Ask any insurance carrier, and they'll tell you that performance measurement is a high priority. But exactly what are they measuring? Due to the lack of an industry standard for performance measurement, insurers too often use arbitrary numbers that don't reflect a true comparison to standards throughout the industry. A new set of performance metrics developed by the Opus Group, a performance management company, however, suggests that many property/casualty carriers that thought they were best in class may actually be coming up short.
According to the Opus study, only 9 percent of insurance companies can accurately measure the cost of a customer transaction. Only 4 percent have an accurate expectation for unit cost. "If you can't measure the cost of the transaction," asked Verint-Opus Solutions' Vice President Mike Callaghan, one of the study's authors, "how can you measure the quality of the transaction?"
The common thread throughout the P/C industry is a lack of operational and customer information or analytics, the study concluded. "Without the insight this information can yield," wrote the authors, "competitiveness, efficiency and effectiveness suffer."
Among the study's most telling findings:
* The average insurance processing unit operates at 62 percent productivity and 51 percent utilization.
* Of the companies that meet or exceed internal service expectations, only 51 percent were rated at or above "average" in surveys.
* Only 4 percent of all processing operations measure true customer turnaround time.
There's room for improvement. "A lot of the information we're seeing from (other) benchmarking studies suggests that the market's really cleaned up its act over the past five years, and we're just not seeing it," said Callaghan.
Customer service is one area that falls through the cracks to a surprising degree, even for companies that perceive themselves as being on track. It goes back to not being able to measure quality internally, he said. You can't manage what you can't measure. So even though companies continually make changes, they're never really able to measure the impact to the end customer. So it's no surprise, he said, that when customers are asked directly, they're less than pleased. "Organizations say they're focusing on quality," said Callaghan, "but clearly, that's not what we're getting back from customers."
June 1, 2006
Copyright 2006© LRP Publications