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6 Insurance KPIs Every Manager Should Know

Author: Chris Wilds

Insurance policies – the older you get, the more of them you find yourself paying a monthly bill for. I remember the days when the only insurance I had to worry about was paying for my car. Now, I find myself not only dealing with multiple policies for myself, but many complex commercial policies that The Lab Consulting pays for to minimize business risk. Professional liability, workers’ compensation, cyber liability, crime coverage – if you can dream of some type of risk, there is a policy that covers it.

Today, many insurance companies focus only on business metrics related to total dollar amounts of transactions processed (income) and the high level expenses (overhead) that it took to process the work without diving into operations focused KPIs at the front line. Many productivity metrics tracked at the front line employee level are often overlooked by different departments at large insurers.

1. Number of New Policies per Insurance Representative (or Agent)

At the front office area of the business where agency operations and revenue producers reside, a key performance indicator at the individual agent level is Number of New Policies per Insurance Representative processed. This metric tracks individual level productivity and allows your company to benchmark producers against one another internally or against external competitors. Everyone wants to have the most effective sales team, right? These should be tracked at a daily level to roll up into weekly and monthly summaries. For more information on insurance new business processing – be sure to check out our lean process management workflow here.

2. Cycle Time: Underwriting

This productivity metric measures the number of business days it takes an underwriter to process a policy application, from the time the application is received by the underwriter until the decision has been made. This metric can also be used when gauging customer satisfaction, because, the longer it takes your company to provide a policy ready for signing, the unhappier the customer.

3. Unit Cost: Application Processing

After a new policy has been captured by a producer (agent) in the front office, it is sent to the back office New Business Processing Group for underwriting and onboarding. But processing policies cost a pretty penny. The Unit Cost: Application Processing key performance indicator measures the amount of expense incurred during the processing of a single new insurance application. A high value for this indicator is obviously disappointing, so look to simplify the insurance application itself for smooth and clear sailing.

4. Claims Employees per 1,000 Reported Claims

Phone lines are full, stressed staff are losing patience with their customers and claims are piling up so high, desks are starting to crack, how can this mess be fixed? Well, first you have to measure Claims Service Employees per 1,000 Reported Claims. This key performance indicator measures the staffing levels within the claims group relative to the incoming workload, or claims volume. Since claims service staff members should be able to handle a relatively high number of claims without sacrificing quality customer service, a low value for this indicator could indicate poor individual productivity or a non-standard claims processing workflow. Look to streamline or automate the claims service process to help the staff handle the claims efficiently. Be sure to assess customer service levels in conjunction with this indicator. An unmanageable workload is bad; no workload is worse.

5. Unit Cost: Claim Processing

Riding on the tail of metric number 4 above, this expense metric measures how much an insurance company spends on processing each individual claim. To calculate this metric, take the total cost associated with processing claims and divide it by the number of claims received for a given time period. This is helpful when deciding premium prices or evaluating options for reinsurance since this metric helps companies properly asses the risk associated with each type of policy.

6. Cases Managed per Case Manager

By using this productivity metric, you can measure the average number of cases under managed care, per case management employee working for the insurance company. The Cases Managed per Case Manager metric is similar in importance and operation to other metrics that track individual productivity as it can be used to improve internal productivity issues while also being benchmarked against competitors. That’s not all, however. A high value in this metric brings with it a rather satisfying positive reinforcement. That is to say, the more people being helped in an efficient manner, the better. Are you looking for a full list of Insurance KPIs for your balanced scorecard of insurance operations dashboard? Download our Insurance Key Performance Indicator Catalog here.

Thanks for the read. In closing, the OpsDog team now offers à la carte consulting services and data analysis. We are the low cost alternative to having outside consultants on the ground in your business. If you would like additional information on our “offsite” analysis packages, be sure to reach out to us here.

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