Key Performance Indicators or KPIs provide you with an overview of how well your organization is performing. Selecting the appropriate KPI is essential in evaluating the success of your agency. They help you understand the current business strategy and what you can do to reach your goals. Although KPIs vary from business to business, insurance agencies must keep a tab on some specific metrics to monitor their business growth.
Often, there are hundreds of metrics that one can keep an eye on. Optimizing each one will help your business in a certain way. But when it comes to agencies, dedicated tools such as insurance-specific CRMs allow managers to track these KPIs and improve operational efficiency. Here are some crucial insurance agency KPIs (key performance indicators) organized by category to help you understand your business better.
Navigation:
- Lead-related KPIs
- Cost-related KPIs
- Time-related KPIs
- Productivity-related KPIs
- Tracking your insurance agency KPIs
Lead-related KPIs
Rates are a good indicator of your lead quality. Over time, the volume of leads coming in will vary. However, if you look at the success rates, you can identify the issues with your sales pipeline. Rates are insurance agency KPIs that can help you find and remove bottlenecks. These include the following:
1. Contact Rate
Contact Rate is simply the number of leads you can contact after you have reached out to them once. If you can get in touch with your client again after the first conversation, it indicates that the lead is interested. This indication will allow you to proceed further.
2. Quote Rate
Quote rate can help you understand the staff performance. It measures how many quotes an agent has provided compared to the leads they have contacted. Break down the Quote rate by producers (agents) to better understand individual performances.
3. Bind Rate
The Bind Rate is a useful KPI as it allows you to see which agents are closing deals. It is the percentage of quotes converted into legally binding policies.
Cost-related KPIs
Cost-related insurance agency KPIs allow you to measure the costs associated with each sales pipeline stage. It can help you optimize pipeline expenditure. Here are some of the expenses that you need to keep an eye on at a regular interval.
4. Cost per bind
Cost per bind is also known as cost per acquisition. Agencies often overlook this particular KPI but it is extremely important to know your expenses. This KPI tells you how much it costs your institution to bind a policy and acquire a customer. You must measure this KPI every month.
5. Cost per quote
Cost per the quote is another crucial KPI that agents often overlook. This KPI gives you an idea of what costs you incur when you put a quote in front of your customer. If you see a low cost per quote, but the cost per bind is high, then something is causing customers to drop after they get the estimate. These are bottlenecks that you will have to identify and address. One can look at this KPI monthly. You can also break this down by week or by day to get a more granular view.
6. Cost per premium by lead source
This KPI allows an agent to understand which marketing source has the lowest cost per acquisition. This metric breaks down the monthly expenses to drive revenue in premium by the lead source.
7. Cost per bind by lead vertical
This KPI allows you to understand which domains your agency excels in more than others. This metric helps you to understand the cost to bind a policy based on verticals. Different verticals include automobiles, home, life, health, P&C, and so on. Your team may excel in binding auto insurance, but not so much on home insurance. You may also have a KPI set up for each vertical, such as life insurance KPIs. This KPI allows you to see bottlenecks in the systems and what you can do to improve performance in other domains. Understanding the strength of your team can also help you market your agency and the policies it sells accordingly.
8. Cost per item by lead vertical
Like the previous KPI, this helps you understand which vertical has the most items to be written. You can track this KPI monthly or weekly, as required.
Time-related KPIs
Time-based insurance agency KPIs help measure how effectively your agency is utilizing its time. It correlates with efficiency as well as customer satisfaction indicators.
9. Average time to settle a claim by policy type
This KPI measures how much time, on average, it takes to settle insurance claims. The KPI breaks it down by policy type because each type has its characteristics. A simple example could be medical claims versus auto claims. In general, medical claims take more time. It is also one of the key performance indicators for health insurance companies.
10. Producers talk time and dials
This metric is crucial to understand how effective your producer activity is and how well they are doing with prospects. A producer who has a low talk time cannot engage prospects. You may consider training and skill development for such agents.
11. Underwriting speed
Underwriting speed or underwriting cycle time is a KPI that measures how many business days it takes for the underwriter to process an application. It measures the number of days elapsed between an application submitted to the underwriter and a formal decision.
The factors that affect underwriting speed include inefficient customer information collection as well as underproductive staff. These factors increase the total time needed to underwrite a policy. This KPI is also a notable metric for understanding customer satisfaction levels. The longer the company takes for underwriting, the unhappier the customer will be.
Productivity-related KPIs
Productivity KPIs will require you to track employee activities. You can use these metrics for insurance agent performance analytics. This information will give an idea about how an individual or a team is performing. Here are some of the primary KPIs in this category.
12. Quotas vs. Production
This metric measures how effective the sales agents are at meeting targets. There are typically two types of insurance sellers: one group works solely for your organization while the other group only sells your products. They are called captive agents. They often sell policies for many companies, and these third party-sellers provide the clients with the best rates. The Quotas vs. Production KPI allows you to set goals for your team in a way that challenges them to do better but does not discourage them from achieving a decent quota to production ratio.
13. New policies per agent
This KPI measures the performance of the organization at the individual level. The “New Policies per Agent” KPI allows managers to benchmark producers against each other and even compare them to external competitors. The idea is to have the most efficient sales team. One can track this KPI monthly or weekly and can further use this to provide targeted training to employees.
14. Underwriting expense ratio
This KPI measures the total company expenses against the total premium acquired over a certain period. The expenses include the cost of selling, underwriting, onboarding, and providing customer service. The higher value of this KPI indicates a lack of productivity or inefficient processes. Generally, manual procedures, unproductive agents, and outdated sales strategies cause a high underwriting expense ratio. This KPI is specifically beneficial for P&C insurance.
15. Loss ratio
The loss ratio is an industry-standard metric that measures the profitability of a company. It is a publicly reported metric when the company is traded publicly. Therefore, poor performance impacts the market value of the brand. High values happen when there is a poor estimation of claims, inefficient underwriting processes, or extended claim cycle times. Natural catastrophes such as earthquakes or hurricanes can also increase the loss ratio.
Tracking your insurance agency KPIs
Once you have decided your insurance company performance indicators, you will have to set them up for tracking. Most large organizations make use of complex software platforms to do so. However, one of the best ways to track KPIs for your insurance agency is to invest in a CRM solution. A CRM tool does a lot more than providing you with metrics. It also optimizes data collection as well as other operations within the business. For instance, it can automate workflows for quotes, producers, opportunities, and more.
Plus, you can set goals for individual agents or entire teams. You can customize reporting and analytics and see the most crucial KPIs right from your dashboard. CRMs can also help improve KPIs with timely automated communication. For instance, they can remind you to phone a client or send them a personalized email with the relevant information.
Final thoughts
The above insurance agency KPIs provide you valuable insights into your company’s performance and what you can do to improve it. However, tracking so many metrics can be challenging. Furthermore, understanding what exactly you need to do to improve those metrics can also be difficult. That is why an insurance-focused CRM is a great tool for keeping tabs on your metrics and keeping them healthy. It allows you to incorporate automation in numerous crucial processes and reduce costs. It also improves productivity levels and increases retention rates.
LeadSquared has helped Pepper Insurance manage its partnerships with carriers & agents and their internal processes across the sales cycle. Take a demo and explore how it can help grow your book of business.
FAQs
Insurance companies and agencies must track cost, time, and productivity-related metrics to ensure their business growth. Some of the important ones are expense ratio, renewal or retention rate, quota vs. production, and average policy size. Read on to find out more.
The top P&C insurance metrics that carriers and agencies track are: Average total cost of case, legal expense per case, cycle time, loss per litigated case, and loss ratio.
The KPIs that help you track the performance of life insurance agents and their products are:
1. Policy lapse ratio
2. Average customer satisfaction
3. Sales/new business
4. Quota vs. production
5. Average policy size
6. Revenue per policyholder
7. Average cost per claim
