Partnering with an insurance Business Process Outsourcing (BPO) provider can offer insurers incredible cost savings, access to specialized experts and technology, and more time to spend on their core operations. But finding the right BPO partner is only the first step to a successful outsourcing strategy.
Insurers need to continuously monitor the performance of their BPO providers. They should establish and track a handful of key metrics and performance indicators as an objective measure of their progress. Below, we’ll highlight some of the key metrics that insurers can use to assess the performance of their providers and explain why this is necessary for successful outsourcing.
The Role of Performance Measurement in BPO
To ensure a successful long-term partnership, insurers need to assess whether their chosen BPO provider is delivering the results that were expected of them before the partnership began.
The partners likely created a service level agreement (SLA) at the onset of the partnership. Creating and tracking key metrics will keep both parties accountable for their responsibilities and ensure they adhere to the agreed-upon expectations. This helps both parties identify improvement areas and ensure the partnership is aligned with their overall business objectives.
As mentioned above, there are countless reasons why insurers outsource part of their operations to BPO partners. The insurance BPO market is growing rapidly, expected to see a CAGR of 7.76% over the next five years. By setting benchmarks and ensuring quality assurance, insurers can optimize their outsourcing partnership for operational effectiveness and success in a competitive market.
5 Key Metrics to Measure Insurance BPO Performance
No matter what tasks or workflows insurers are outsourcing, they should continuously monitor a handful of key metrics to uphold a high quality of service even when they don’t have an active, hands-on role.
Take a look at some key metrics that insurers can track for better transparency and visibility into their BPO partner’s performance. Keep in mind that insurers can track more service-specific metrics depending on the workflow they’re outsourcing, like claims processing, customer support, underwriting, and others. These are some of the most common metrics for insurers to track when working with a BPO provider:
1. Turnaround Time
Turnaround time refers to the time the BPO provider takes to complete a specific task or process. This metric commonly applies to claims processing, policy issuance, or policyholder inquiries.
Insurers can track and monitor turnaround time to ensure their BPO provider meets any benchmarks established in the service level agreement. Based on the performance tracking, insurers can determine whether or not they’re providing services within an acceptable timeframe.
For instance, they may have agreed upon a turnaround time for claims processing of 30 days from filing to the resolution. If the BPO provider is consistently taking 45 days or longer, both parties will need to work together to identify bottlenecks and see where processes can be streamlined for better efficiency.
Regularly tracking turnaround time will help insurers speed up service delivery times for improved policyholder satisfaction.
2. Policyholder Satisfaction
Monitoring policyholder satisfaction helps insurers gauge the overall policyholder experience and the quality of service the BPO provider offers. Plus, it’s a helpful measure in determining policyholder loyalty, an important indicator of ongoing success.
Insurers can measure policyholder satisfaction by:
- Issuing surveys to agents and policyholders
- Tracking reviews
- Monitoring Net Promoter Scores (NPS)
Looking for patterns in reviews and survey responses can help pinpoint any ongoing issues with a provider’s service. If the responses consistently reference poor email support, for example, this is a specific workflow that needs to be improved.
3. Error Rate
The error rate measures the accuracy and quality of a BPO provider’s service delivery. A certain level of errors and mistakes is often expected, as 100% accuracy rates are unreasonable. But, insurers should set acceptable margins of error as a benchmark for the BPO provider to adhere to.
The consequences of a consistently high error rate include costly reworks, processing delays, and lower policyholder satisfaction. Tracking the error rate helps insurers discover patterns and root causes of costly errors. Working together with the BPO provider, insurers can implement corrective actions to result in fewer errors and better accuracy.
4. Cost-per-Claim
Not all insurers will outsource claims processing to their BPO partner. Those that do should track the cost-per-claim to evaluate the cost-effectiveness of the process. This metric measures the average cost the insurer incurs for each claim the BPO partner processes.
Monitoring this metric is necessary to ensure the provider’s service delivery aligns with the insurer’s cost management strategy. Plus, cost-per-claim data can provide unique insights to insurers, allowing them to identify cost-saving opportunities and areas where workflows could be more streamlined.
The potential cost savings is one of the principal reasons why insurers outsource to BPO providers. They can analyze the cost-per-claim metric to determine if the pricing structure with the BPO partner is congruent with their operational efficiency. If not, they may be able to negotiate more favorable pricing or seek out a different BPO provider that offers more financial benefits.
5. Issue Resolution
Lastly, issue resolution is an essential metric for tracking insurance BPO performance, especially if the insurer has outsourced its policyholder support tasks to them. This measures the provider’s effectiveness in handling policyholder escalations, complaints, and other issues.
This might include tracking data like:
- Time taken to resolve issues
- The severity of policyholder issues
- The number of escalations handled within a timeframe
- Effectiveness of the resolutions
Using the data collected, insurers and BPO partners can collaborate to address policyholder concerns, enhance their experience, and increase their satisfaction.
Making the Most of Your BPO Partnership
Earning policyholder trust and improving their satisfaction is the key to retaining market share. The best BPO providers can help you strategically navigate today’s hyper-competitive marketplace and enhance your policyholder experiences through accurate, timely services. And by tracking key performance metrics, you can enhance your partnership even further and take your operations to the next level.
Covenir: Your Onshore BPO Partner
Covenir seamlessly becomes a part of your team to provide on-brand service you can trust. After all, we’re not just an extension of your team; we ARE your team. We focus on getting every detail right, so we’re constantly collaborating with you to ensure we’re exceeding your expectations.
We offer the perfect blend of human touch and modern technology to ensure your policyholders receive efficient and proactive service. In turn, your team gains the freedom to work on your core operations without sacrificing the policyholder experience in return.
Contact us today to learn how working with a performance-driven BPO provider can help you grow and navigate the modern insurance market.