“Irrespective of the region, the insurance industry has to face a plethora of challenges.”
Insurers who deal with the Insurance Agency Management challenges in a better way are able to outshine their competitors. However, doing so is not a cakewalk as insurers need to take into consideration the critical KPIs and work towards streamlining their business processes in compliance with the same. So, what exactly are these KPIs?
Key Performance Indicators (KPIs)- One of the essential metrics to let insurers know about the performance of their various processes with respect to its in-house operations, customer service, competitors, and more. If we go into the core KPIs, elements like technology use, errors, cycle-time, activity or unit-based cost, etc. come into play. So, let’s get started and know what KPIs top the priority list of insurers to succeed in the market.
Table of Contents
Top 12 KPIs for Insurers
1. Revenue per Policyholder
It is one of the basic KPIs that enable insurers to measure the amount of revenue which is generated on the whole per every policyholder who is serviced. A low value of this KPI clearly states that there are insufficient online and agency sales, along with poor investment practices and customer service (leading to a low retention rate).
2. Average Cost per Claim
This KPI is an important expenditure metric that lets insurers know the amount they spend per each claim. As per the Insurance Research Council and Verisk Analytics, $626 is the average claim for home insurance, and $3,160 is the average claim for auto collision, respectively. This KPI helps in assessing the risks associated with every claim and adjusting the price of policy accordingly.
3. Average Time to Settle a Claim
This KPI is all about calculating the average time spent against each policy type for settling a claim. As per the J.D. Power & Associates Property Claims Satisfaction Study, one of the major elements in customer satisfaction is nothing but the claim cycle time. The same study revealed that Amica held the record for the fastest claim settlement (11 days). So, lower the claim cycle, more will be customer retention.
Frequency KPI measures the expected claim numbers on the basis of exposure. It has 3 variants in the form of:-
- Low Frequency ( least possibility of a claim loss event )
- Moderate Frequency ( moderate possibility of a claim loss event )
- High Frequency ( high possibility of a claim loss event )
This KPI is essential to make an estimate of the possibility of paying out claims and make future financial decisions accordingly.
5. Components of Claim Costs
With this KPI, insurers are able to track the costs which are associated with important controllable claim elements like settlement time, report delays, legal costs, and more. This KPI helps in minimizing the costs and track operational efficiency.
This KPI lets insurers know of the number of clients who hold the hand of their insurers by continuing with their coverage after their initial term gets expired. As per The Independent Insurance Agents of Dallas, in the insurance industry, 84% is the average customer retention rate. This KPI is essential since it clearly shows that the amount paid to retain an existing customer is 5 times less the amount paid to make a new customer.
7. New Business/Sales
This is a useful KPI metric that helps insurers track the number of new policies that they have sold and devise strategies for enhancing the performance of operations. It can be easily tracked through an agent or by product line over a specific time period.
8. Quota vs. Production
This KPI helps insurers track the efficiency of their sales agents at meeting the targets of sales. In general, insurance sellers are of two types; first, the ones who sell company’s own products (captive agents) and second are the third-party sellers who sell products of multiple companies (non-captive). It is imperative to set quotas that are realistic since the team can get discouraged, owing to a high ratio of quota to production.
9. Average Policy Size
This KPI is all about the price or size of the entire policies that are sold in a specific time period divided by the actual number of policies being sold. As per the ACLI reports, $165,000 is the individual life insurance policy size on an average. One can easily determine the operational excellence with this KPI and evaluate the company’s selling strategies.
10. Number of Referrals
This KPI helps determine the number of new customers that were referred by existing customers. It helps in knowing whether the company’s brand image and marketing efforts are creating a mark in the market or not.
11. Top Brokers in Sales
As it is clear from the heading, this KPI ranks the brokers who are top-performers when it comes to sales. This KPI helps in enhancing healthy competition between the brokers and also make decisions in a tactful way for preparing the claims management and sales strategies of every employee.
12. Quantitative Customer Experience
Irrespective of the industry type, customer experience holds immense importance in making a company succeed. This KPI helps in evaluating the customer satisfaction level through online or phone questionnaires related to specific services and products of the insurance company.
This brings us to the conclusion that with the help of these KPIs, insurers can truly raise the bar of their success. There is no denying that the market is always changing with respect to the changing customer demands and the evolution of technology, and insurers are at their toes for keeping compliance with the same.
Incorporating the use of technology, devising unique and tactful strategies, along with these KPIs is the only way in truly improving the in-house operations, providing enhanced customer experience and staying ahead of the competition, leading to the desired results eventually.
Yes, there are times when insurers get over-burdened with work and may not be able to work towards each of these goals with perfection. In such situations, seeking the help of professional Insurance Policy Management Services or Claims Processing Services is an ideal solution to manage the excessive workload and work towards attaining their goals proficiently.