A lot of numbers cross our desks every day with the expectation to make meaningful analysis out of them. But do these numbers simply represent a measure much like 101 degrees can be a measure of body temperature? What does 101 degrees really mean if we don't understand that normal body temperature should be 98.6? If 98.6 degrees is a target, then a target turns a measure into a key performance indicator (KPI). We know that the important KPIs to follow regarding our personal health are blood pressure, heart rate, temperature, and weight. What KPIs will give you a clear view of your insurance company's claims health?

For any type of claim there are four important arenas to consider: customer satisfaction indexing (CSI), loss costs, expenses, and compliance. By breaking these arenas down into categories and assigning specific measures with appropriate targets to these categories, one can provide the company with easy-to-interpret results — especially if the individual KPI scores are aggregated to provide an overall category score. When monitored weekly, these overall category scores can help avoid the roller coaster effect of balancing customer satisfaction results against the need to control loss costs.

Even more important, however, are the KPIs that comprise these category scores. (We'll use examples from auto physical damage, but the same concept applies to property damage, medical expenses, theft, and the like.) For example, with CSI it is important to include the internal CSI scores and suppliers' CSI scores. What do customers really think of the company and the suppliers and agents associated with it?

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