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Insurance - What are Insurance KPI's

Key performance Indicators or KPI's in insurance

Key Performance indicators are the beating pulse of an insurance entity. The operational flows of insurance allow you to navigate the peaks and troughs of the areas in the business to refine, improve or revamp.

What are Insurance KPI's that should be monitored?

Before we get into the specific KPIs, what I like to encourage is getting a view of the operational flow of the business, these must have data points that allow you to view the activities. Manual or paper based does not cut it.

Ratio's in Insurance are all important remember to take out or add elements that are not part of the reinsurance or risk/profit model eg: Catastrophe or Excess Of Loss, salvages, recoveries etc.

KPIs for Different Business Areas

  • Marketing and Sales: Track leads, conversions, and sales performance.

  • Claims: Monitor claim frequency, severity, and handling efficiency.

  • Operations: Measure turn-around times for key processes, such as policy issuance and claim settlement.

  • Financial: Monitor solvency, asset management, and operational costs.

Top KPI's measured and actively monitored - add in your product lines here

  1. Loss Ratios measure the profitability of insurance products. Calculated as:

    1. Claims amount / Premium X 100 = Loss Ratio

    2. Motor

    3. Non-Motor

    4. Product lines

  2. Average policy Age - Indicates customer Loyalty (months & years)

  3. Average Policy Amount - Provides policy and underwriting risk (Gross)

    1. Product

    2. Package

  4. Average Discounts applied to policy holders

    1. Insurance product packages or standalone products

  5. Debit order success Rate to measure efficiency of premium collection

  6. Refunds outflows of money need to be monitored

  7. Cancellations are indicative of competitors and service levels

  8. New customer Churn - customers on the books for less than 30 days is

  9. Marketing and Sales Funnel

    1. Marketing prospects

    2. Leads

    3. Conversions

    4. Sales

  10. Retention Ratio - Number clients that wanted to cancel and were retained

  11. Average cost of Repairs (Motor)

    1. Accident Damage

    2. Glass

    3. Other

  12. Average cost of claim (Non-Motor)

    1. Building and structure

    2. All Risks

    3. Household

  13. Operational Costs (FTE/Staff)

  14. Salvages/Recoveries

  15. Operational Measures

    1. average call time

    2. number of calls

    3. average wait time

    4. top enquiry

  16. Turn-around time for operations flows

    1. assessing/loss adjuster submissions

    2. quotes/repairs/waiting time

    3. customer service enquiries

    4. Ombudsman claims

    5. Complaints

Note: Exception and Key Fraud measures will need to be closely monitored against baseline measures and common activities in the outflow of services and or funds from the business. Controls and segregation of duty monitoring to be established.

KPI Meeting Best Practices

  • Schedule regular KPI meetings to review and analyze performance - Monthly is good

  • Invite key stakeholders from relevant departments (e.g., underwriting, claims, operations).

  • Review KPIs against targets and identify areas for improvement.

  • Discuss root causes of underperformance and develop action plans to address them with owners.

  • Implement corrective measures and track progress regularly.

Additional Questions and Answers

Q: How often should KPIs be monitored? A: The frequency of KPI monitoring depends on the nature of the KPI and the business's reporting cycle. Some KPIs may be monitored daily (e.g., loss ratios), while others may be reviewed quarterly (e.g., retention ratio).

Q: Who should be involved in setting KPIs? A: KPIs should be established collaboratively by key stakeholders, including senior management, operational teams, and data analysts.

Q: How can KPIs be used to improve business performance? A: KPIs can be used to identify trends, pinpoint areas of concern, and develop strategies to improve profitability, customer satisfaction, and operational efficiency provides expert advice and consulting to insurance entities looking to optimise their insurance data management and projects.

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