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Executive summary
Founded in 1966, Deutsche Allgemeinversicherung (DAV) was one of the worlds largest
insurance companies and the second largest insurance company in Germany. About 51% of
DAVs business was in Germany, while 60% of its business was retail insurance dealing
with disability income protection, health, property, and life insurance.
Along with companies like Allianz, Credit Lyonnais and Aetna, DAV was one of the giants
of the industry. However, the emergence of smaller insurance companies and increasingly
customers demand are now challenging the position of DAV. This development has
increased the competition for the market share in the insurance industry and thus, there is a
potential loss of market share and revenue for DAV.
Therefore, to improve the quality and accuracy of DAV data entry numbers the company
decided to adopt a new quality improvement initiative *€“ Process Measurement and
Improvement (PMV), with Annette Kluck, who was the head of Operations Development
at DAV. The PMV project was a revolutionary effort to use manufacturing-style
improvement techniques in insurance service, it was expected to differentiate DAV in the
industry and hopefully, maintain its prominent position. Kluck, however, was facing a
number of difficult problems with the improvement phase of the project.
Prior to 1994, correct transcription from forms had been assured using a method called
double-key entry. There were two problems with this method of assuring accuracy. Firstly,
it was very expensive, since it essentially demanded that work be done twice. And
secondly, it was found that first-pass quality actually deteriorated over time when the
double-key method was used.
To begin to find out what accuracy levels were like throughout DAV, Kluck selected the
New Policy Set-up department as a pilot measurement project. The plan was to take a
sample of the work carried out by the associates, and use that sample to infer what the
general accuracy rate was in the New Policy Set-up process. Kluck decided to use
