In working with our insurance carriers of all tiers, manyclients ask me which key performance indicators (KPIs)are the most measured in the P&C industry. While there areseveral that are widely used and accepted, frankly, they areoutdated.  I can confidently say that both the measuresand emphasis are changing for the better, though.

For many years, the industry focused on paint and parts(specifically the ongoing repair vs. replace debate). Even thoughthe parts metric has been the industry standard for many years, itis flawed. The parts metric measures the "percentage of partsdollars," which on the surface seems logical, but any time youmeasure a percentage of something, it can lead to unexpectedresults.

Take alternate parts for instance, the prime example of why thismetric is ineffective. Let's say you have a $2,000 estimate inwhich $1,000 is spent on parts. Of that $1,000, $200 is for a useddoor.

According to the old metric, your used-part use would stand at20 percent. If you found a cheaper door for $100, your used partsuse would dip to a mere 11 percent. Unfortunately, thispromotes selection of the most expensive alternate part to increasethe percentage of dollars, not exactly an optimal approach.

The sole reason for tracking KPIs is to control costs as best aspossible, which is obviously not happening here. Better to measurethe number of parts by type and the delta "savings" between thealternate part and the original, new OEM part.

Another dated mantra? The estimate is king. Not anymore.

Today's most-tracked measurement has nothing to do with estimatewriting at all. By far the most important measurement is customersatisfaction with the claims and repair process. Insurers haverealized that it is far more cost effective to retain currentcustomers than to obtain new ones. Policyholders see the claim asthe "moment of truth" because it is the fulfillment of the promisethe carrier made when the policy was sold.

Readmore of Greg's insights at Sounding the Horn!

Interestingly, insurers trust much of this experience to outsidepartners. According to JD Power and Associates, a customer'ssatisfaction points in the auto claims process are 62 percentrelated to the estimation process and 36 percent related to repairexperience, with the remaining two percent pertaining to the rentalcar. If a policy holder chooses to use a Direct Repair Program bodyshop, 98 percent of their potential satisfaction is based on theshop's performance. No wonder DRP shops are being so closelymonitored!

So the question is, what KPIs do you most value?