities.”
Senior Manager for Planning and Accounting
As a large organization with hundreds of international entities, UTC assumes significant deductibles and self-insured retention while buying insurance for catastrophic loss. To mitigate losses at the local level, UTC Risk Management supports international entities in adopting sound risk management practices. To alleviate administrative burdens for local entities, UTC Risk Management strives to make its risk programs as efficient, accurate and timely as possible. UTC and Aon Risk Solutions conceived the premium-tracking tool as a way to achieve objectives for both loss control and administrative efficiency.
According to UTC Senior Risk Finance Manager Connie Bartels, “We recognize that there’s a direct link between a local entity’s loss experience and the premiums it pays. We needed a system for transparent local invoicing, which we knew would improve loss control at the local level, because local invoicing helps the local entities focus on controlling claims. At the same time, handling allocations and invoices isn’t anyone’s full-time job at the local level, so we needed to figure out a way to streamline local administration and ease of use.”
Under the terms of the UTC insurance structure, most local entities are invoiced by local insurers, yet the follow-up process was very much manual, relying on Excel worksheets that were routinely touched by UTC’s insurer, the local Aon Risk Solutions offices, the Aon Risk Solutions New York City office and by UTC corporate Risk Management. The manual nature of the invoicing process opened the door for potential errors; moreover, when local entities accessed their invoices, the status could be out of date.
According to UTC Senior Manager for Planning and Accounting Cindy Regan, “The feedback from our customers at both the business unit headquarters (including business unit risk managers) and at the local level was that the process needed to change. From the allocation methodology to the escalation process, everything associated with invoicing took a lot of time, and that was causing pain for everyone involved. A local entity would be told it needed to pay an invoice, but if the entity had questions or challenged the invoice, the local Aon Risk Solutions office didn’t always have ready access to the information needed to answer the entity. As the due date for payment approached, the process often became a fire drill for the local entities. We needed a tool that effectively monitored the servicing provided to local entities by the underwriter and broker, so that we could be sure that the invoicing process wasn’t an undue burden on the local entities.”
“We look at Aon Risk Solutions as our right hand, so to speak, in the basic local servicing of our international entities,” says Bartels. “So, we developed a premiumtracking tool that supports Aon servicing by automating allocation and invoicing.”
In order to expedite the invoicing process and alleviate the administrative burden on local entities, the premium-tracking tool was designed to present a real-time, up-to-date picture of the status of every invoice.
According to Bartels, “The tool was designed so that one allocation record in RiskConsole would contain or link to everything related to an invoice.” The tool attaches the relevant schedules, legal entity codes, contact names, closures and other inputs, as well as all related documents, to a single record.
The premium-tracking tool also had to support international UTC risk managers at the business level, says Bartels: “We developed a single sign-on by a link to AonLine that gives our risk managers ready access to the ‘big three’ of information needs for us, which are claims, invoicing and policy. That’s huge for us and certainly differentiates this system.”
According to Bartels, “One of the main reasons for creating this tool was to have better reporting and dashboarding capabilities. The RiskConsole team has created dashboards for each of our business unit risk managers and for the Aon Risk Solutions New York team, so they can now go in and get the reports they need to track outstanding invoices in categories like business unit, country and region.”
“Part of what Aon Risk Solutions is charged with doing as our broker is determining where local policies should be in place and where those local policies need to be paid in that country,” says Bartels. “This tool has helped us refine the information we need to accurately reflect where all our premium charges should be paid.”.
When speaking with a business unit risk manager or the local entity, the UTC Risk Management team can now accurately determine its total cost of risk at any given point in time. All the relevant information now resides in the allocation record and can be reported on at any time.
Says Bartels, “If you’re a global company, you’re going to need to invoice locally, and this tool helps support that. It eases the administrative burden and provides transparency.”
Because the premium-tracking tool is automated and repeatable, it enables the use of metrics that UTC Risk Management uses in the process of continuous business improvement. According to Bartels, “When the system was manual, it was challenging to track and determine where we needed to improve our processes, the work done by our providers and the prices we paid. Now, we look for trends in areas that impact our timeliness and accuracy. For example, we put in a customized field to track the reasons why local entities challenge an invoice; we call them turnbacks, and we analyze turnback trends so that we can address areas of our invoicing that need to be corrected. It’s precisely that type of information that provides the missing piece which allows us to constantly improve our processes.”
UTC, Aon Risk Solutions and Aon eSolutions have made significant strides in the area of allocations, invoicing and payment, but as one would expect given the UTC Risk Management team’s focus on continuous improvement, there is always more work to be done. Future goals include moving all of UTC’s global insurance programs into the premium-tracking tool and adding all locally billed programs.
According to Bartels, “Our expectation is that the premium-tracking tool will continue to grow and evolve, because there are always ways the process can be streamlined further.”