The Regional Insurer's Digital Claims Ambition
Northmoor Mutual is a mid-sized regional insurer with 1.4 million policyholders. Its claims function processes 900,000 motor and household claims annually. Average settlement time is 11 working days; the board has committed to 4 days within 24 months. A pilot of an automated photo-based claims triage tool in one region cut handling time by 38% but raised fraudulent-claim leakage by 2.1 percentage points, costing roughly £3.4m. The tool's training data came from settled claims over five years, skewed toward urban postcodes. Field assessors, who handle 30% of complex claims, were not consulted in design and have quietly continued parallel manual reviews, so the pilot's efficiency gains are partly illusory. The CIO wants to scale nationally in nine months. The CFO questions whether the £12m programme cost is justified. The regulator has asked for evidence of fair treatment of vulnerable customers.
1. Evaluate whether Northmoor should scale the automated triage tool nationally on the CIO's nine-month timetable.
Read the worked answer
The case for scaling rests on a real 38% handling-time reduction against a board commitment that is otherwise unattainable. But three symptoms undermine the evidence base. First, the leakage increase of 2.1 points costing £3.4m means the tool's net benefit is unproven; scaling a control weakness nationally multiplies exposure. Second, the parallel manual reviews mean the measured 38% is contaminated: assessors are silently correcting the tool, so true automation performance is unknown and the efficiency claim is overstated. Third, the training data's urban skew creates a foreseeable bias risk for rural and vulnerable customers, which directly conflicts with the regulator's fair-treatment request.
A defensible recommendation is conditional scaling: fix the data (rebalance training samples, add rural and vulnerability indicators), integrate assessors into redesign so their corrections become explicit rules rather than shadow work, and re-pilot with fraud controls embedded. A staged national rollout over 15-18 months with gate reviews is more defensible than nine months. The CFO's £12m question should be answered with a benefits-realisation model that nets off leakage and includes the cost of the shadow manual process. Scaling on the current evidence would be a judgement error dressed as speed.
2. Explain how the CIO should redesign the performance measurement of the programme so the board can govern it credibly.
Read the worked answer
Current measurement is single-metric and gameable: handling time fell while leakage rose and assessors worked around the system. A balanced scorecard for the programme should include four perspectives. Customer: settlement time, complaint rate, and outcomes for vulnerable cohorts, disaggregated by postcode type. Process: straight-through-processing rate, override rate by assessor, and rework volume, which together expose shadow manual work. Risk: fraud leakage rate, false-positive rate, and audit findings. Financial: cost per claim, programme spend against budget, and realised benefits net of leakage.
Governance matters as much as metrics. The board needs a monthly dashboard with tolerance thresholds and escalation triggers, for example leakage above 1.5 points or override rates above 20%. Benefits should be tracked against a baseline that removes the contamination from parallel reviews. Independent validation of the model's fairness should be a standing agenda item, reported to the risk committee and available to the regulator. With these measures the board can distinguish genuine progress from reported progress, and the CIO's timetable becomes a managed risk rather than an assertion.