Benchmarking: Setting the Standard in the Insurance Industry
What Is Benchmarking?
“Benchmarking is the practice of measuring a system’s performance against a standard.”
– International Risk Management Institute, 2022
Benchmarking is a term used in various industries to set the precedent of how good (or bad) a company is performing against industry standards. Benchmarking allows industries to set guidelines to track goals, pace progress, and assess other metrics for success.
Why Benchmarking Matters
Benchmarking provides an analysis to objectively assess performance against peers and quantify opportunities for improvement.
Within the insurance industry, benchmarking has a particular application to claim management. Benchmarking for claim management helps users obtain perspective on the efficacy of tools and efficiencies in processes.
Benchmarking finds instances of superior performance so users can understand the underlying processes and practices driving performance. After determining factors are discovered, companies can improve their performance by incorporating these best practices into their operation. The key to success is not continuously copying processes, but innovating solutions to create optimal conditions for success.
Why Use Benchmarking for Insurance?
Benchmarking is critical in identifying and justifying opportunities to maximize resources, funding growth strategies, and capturing a more complete picture of a company’s strengths.
With benchmarking, companies understand how fast their company solves claims compared to industry peers.
By using the standards provided by benchmarking as a reference, insurance companies are able to:
- Improve processes
- Test products
- Gather competitor research
- Uphold higher quality standards
- Identify pain-points & create solutions
Another major benefit of benchmarking for insurance is the use of benchmarking for claim management. Benchmarking uses centralized data to improve every aspect of claims management, from claim filing and evidence gathering to automated claims reports.
How Does Benchmarking Improve Performance?
In order to reap the results of implementing benchmarking software, there are two crucial requirements for success:
- Clear Key Performance Indicators (KPIs)
KPIs are the metrics to measure success. If the goal is to resolve claims faster, the KPI to continuously benchmark would be tracking the time spent gathering evidence
- Clear industry standards: Industry standards guide quality. What established precedents are you competing against? Using the previous example of faster claims resolution, if the industry’s established standard for claims resolution is three days, benchmarking would reveal whether your company is ahead of or behind that standard timeline. The information for the industry standard helps companies adjust their processes for improved performance.
The benefits of benchmarking include:
- Gaining perspective on performance compared to other companies
- Identifying areas of improvement
- Enabling a mindset and culture of continuous improvement
- Setting performance expectations
- Monitoring company performance
- Promoting customer satisfaction and loyalty
Overall, benchmarking is a valuable tool to improve performance and stay updated on industry standards.
Want to learn more about benchmarking for insurance?
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