Why you should measure your claims?
Insurance companies deal with a large volume of claims on a daily basis, and manually processing these claims can be time-consuming and error-prone. KPIs and claims automation can help insurers streamline their claims process and improve efficiency by automating certain tasks and reducing the need for manual intervention.
There are several reasons to measure KPIs in your insurance claims operations. Tracking and measuring metrics can help you identify areas where your claims process is performing well and where there is room for improvement. By analyzing this information, you can make adjustments and optimize your claims process to ensure that it is efficient, effective, and aligned with your business goals. This can be particularly important in the insurance industry, where claims operations play a critical role in maintaining customer trust and satisfaction. By regularly measuring and reporting on key metrics, you can show that your claims operation is working effectively to meet the needs of your customers and your business.
Are insurers and KPIs finally getting along?
But insurance companies are not very well known for measuring KPIs in the claims phase. In some cases, organizations choose to measure the wrong KPIs, or may not track them consistently over time. In other cases, there might not be a system and process in place to collect and analyze data, which can make it difficult to obtain meaningful insights from the metrics.
Several competitive advantages can come from measuring KPIs in the insurance industry. First, tracking and measuring KPIs can help you identify areas where your claims process is performing well and areas where there is room for improvement. By analyzing this information, you can make adjustments and optimize your claims process to ensure that it is efficient, effective, and aligned with your business goals. This can help you reduce costs, improve customer satisfaction, and increase revenue.
Tracking and measuring KPIs can help you stay up-to-date on industry trends and benchmark your performance against your competitors. This can help you stay ahead of the competition and maintain a competitive advantage.
So, what KPIs should you be measuring?
There is no one-size-fits-all answer, as companies align their metrics with individual goals and may use different KPIs to evaluate the performance of their claims processes. But these are a few common KPIs for claims operations:
- Loss ratio – The ratio of the amount of money paid out in claims to the amount of premiums earned by the insurance company. A low loss ratio indicates that the company is effectively managing its claims process and not paying out more in claims than it is earning in premiums.
- Incurred loss – The total amount of money paid out by the insurance company for all claims, including both settled and outstanding claims.
- Claim settlement ratio – Is the ratio of the number of claims settled to the total number of claims received by the insurance company. A high claim settlement ratio indicates that the company is efficiently and effectively managing its claims process.
- Average time to settle a claim – Average amount of time it takes for the insurance company to settle a claim from the time it is received. A low average time to settle a claim indicates that the company can efficiently process and resolve claims.
- Customer satisfaction – This is a measure of the level of satisfaction of the policyholders who have filed claims with the insurance company. A high customer satisfaction rating indicates that the company is providing a positive claims experience for its policyholders.