Insurance carriers are increasing their reliance on metrics as they manage their business and are not relying strictly on their own numbers, according to Jeffrey Rieder, president of the Ward Group, which conducts benchmarking studies for the insurance industry.
"Some areas where we see particular attention growing are in their use around predictive analytics, specifically within the claims organization," says Rieder. "Companies are using those metrics to integrate into their expert underwriting systems. A lot of the growth around claims has to do with managing the business better and how the business is changing, particularly with the downturn of the economy."
(Rieder and Tech Decisions editor in chief Bob Hyle discuss the use of metrics in a podcast on the Tech Decisions Web site. Click here to listen to their conversation.)
Rieder does not believe most insurance companies are satisfied with the information they have.
"They always are looking for more information," he says. "One of the downfalls is they don't take the time to track the information at the necessary level of detail to make decisions on managing the company. In many cases they just don't know what to do with the information."
Rieder explains many companies spend too much time trying to justify what the numbers are rather than trying to make better business decisions.
"It's like watching the bathroom scale each day," he says. "It tells you that you need to watch what you eat and change your lifestyle, but we get caught up in the trap of not making decisions based on what the information tells us."
Companies also mistakenly believe they are unique and they use that as an excuse for not tracking information, according to Rieder.
"We generally find the advanced metrics that stand out is information that provides perspective into what other companies are doing and comparing [the performance of others] to your own performance," he says. "[Making those comparisons] is an important component of making a critical assessment on the performance of your operation."
Rieder sees top-performing companies doing regular tracking as opposed to a one-time approach to analyzing their operation. Those same companies also track metrics that can be directly controlled by a department or individual, and break down metrics into the lowest common denominator.
"The best performers are breaking it down into finite information," he says.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.