Insurance is an effective way of protecting valuables against unforeseen circumstances. Anything that you value needs an insurance cover so that you may not have to bear the burden of unexpected losses entirely upon your shoulders.
The most important part of the insurer’s job lies in the assessment of risk and equating a definite monetary value to such possible losses in various events. If such assessments do not turn out to be accurate, there is a high probability of an erroneous policy causing unsatisfactory service to the policyholder as well as resulting in poor sustainability of the company in the long run.
In order to efficiently serve the policyholders and value their assets, insurance companies tend to set targets for maximizing performance and set key indicators of expected performance. Through OKRs, the insurance company can have a clear and definite goal of assessing risks efficiently and providing rewarding services to their policyholders.
Whether it’s an insurance against something as unpredictable as a natural calamity or a common kind of loss like pilferage/theft, OKRs help in minimizing inaccuracy, eliminating chaos and offer a smooth functioning of the day to day operations of insurance companies. By setting pre-determined goals and taking the effort towards the fulfilment of such goals, a company can easily find deviations and errors. This, in turn, helps in discovering effective solutions for controlling such deviations and managing the operations of the company in an organized, iterative and productive manner, also leading to greater satisfaction for the customers. Top ten examples of how great insurance companies incorporate OKRs in their business operations are as follows:
#1: Customer Experience Department
Description: This objective helps in gaining increased customer retention by reducing the customer churn, decreasing policy lapse ratio and providing customer appreciation dinners to retain the customers for a longer run.
Objective
Improve customer retention
Target Date: Annual-2021
Visibility: All Employees
Key Results
Decrease the policy lapse ratio from 27% to 10%
Policy lapse ratioDecrease average customer churn rate from 8% to 4%
Average customer churn rateInvite 50 long term clients to a customer appreciation dinner
Customer appreciation dinner#2: Claims and Processing
Description: The faster the claims get processed, greater would be the satisfaction of customers. This objective focuses on efficiently processing claims and conducting inspections without too much delay.
Objective
Increase the speed of claims processing
Target Date: Annual-2021
Visibility: All Employees
Key Results
Decrease average time taken for claim settlement from 48 hours to 36 hours
Claim settlement cycleReduce inspection turnaround time from 48 hours to 24 hours
Average turnaround timeIncrease digitization of documentary evidence submission from 25% to 50%
Digitalization of documents submission#3: Agency Management
Description: Increasing the number of trained insurance agents would help in securing greater market share in the industry.
Objective
Increase revenue through Agents
Target Date: Annual-2021
Visibility: All Employees
Key Results
Increase the number of policyholders in the southern region from 54K to 80k
Number of policyholdersIncrease revenue from Southern region from $100 million to $125 million
RevenueIncrease number of deals closed by agents from 10 to 50 per quarter
Bind rate#4: Human Resources
Description: Hiring a large number of agents would definitely help in securing a larger number of customers. At the same time, the question is whether the agents are trained enough to attract the targeted consumer segment.
Objective
Increase Hiring and extensive training for insurance agents
Target Date: Annual-2021
Visibility: All Employees
Key Results
Increase number of data scientist from 10 to 30
Number of data scientistIncrease number of training programs to new agents from 1 to 3 in a quarter
Number of training programsIncrease the number of agents achieving targets from 50% to 75%
Number of against achieving targets#5: Accounts and Financial Management
Description: This objective focuses on taking measures to improve the financial performance of the company by cutting down operational costs.
Objective
Reduce costs by enhancing operational efficiency
Target Date: Annual-2021
Visibility: All Employees
Key Results
Decrease the average processing cost per application from $300 to $250
Average processing cost per applicationDecrease financial reporting cost from $20k to $15k in Q2
Reporting costsIncrease Revenue Per Client / member (RPC) from $700 to $800
Revenue per client#6: Branch Operations
Description: It is essential to follow up with customers who default in payment of premiums which would help in reducing the rate of customer dropouts. By reducing this rate, the company can retain customers who would otherwise turn into potential defaulters.
Objective
Improve customer experience in branch
Target Date: Annual-2021
Visibility: All Employees
Key Results
Increase customer satisfaction score from 6 to 9
Customer satisfaction scoreReduce turnaround time for consumer complaints from 36 hours to 12 hours
Average turnaround timeIncrease number of referrals from existing customers from 20% to 40%
Number of referrals#7: Accounts and Financial Management
Description: Accounts and finance play a major role in all industries. The financial stability and profitability of a company is measured by its key financial indicators. This objective focuses on improving financial stability and profitability.
Objective
Improve financial performance and profitability
Target Date: Annual-2021
Visibility: All Employees
Key Results
Increase the net income ratio from 0.2 per dollar to 0.45 per dollar
Net income ratioDecrease financial transactions error rate from 0.08% to 0.05% by Q2
Transactions error rateIncrease sales growth by new policies and renewals from 40% to 60%
Sales growthDecrease debt to equity ratio from 1.4 to 0.8 by Q2
Debt to equity ratio#8: Accounts and Financial Management
Description: This objective focuses on taking measures to increase the profitability of the company by diversifying investments as well as increasing revenue from operations.
Objective
Increase revenue from operations and improve investment management
Target Date: Annual-2021
Visibility: All Employees
Key Results
Increase quarterly company revenue from $250M to $300M
RevenueIncrease investment in mutual funds from 50% to 70%
Investment in mutual fundsIncrease net income ratio (based on each dollar of premium) from 6% to 10%
Net income ratio#9: Accounts and Financial Management
Description: Insurance companies need to effectively channelize their loss control programs in order to limit their liability and increase their profitability on the event of claims. At the same time, such programs should not disrupt consumer satisfaction.
Objective
Increase the efficiency of loss control programs
Target Date: Annual-2021
Visibility: All Employees
Key Results
Decrease the loss ratio from 40% to 30% in the current quarter
Loss ratioDecrease the cost of risk allocation contracts from 35% to 28% of the budget
Cost of risk allocation contractsIncrease the underwriting surplus for loss coverage from 0% to 5%
Underwriting surplus#10: Branch Operations
Description: This objective focuses on minimizing errors during branch operations and increasing operational productivity.
Objective
Minimize operational errors
Target Date: Annual-2021
Visibility: All Employees
Key Results
Decrease billing error rate from 0.5% to 0.02%
Billing error rateIncrease automation of PoS(Policy owner services) from 35% to 50%
Policy owner servicesConclusion
Setting great OKRs starts right from the top management of an organization and gets delegated to the branch level and can be expanded down. Insurance sector protects the consumers from unforeseen liabilities and losses. In the same manner, setting up these 10 OKRs could protect any insurance company from major failures and losses, enabling it to perform better than the competitors. A great OKR software not only helps in strategizing the goals of your business for optimal performance but also helps in better productivity of employees. Try reading some of the other great OKR examples on Customer experience OKRs, Banking OKRs,Sales OKRs, Marketing OKRs, HR and Engineering OKRs.