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 Dennis
J. Incitti
Director, Statewide Policyholder Services
New York State Insurance Fund
Whenever claims or policyholder service operations
are discussed, the subject is likely to turn to measuring performance.
With resources stretched to the limit, every competitive state
insurance fund is focusing on outcome-based performance measures
for every phase of operations. Even monopolistic state funds tend
to examine the timeliness and efficiency of the processes of the
policyholder service workgroup.
Since the policyholder service operation is the income generating
side of the business, state insurance funds from coast to coast
are eager to compare performance measures.
State funds tend to agree that while outcome-based measures are
critical, some functional performance measures need to be examined
as well. A substantial piece of the customer service puzzle can
be missed without examining quality and production issues in the
underwriting, loss control, premium audit and marketing functions.
Functional performance measures
These functional measures begin with underwriting audits focusing
on adherence to procedures, file documentation, sound underwriting
judgment, accuracy of account information, and quality decisions
regarding pricing and classification.
The premium audit function is often measured on an audits-per-hour
standard, compliance audits performed, compliance audits without
errors, percentage of correct audits, percent of audits missing
NCCI cutoff, and percent of work turned in on time. Quality is measured
by the audit passing test audit criteria and the auditor’s
ability to explain adjustments to the customer.
Most state funds continue to struggle with developing meaningful
measures for loss control function. Some funds quantify the number
of loss control plans created and measure the quality of loss control
visits by reviewing those that produce letters to policyholders.
Many funds look at creative ways to convey the safety message and
examine both the number and quality of feedback from educational
seminars.
Teamwork and technology
The focus of most workers’ compensation carriers on teamwork
and technology has brought about the development of measures regarding
the performance of the policyholder service team and the reliability
of the technology utilized.
With customer service the key to developing loyalty, some state
funds attempt to measure fundamental service by examining whether
the team is answering a call within three rings and then satisfactorily
handling the call.
All state funds agree it is necessary to measure team work processes
that have a direct impact on the bottom line. Those measures include
new business processing, turn-around time on priority premium audits,
and zero tolerance for any potential workers’ compensation
penalties.
The proof is in the pudding
Regardless of the work process, most state funds are focusing on
outcome-based measures. There is clearly no way to measure overall
success without this “proof is in the pudding” approach.
Of all outcome-based measures, retention clearly appears on everyone’s
list of indicators of successful policyholder service. Since many
state funds are required to write all business that comes to the
fund, overall retention may not be as significant a measure as it
is in the industry on the whole.
Most funds agree it is necessary to examine the retention of profitable
or desirable accounts. Some have devised measures that include retention
of policies and premium dollars deemed profitable.
A key outcome-based performance measure for policyholder service
teams is premium audit pick-up. Many funds are striving to find
creative ways to make sure they have properly billed the policyholder
for the exposure they insure. This proactive approach to getting
it right the first time avoids the problems of collecting premium
after the fact and is a true measure of team performance since it
crosses functional responsibility and involves substantial interaction
between underwriting and premium audit functions.
The ultimate bottom line
One cannot review outcome-based measures without discussing overall
loss ratio, the very measure of the bottom line. This critical measure
shows policies, premium, claims count, medical incurred cost, compensation
incurred cost and compares total premium to total incurred cost
by policy year.
While this is the most telling of all performance measures, it
is only a retroactive look at what the service provided in the past
has reaped.
Measuring performance is a topic the Policyholder Services Committee
plans to explore at its workshop Oct. 8-10.
Author Dennis Incitti can be contacted at dincitti@nysif.com
or
(212) 312-7264. Also contributing to this article: Dora Cooke, California,
Barbara McMullen, Oklahoma, Mary Owens, Arizona, Mary Ross, Kentucky
and Barry Schumacher, North Dakota.
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