With the global recession happening today, it becomes more than a must to have insurance indicators or key performance indicators. This is very important in the industry of selling insurance, especially because there would be a serious decrease of customers purchasing these pre-need plans. After all, there are more important matters to spend money on - and this is quite the common perception amongst a lot of people today. This is precisely why it is important to implement and uphold such indicators, to ensure the satisfactory performance of any insurance company.
Running an insurance firm is not as easy as it seems at all. It does not pertain to just selling premium packages and then all you have to do is wait for your clients to pay their premiums. If only these were the only things needed to ensure the success of any insurance company! There literally is so much more to the matter.
It all boils down to the implementation of processes that are out to test whatever business strategy you might have right now - and this entails several management processes, including collection management and accounting. The most important management process, however, is performance measurement. When operating an insurance company, it is a must to know just what yardsticks to use when you are out to determine the current performance of the company. To do this, you need to determine the appropriate KPIs or key performance indicators to use.
In a nutshell, the KPIs that even the moguls in the insurance industry use are not at all that different from the ones that are used by retailers and companies that are more sales-oriented. This is because insurance companies also aim to sell their insurance packages so there is enough ground for similarity there. The difference lies in the products that these companies sell. Retailers, for the most part, sell their products and services on a one-time basis. Once a customer purchases a particular product, the retailer does not need to deal with that customer anymore. Insurance packages, on the other hand, are lifecycle products. This plays a huge influence on the types of KPIs that the industry uses.
A commonly used KPI in the industry is the number of policy sales - and is actually the most important. After all, policy sales would pertain to the actual sales of the company, so to speak. Thus, it is important for companies to focus on company sales because a dip in this would understandably hamper performance.
Another common KPI is the ratio of policies renewed against accumulated number of policies sold. By monitoring this KPI, it would be easier to determine which type of policy can sell more. This also helps determine the appropriate changes to implement, especially when it comes to updating both old and new customers.
It is also important to take note of the number of lapses in payments, as well as the missed payments. These are the contributions of customers, after all, and they very well play an important role in the success of the insurance company. Neglected payments can lead to more serious issues, such as foreclosure, which should be more than reason enough to include this as an insurance indicator.
