KPI Benchmarks : Cost per Claim (P&C)
- Benchmark Range
- Benchmark Average
- Benchmark Sample Size (n) 6
* Is High or Low Best: Lower is Better
Cost per Claim (P&C)
Cost per P&C claim processed measures the average cost incurred by the organization to handle a single P&C insurance claim (i.e., unit cost). Claims processing is a vital function within any insurance company, as it has a significant impact on profitability (e.g., improper claims processes can increase claims paid out) and customer experience (e.g., extended claims cycle times negatively impact customer satisfaction and increase costs). Relatively high P&C Cost per Claim values can be a lagging indicator related to several common inefficiencies within the claims process, including improper claims routing and triage procedures (e.g., claims not assigned to the correct adjusters, etc.), low adjuster productivity (i.e., each adjuster not handling enough claims per week/month), incomplete or missing claims data, or a high rate of rework within various claims processes (e.g., adjusters must communicate with claims intake representatives to clarify inbound data or gather additional information, etc.).
The total cost (labor, technology and overhead) of processing property and casualty (P&C) insurance claims, including claims intake, adjustment, estimate and settlement/closure, divided by the total number of P&C claims processed over the same period of time.
KPI Best Practices
- Consolidate steps of the claims process when possible
- Set service levels on how quickly adjusters perform inspections after first notice of loss
- Utilize electronic claim payment systems to save time and money
KPI Calculation Instructions Cost per Claim (P&C)?
Two values are used to calculate this KPI: (1) total P&C Claims Department operating expense over a given time period, and (2) the total number of P&C claims processed over the same period of time. Total Claims Department expense should include labor, technology and other overhead costs related to claims intake (i.e., first notice of loss, triage, etc.), claims data entry, estimate, adjustment, negotiation and final settlement/closure (including disbursement of payment(s) to the appropriate parties). Costs related to special investigations (SIU), subrogation and salvage operations should not be included in the numerator for this calculation, as these functions are typically carried out following the closure of a claim and/or may significantly inflate claim unit costs. Only claims that are formally settled/closed should be included in the denominator for this calculation. The actual dollar amount of claims losses paid out to policyholders (and related parties) should NOT be included in the numerator. Include only P&C claims costs and volumes in this formula.
KPI Formula :
Total P&C Insurance Claim Processing Expense / Total Number of P&C Claims Processed