Running a financial protection agency like insurance can be a daunting task. There are a lot of variables involved. What helps is tracking them. Numbers always rule the game, right?
They can also work in your favour. Quantitative analysis helps you be aware of your current standing in the market as well as the big picture. In comes KPIs!
Key Performance Indicators — or KPIs as we all know them — help you track where your financial protection agency is performing well and where there is room for improvement.
By taking action to improve your KPIs, you can ensure your protection agency is continually growing and thriving.
For insurance agencies looking to improve business, tracking these KPIs is the starting point of growth.
Here are three reasons why:
- They help provide a blueprint for lead generation, identifying closure rates, and other relevant information.
- You can then establish business processes to address improvement areas and optimise those performing phenomenally well.
- This will ultimately drive how they deliver these services to the clientele in accordance with their needs.
And boom. You have a winning system, which when optimized, is designed to help you.
There are a lot of KPIs (key performance indicators) that you can track for your insurance and protection agency in order to measure growth.
Here are the ones you should keep an eye on
1. Lead conversion Rate
is defined as the percentage of people that you issue the policy (offer insurance coverage), the Policy issued Rate determines leads that convert into paying customers. It offers insight into the number of leads you are able to generate and can lay the groundwork for whether the short-term initiatives actualise long-term results.
A high policy issued rate indicates that your insurance agency is efficient at turning interested inquirers into paying customers. For the bottom line, it demonstrates that your agency’s sales team functions optimally and can handle the inquiries coming in.
For example, It is measured by dividing the actual customers who actually purchased policies by the number of prospects contacted or to the number of potential customers who visited the business. Assume that If the business talked to 100 prospects in a month and 15 of those prospects bought policies, then the lead coversion ratio would be 15%.
Policy Issued Rate = No. of Actual Customer Converted / No. of leads
2. Customer Acquisition Cost
Bringing in customers can be an expensive ask. Depending on the size of your agency, advertising spending, and collective marketing efforts, this number can vary across extremes. Tracking your Cost Per Customer helps you determine the average cost of acquiring a single new customer while you’re issuing the policy them and then track whether that’s equitable across the realm.
This covers all the costs for marketing, advertising, and sales functions and compares their profitability with the income earned for one policy issued . This is important because it shows how cost-effective the insurance agency is at issuing the polices and how that will translate into a profitable business future.
3. Quote Rate
The Quote Rate measures how many quotes you provide to potential customers. A high quote rate indicates that your insurance agency is effective at generating quotes. It signals that you are receiving considerable traffic from qualified leads actively interested in knowing more about your service.
Over the long run, it’s important to understand how many quotes you receive, how long it takes you to provide a quote, how many quotes you can get in a week, and how many leads you’re able to talk with weekly. These are all things that help you understand where your protection agency is at any given time. It is also important to ensure an even distribution of quotes. Every lead getting a moderate number of quotes is better than some leads getting many quotes and some getting 0 or very few quotes, even though the average is the same across both scenarios.
4. Cost Per Quote
The Cost Per Quote is the average cost of acquiring a new customer by quoting them. It also measures how much it costs the insurance agency to generate an insurance quote. This is important because it shows how efficient the insurance agency is at generating quotes for leads who are already qualified and interested in the product.
It offers insight into how the business runs internally, especially when compared with the Cost Per Policy Issued and high Cost Per Quote signals that there is some bottleneck that needs to be addressed before the company can experience true growth.
let’s say your cost for generating overall quotes were Rs 10,000 and ultimately you drove 1,000 conversions. Then by plugging in 10,000 / 1,000, your CPQ will be Rs 10.
Cost per quote = Cost of generating quote / Conversions
5. Cost Per Premium by Lead Channel
The Cost Per Premium by Lead Channel is the average cost of acquiring a new customer through each lead source (such as website, emails, application etc).
Measuring the Cost Per Premium by Lead channel can help agencies determine where their most profitable customers are coming from ie which channels are working effectively and can be boosted to drive further growth. It determines how well you’re doing with marketing your insurance agency and presenting it to the right target audience.
The lower the better, but it’s not something that should be used to determine your bottom line. Instead, it should be used to determine profitable channels and optimize them to receive more leads as well as quotes.
6. Average Time to Settle a Claim by Policy Type
This refers to the average time the insurance agency takes to settle a claim segregated by the type of policy. Simply put, it is the amount of time between when a loss occurs and when the benefactor receives payment for their claim.
This metric helps insurance agencies track how fast they can resolve claims. The Average Time to Settle a Claim by Policy Type can be a good predictor of future claims volume and savings that will result from quicker customer resolution times. It is also a measure of your daily performance and productivity.
The Average Time to Settle a Claim by Policy Type is an important metric for protection agencies to benchmark themselves against their competition and set targets for customer development during each phase of their business plan. Using this KPI can help understand how effective your operations team is so you can improve future efforts.
For medical: (Sum of Medical Claims Settlement Cycle Times) / Number of Medical Claims Settled
For Life : (Sum of Claims Settlement Cycle Times) / Total Number of Claims Settled
7. Sales Growth Rate
This refers to the company’s sales increment or decrements over a specific period. This metric is best utilized when broken into two different categories.
- The number of new policies
- The number of policy renewals,
As these two figures can give you more insight into how the business is performing.
Remember, KPIs are important. Data is always favourable BUT that’s not all that wins the game.
Knowing (and collecting) the right data will get you closer to your end goal. The metrics we’ve covered here will help you grasp an understanding of your position as a market player.
We would recommend following them up with more detailed insights as you progress across your business.
In addition, account for other variables (such as psychographic factors) that can have an effect on your bottom line. After all, it’s people that are using the numbers, right? Are they using them for the right result?