Insurance agency KPIs are metrics that provide a quick snapshot of how your company is performing. When you analyze these numbers, you can gain a good understanding of your agency’s strengths and weaknesses, allowing you to make the necessary adjustments to succeed.
One of your top priorities as an insurance agency owner is to ensure your company’s growth year after year. To accomplish this, you must track your agency’s performance using key performance indicators (KPIs).
With insurance agency KPIs, you can improve your company’s performance and put your employees in the best position to succeed. In this article, we’ll go over the top metrics you should be tracking in order to facilitate growth within your agency and effectively execute your business strategy.
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What are key performance indicators (KPIs) in insurance?
For decades, data and analytics have driven claims-related business decisions in the insurance industry. However, the insurance industry, like the old adage “the cobbler’s children have no shoes,” lags behind other industries in using team KPIs to measure company-wide performance.
Also read: Best health insurance companies in Texas
An insurance policy A metric or key performance indicator (KPI) is a metric that an insurance company uses to monitor its performance and efficiency. Insurance metrics can assist a company in identifying areas of operational success as well as areas that require more attention to be successful. These KPIs are frequently used to compare insurance companies to determine which would be a better investment.
Why are insurance agency KPIs important?
Insurance company KPIs are more than just a set of numbers. They are tools that determine whether or not your company is meeting its objectives. When you track KPIs, you hold your employees accountable for their results. The metrics serve as a reminder to your team members of their roles and responsibilities, as well as that you want to see progress along the way.
Every thriving business understands the value of tracking valuable metrics because it keeps its goals in sight. As a result, KPIs are critical for both short-term and long-term growth because they provide information that allows you to make data-driven decisions.
“What gets measured gets done,” as the adage goes, and this certainly applies to insurance companies. Employee morale improves when they can monitor their output, which is critical in a people-based industry like insurance. Everyone can stay on the same page and contribute to the best of their abilities with built-in transparency in work effort.
With that in mind, we’ll go over three types of KPIs: cost-related, productivity-related, and lead-related. All of this will provide you with a better understanding of how your company operates and allow you to optimize it for growth and sustainability.
Agency for cost-related insurance KPIs
Cost-related KPIs are the figures associated with the expenses incurred by your company during the sales stage. Here are a few metrics you should keep an eye on in this category:
- Price per bind
This KPI refers to the cost of binding a policy and acquiring a client. This KPI must be measured monthly in order to keep your cost per bind low.
- Price per quote
The cost per quote denotes how much it costs your agency to prepare a quote for the client. A low cost per bind combined with a high cost per quote indicates that clients are uninterested after receiving the estimate. When this occurs, you should monitor your cost per quote on a weekly or daily basis to identify potential bottlenecks.
- Lead price
Cost per lead is a metric that informs insurance agents about the effectiveness of their marketing campaigns. You must measure the effectiveness of your marketing efforts to ensure that you do not go way over budget, and the cost per lead will assist you in doing so.
KPIs for lead-related insurance agencies
Rates are a good metric to track if you want to know the quality of your leads. The number of leads you’ll get depends on how well your sales pipeline works. To identify any problems, look at the success rates to identify potential bottlenecks. Here are a few examples of insurance agency KPIs related to leads:
- The quote rate
Quote rate is a good indicator of employee performance because it compares the number of quotes sent by an agent to the number of leads contacted. This KPI can be broken down by an agent to better understand your team’s performance.
- The binding rate
The percentage of quotes that your agents convert into legally binding policies is referred to as the binding rate. Again, it’s a good indicator of your staff’s performance because the KPI shows which agents are capable of closing deals.
- Contact frequency
The contact rate is the number of leads you can contact after only one contact. If the client responds.
Insurance company KPIs related to time
When it comes to insurance companies, time is of the essence. These KPIs assess the level of customer satisfaction as well as the efficiency of your employees. Time-related KPIs include the following:
- Speed of underwriting
Underwriting speed is the most noticeable time-based KPI. This KPI measures the length of the underwriting process. The faster the underwriting process, the more satisfied your clients will be. Underwriting speed is affected by factors such as the thoroughness of client information.
- Talk time with the producer
This KPI assesses how well your insurance producers engage with your clients. Producers with a lot of talk time are great at communicating with prospects, which helps with lead generation. If you notice that one of your producers is underperforming, you should think about investing in their training and skill development.
- Average time to settle claims according to policy
This KPI measures the average length of time it takes to settle claims based on the policy type offered by your agency. Each insurance policy will have different claim periods and settlement lengths. Auto insurance claims are typically settled faster than medical claims, which is why this KPI exists.
Insurance company productivity KPIs
These sets of KPIs track employee productivity to give you an idea of how well each member of your team is doing. Examine the metrics that fall into this category:
- New policies for each agent
This KPI assesses the effectiveness of each agent in your organization. Insurance agents’ numbers can be compared to determine which sales team is the most efficient. To keep an eye on your staff’s performance, you should ideally monitor this KPI weekly or monthly.
- Underwriting expense to revenue ratio
The underwriting expense ratio compares the agency’s total expenses to the total premium acquired over a given time period. The costs include onboarding, underwriting, customer service, and other services. The goal is to reduce your underwriting expense ratio as much as possible because a high underwriting expense ratio indicates a lack of staff productivity or efficiency.
- The loss ratio
The loss ratio is an important metric for insurance agencies because it measures your company’s profitability. This KPI calculates an agency’s paid claims losses as a percentage of premium earnings. A high loss ratio indicates financial distress, which is typically caused by slow underwriting speeds, inaccurate claims estimation, and lengthy claim cycle times.
- Production vs. quotas
This KPI must be tracked if you want to measure your employees’ effectiveness in meeting their goals. Insurance agents are classified into two types: captive and non-captive. Captive agents only sell policies from one company, whereas non-captive agents sell policies from multiple companies.
This KPI encourages your team to meet a reasonable quota without discouraging them, which is critical for maintaining a high quota-to-production ratio.
How to Monitor Insurance Agency KPIs
With all of the metrics we’ve discussed here, it can be difficult to keep track of them all if you don’t use a CRM tool. A CRM tool is a piece of software that allows you to track key metrics, automate processes, and build stronger client relationships.
CRM tools are great because they make data collection and analysis easier, allowing you to make data-driven decisions. Monitoring your KPIs is one thing, but taking the right actions can help your insurance agency grow. There are numerous excellent CRM tools available, so select the one that best meets your requirements and preferences.
You must be consistent in monitoring your KPI numbers, or else you may discover gaps in your agency’s performance. As a result, we recommend CRM software, which allows you to set goals for individual agents or entire teams. You can then establish timely communication so that everyone meets their goals and objectives.
Finally, it’s about quantifying your progress and making adjustments to ensure your company is on the right track.
In conclusion
If you want to grow your business and attract more customers, you must track key performance indicators (KPIs). By monitoring the right metrics, you’ll gain a better understanding of how your business works and how you can improve it. Keep track of the top insurance agency KPIs we’ve mentioned to ensure your company’s success.
Profitability is critical to the survival of your insurance agency.
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