Benchmarking Metrics for PEOs and TPAs
The most precious asset across all insurance claims management is time.
Time changes everything. The more time passes, the more complex the claim can become, this is particularly true for Commercial Property claims, Workers’ Compensation claims, and Health Insurance claims.
Claims are time-sensitive because the nature of the issues that cause claims are time-sensitive and often life-altering. The longer it takes a Commercial Property to be repaired, the more reopening is delayed, the more revenue is lost. Delayed Workers’ Compensation claim could mean fines, additional costs, and financial burden on the employees.
In short, time is essential.
How can a Third-Party Administrator (TPAs) or a Professional Employer Organization (PEOs) monitor claim to ensure everything works efficiently? A proven method is benchmarking.
In this article, we will cover the definition of benchmarking, key-performance indicators, and how PEOs and TPAs can benefit from them.
What is Benchmarking?
Benchmarking is a method of measuring performance against your own data or that of your peers. By utilizing cross-market comparison, companies can gain perspective on how well their systems are performing compared to their competitors. Comparing metrics through benchmarking can help companies highlight patterns and areas of improvement for their claims management systems.
Benefits of Benchmarking
- Identify Metrics for Improvement
- Panoramic Vision of Performance
- Obtainable goals & Projections for the Future
- Improve Employee Understanding of the Claims Process
Benchmarking is a crucial tool when applied correctly. It’s vital to identify and compare key metrics.
What is a Metric? Is It the Same as a KPI (Key Performance Indicator)?
Metrics and Key Performance Indicators are not the same. A metric is used to measure and track the status of a specific process. A Key Performance Indicator measures how many successful goals a business reaches over time.
How to Use Benchmarking to Evaluate Performance?
Benchmarking is about quantifying how well a system performs.
After selecting a metric to evaluate, define the metric as:
- Internal Benchmark: Comparing results today against metrics from a year ago.
- External Benchmark: Comparing company performance against other companies.
There are two types of external benchmarking called ‘competitive’ for analyzing specific products, and ‘strategic’ for identifying overarching patterns that exceed within an industry.
Data collection and analysis will identify the areas for improvement. The next step is putting together an organized plan and set up SMART objectives.
What Are SMART Objectives?
SMART stands for:
- Specific – Isolate a variable and measure only one thing. The more things are defined as variables, the less likely it is to achieve accurate results.
- Measurable – There should be a quantifiable element to your objective. This refers to the metrics described earlier.
- Achievable – Set an objective that is attainable and feasible.
- Relevant – Meeting this objective should have an impact on the process.
- Time-bound – Determine how long it should take to achieve the objective.
What KPIs Should PEOs And TPAs Monitor to Improve Their Insurance Claims?
The best KPIs to watch on insurance claims are:
- Average Cost Per Claims
- Claim Frequency
- Claim Cost Component
- Time to Settle a Claim
- Resolution Rate
- Claim Life cycle
- Claim Success Ratio
- Underwriting Time
Remember, it is crucial to handle claims in a timely manner. A claims management system that centralizes work and automates tasks is an efficient way to improve KPIs and overall time spent on claims.
Terra is a cloud-native, intelligent claims management system that centralizes information and makes claims management easier. Schedule a demo to Learn more.