Insurance KPIs and metrics

insurance kpi1Insurance KPIs and metrics

Monitoring the right metrics and KPIs is almost second nature to the world’s most successful insurance organizations. The secret to their success is a blend of offering the right product, having the right people selling that product, and managing the risks associated with running an insurance organization. In many respects, insurance metrics and KPIs are similar to other organizations, such as a sales organization, with the important exception that insurers need to strike a balance between short-term rewards and long-term risks.

That’s why putting insurance metrics and KPIs where they are always accessible and actionable is so important. In fact, access to that information can be the difference between success and failure for an insurance organization. With a web and mobile dashboard, insurance organizations can track, monitor, and act on the metrics that drive their business forward avoiding unnecessary risks along the way to financial success.

To help get you started monitoring this data, we’ve put together a list of the top 10 insurance metrics our customers use.

Insurance KPI: Net Income Ratio
  1. Net Income Ratio. This insurance KPI measures how effective your company is at generating profit on each dollar of earned premium. This KPI is used to measure the profitability of your organization and is primarily used for internal comparison, although it can be useful to compare your business to others operating in the same space. Use this insurance KPI to gauge future pricing policies.
    Audience: Brokers, Managers, Executives
    Calculation: Net Income / Earned Premium
Insurance KPI: Policy Sales Growth
  1. Policy Sales Growth. This insurance KPI measures policy sales growth over a set period of time. This KPI is designed to provide you with a view of the big picture, and even if you use this insurance KPI to monitor a shorter time-frame, it’s important to compare current values to historical norms. The policy sales growth can be defined based on the number of new clients, a measure of number of new policies sold, or a combination of the two. Use this insurance KPI to determine if you’re hitting sales targets.
    Audience: Executives, Brokers
    Calculation: (Current period sales revenue – Previous period sales revenue) / Previous period sales revenue
Insurance KPI: Sales Growth
  1. Percentage of Sales Growth. This insurance KPI measures the percentage of policy renewals over a set period of time. The renewal ratio measures the number of insured clients that stay enrolled in a program after the initial coverage period expires. New policies include any clients purchasing coverage for the first time, or returning after an extended period.
    Audience: Brokers, Managers, Executives
    Calculation: Renewals / Policies Sold
Insurance KPI: Claims Ratio
  1. Claims Ratio. This insurance KPI measures the number of claims in a period and divides that by the earned premium for the same period. It’s important to note that insurance is the business of managing risks, and to do that well, the insurer needs a thorough understanding of the incurred claims ratio. If the value is higher than expected, then further investigation is required to figure out why that is (ex: fraud). If it is lower than expected, it could indicate irrelevant products or difficulty in claiming (affecting customer satisfaction).
    Audience: Brokers, Managers, Executives
    Calculation: Total Claims per Period / Total Earned Premiums per Period
Insurance KPI: Quotas vs. Production
  1. Quotas vs. Production. This insurance KPI measures the effectiveness of agents and sellers at meeting desired target sales. Within the insurance world, there are typically two types of insurance sellers. The first group work exclusively for your organization, and only sell your products (often called captive agents). The second group works for a third-party and sell policies for a number of companies, ostensibly finding the best rate for clients (non-captive). Setting realistic quotas that challenge your team and don’t discourage them is essential for achieving a high quota to production ratio.
    Audience: Executives, Brokers
    Calculation: (Total $ Quoted Business / Total Revenue)
Insurance Metric: Time to Settle
  1. Average Time to Settle a Claim. This insurance metric measures the average amount of time to settle a claim. It’s imperative that you distinguish between different types of policies since different policies may vary greatly in terms of how long it takes to settle. A common example is the difference between medical claims and car insurance claims.
    Audience: Brokers, Managers, Executives
    Calculation: Total Number of Days taken to settle all claims (in each insurance claim category) / Total Claims
Insurance Metric: Customer Satisfaction
  1. Customer Satisfaction. This insurance metric measures how satisfied your customers are with the products and services your provide. For an insurance business that relies on recurring revenue from renewing customers, it is important understand if you’re delivering quality customer service. If customers are unhappy with your organization, they may not renew their policy and instead find coverage with one of your competitors.
    Audience: Brokers, Managers, Executives
    Sample Question: How satisfied are you with the service provided?
Insurance Metric: Sales Revenue
  1. Top Brokers in Sales Revenue. This insurance metric measures and ranks top performing brokers based on sales revenue. By spotting who your top performing brokers are, you can ensure that tentative leads are sent to the experts to be converted. There are two views to this KPI: one is strategic and takes a look at top sellers over a longer time period (annual), and the other is tactical and looks at short-term performance. Sharing tactical information about this KPI can foster healthy-competition among brokers.
    Audience: Executives, Brokers
    Calculation: Rank top 3/10/25 brokers by sales revenue per policy type
Insurance Metric: Cost per Claim
  1. Severity-Average Cost per Claim. This insurance KPI measures the change in average cost per claim over time. With this metric (as with other insurance metrics), it’s important to categorize based on the type of claim, since each type of claim will differ in cost. By understanding the impact of external factors, monitoring this metric will help your organization properly adjust policy pricing.
    Audience: Brokers, Managers, Executives
    Calculation: Total Cost of Claims per Month / Number of Claims
Insurance Metric: Sales Ratios
  1. Sales Ratios. This insurance metric combines two importantsales metrics to help you understand your sales funnel: quote-to-close and lead-to-quote. Many folks will shop around for the best policy, which means you may be spending quite a bit of time sending out formal and informal quotes. This metric helps you understand how valuable each quote is in the big picture. If your organization gives online quotes, make sure to include that data in this metric.
    Audience: Brokers, Managers, Executives
    Calculation: # of quotes / # of wins

 

source http://www.klipfolio.com/resources/kpi-examples-top-insurance-metrics

 

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