When I started in the business, audits and reinspections were the only way of gauging the effectiveness of staff or direct repair appraisals. My boss at the time likened it to trying to drive a car down the road by looking in the rear view mirror. A lot has changed in the gathering and use of electronic data. We can manage and alter appraisals before they have been paid through electronic audit or before an appraisal is committed, but we still need to manage the performance on an aggregated scale through meaningful key performance indicators (KPIs) or metrics. While this smacks of driving through the rear view mirror; we can also benchmark performance of an entire team and establish the value in real dollars of improving performance.
The question is what KPIs give us the best holistic picture of performance? To answer this we need to look at the reasons why we measure various metrics and ensure the most accurate appraisal that restores or replaces the vehicle. This, along with accurate underwriting, ensures that the company will continue to remain profitable. Part of that profitability is to create a positive customer experience so the insured will renew and the third-party claimant is satisfied with the process.
To achieve this, let’s look at five important areas in claims performance management:
- Productivity/efficiency — How many appraisals and supplements were done?
- Severity — Is severity in line with losses for similar vehicles in a similar jurisdiction?
- Accuracy — How many supplements were written and were the correct procedures followed the first time?
- Cycle time — Did the appraiser or shop efficiently move the vehicle through the process?
- Customer experience — Claims is the moment of truth for a policyholder, was the customer satisfied with our process and the repair?
By developing a scorecard using this balanced approach, we can evaluate the impact on financials and customer retention for auto claims based on the effectiveness of handling the physical damage. So, how does your scorecard stack up? Are you too focused in one area at the expense of another?