The insurance industry involves quite a lot of data monitoring. Whether your organization is interested in health, life, pet, car, or any other type of insurance, it’s essential to examine your business data in a way that can visualize how well your marketing tactics are working to bring in new clientele and keep them.
In this in-depth guide, we’ll explore some key metrics you need to use when working in the insurance sector to ensure that you can monitor and understand your data helpfully for your organization. Remember that you don’t have to use all these metrics in your analytics process– choose the metrics that align with your specific needs.
Top 10 Metrics for the Insurance Industry You Should Be Monitoring (and Why)
Cost per Quote
A critical KPI that agents frequently overlook is the cost per quotation. This KPI lets you track how much it costs to present your quote to a customer. Observing a low price per quote, but a high cost per bind indicates that a factor is causing prospects to lose interest after receiving a quote but before they bind. The most crucial thing to do is to examine this monthly, which may also be done weekly or daily.
Quote and Quota Rates
The most fundamental insurance KPI that may be used to assess employee performance is the quotation rate. The number of quotations a staff member has been able to offer relative to the number of leads they have contacted is known as the quoted rate.
Then there is the quota rate. This insurance KPI has a name that is only one letter different from the one before, but it measures something more significant than the quotation rate. The effectiveness of staff in hitting sales goals is evaluated using the quota rate.
The corporation shouldn't establish a high quota that is impossible to meet; otherwise, employees could feel depressed and unmotivated. This rate can be used to determine the correct percentage.
Revenue by Policyholder
A straightforward KPI called revenue per policyholder evaluates the amount of money the insurance firm makes for each policyholder it services. This is a clear financial key performance indicator that can benefit most insurance companies.
It enables you to see how much money each policyholder generates. Let's imagine, for illustration, that you sell life insurance products. Higher coverage premium insurance will bring in more money per policy because you can charge more for more services or coverage.
A low, or trailing, value for this KPI could be caused by several things, including lousy agency and internet sales, poor in-person customer service (which lowers retention rate), or a lack of adequate investment policies. Work to enhance your distribution plan and investment operations to increase business profits.
Referral and Contract Rates
The contract rate insurance metric is straightforward but very important for measuring growth. Compared to the overall number of leads they contacted, this KPI tracks how many leaders a staff member could reach out to.
The volume of insurance referrals KPI compares the number of new clients during a specified period to the number of new clients referred. This insurance metric provides insight into two distinct areas. The first is the degree to which your current customers are pleased with your goods and services. The second is the percentage of organic growth vs. growth fueled by advertisements for the business.
These two measurements complement one another and are extremely helpful for insurance providers in almost any market.
New Policies, Retention Rates, and Ongoing Policies Per Agent
Insurance company leaders want to know about their top-performing agents and who they are. These metrics are valuable for internal evaluation rather than external.
The insurance statistic for new policies per agent aids businesses in identifying their top performers and fosters healthy competition among agents. Recent client acquisition can also be an expensive and time-consuming procedure.
Firms renewed policies are far more profitable if they can extend an existing policy. The percentage of renewed policies compared to the number of new guidelines issued is tracked by the essential insurance measure known as the retention rate.
The Policies In-Progress Per Agent statistic is another metric to consider. The agent-specific level is not the focus of this insurance statistic. It divides the number of active policies by the number of employed agents. This insurance KPI can be utilized along with the sales growth rate and the retention rate statistic to try and pinpoint inefficiencies.
Average Settlement Time for Claims
The Average Time to Settle a Claim KPI tracks how long insurance claims typically take to resolve for each type of coverage your company offers. Each insurance policy will have a distinct claim period, and the time it takes to determine that specific claim may fluctuate significantly.
Here’s the formula for this KPI:
Total Days Taken to Resolve All Claims Per Category / Total Claims = Average Time to Settle Claims
Depending on your industry and company model, claim cycle time may be your corporation's best predictor of client satisfaction. Low claim cycle times are crucial for retaining customers. Keep an eye on this KPI to limit cycle time.
Gross Written Insurance Premiums
GWPs are the entire premiums issued by the insurance business for a specific period before ceding, and commissions are subtracted. Using this measure, you may monitor the number of GWP created and renewed over time. The price per new and renewal GWP should be added to compute this KPI. This measure can also be divided into groups based on gender, age, and premium kind.
Loss Ratio
The Loss Ratio metric measures the total amount of claims paid to policyholders by the insurance firm as a share of the total premium revenue during the same period. This is a sign of an insurance company's performance.
This ratio shows whether or not companies are collecting enough premiums to cover claims or collecting tips higher than the number of claims paid. High loss claims from companies may indicate financial difficulties.
Average Insurance Policy Sizes
The average policy size provides your insurance company's financial information. This measure computes the collected premiums and divides them by the policies issued over the specified period. Since more minor policies are typically less dangerous than bigger ones, this metric is also beneficial for calculating risk.
The Frequency Metric
Frequency is a measurement of the anticipated number of claims based on exposure, which can assist you in determining the probability that a loss will occur. A low frequency indicates that while the loss occurrence is feasible, it hasn't happened frequently in the past and is unlikely to happen anytime soon.
A moderate frequency suggests that the loss event has occurred occasionally and will likely do so in the future. A high frequency suggests that the loss occurrence occurs frequently and will likely continue to do so.
For instance, losses from workers' compensation and those from auto or truck accidents typically occur frequently. Property losses often happen on a low frequency, while general liability losses usually occur on a moderate frequency.
The frequency must be measured to assess the likelihood of making claims payments and financial viability plans. This measure determines how rates are set.
How Can DashboardFox Help in Monitoring Insurance Industry Metrics?
Metrics are highly functional in any industry because it helps you see which ones you need to focus on and which you need to maintain. This gives you a more systematic approach to your improvement points for easy operations.
DashboardFox presents itself as a handy tool when it comes to monitoring the metrics in the insurance industry. With its countless functions and features, including data visualization, you can create dashboards that allow you to see which direction you are heading in real-time. Anyone can use DashboardFox to create graphs, tables, charts, and heat maps if you need to be more detailed.
Interactive dashboards can also be done using DashboardFox without needing any computer programming certificate or a degree in IT. Its codeless report-building structure has allowed the newest novices to navigate through DashboardFox without needing much help.
They also have a soft spot for small businesses, so they made their one-time payment policy the norm instead of keeping monthly, quarterly, or annual subscriptions. You can save more and get even more from DashboardFox.
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