The top 10 insurance KPIs to track in 2024: how digital data intake transforms performance

Like nearly every other industry, the insurance sector has seen sweeping digital transformation in recent years. Embracing this shift has become a must for any insurance company seeking to stay competitive in 2024, and it’s easy to see why. Not only can digital technology boost efficiency and ROI for organizations; but insurance customers have also come to prefer and expect a more seamless, digital experience. 

The influence of digital transformation and digital data intake - the use of digital technology to collect customer data - is so comprehensive that making the switch can have an impact all throughout an insurance organization. We can see this clearly when taking a look at ten of the most commonly used insurance industry KPIs and the benefits that digital data intake can have for each.

10 insurance KPIs you need to track

1. Loss ratio

The loss ratio is a metric representing the relationship between total premiums earned and actual losses incurred over any given time period. This KPI helps measure insurance companies’ profitability by revealing how much they spend on paying claims and other expenses compared with the premium received. A low loss ratio indicates profitability, while a high one suggests possible financial strain.

As profitability becomes all the more important in the face of a global economic slowdown, digital data intake emerges as a highly effective way to improve the loss ratio. Digitalization enables you to reduce losses by:

• Identifying high-risk customers for whom you can decline coverage or charge higher premiums
• Reducing fraudulent claims with advanced fraud detection algorithms
• Eliminating human errors in manual paperwork that lead to losses from overpayments and delayed payments 
• Reducing customer service operating costs by deflecting to self-service
• Decreasing loss adjustment expenses by automating the claims process and simplifying how customers submit information 

2. Combined ratio

The combined ratio is another metric measuring the profitability and health of an insurance company, determining whether the company earns more from premium collection revenue than it pays out in claims. This KPI is calculated by adding the loss ratio (as discussed above) and the expense ratio, which you can find by dividing incurred underwriting expenses by earned premiums. A ratio below 100% indicates profitability, while higher may signal operational inefficiency. 

Like the loss ratio, the combined ratio is another critical measure of profitability that can be directly improved through digital data intake. In addition to the ways that digital data intake reduces loss, as we outlined above, it can also increase premiums through:

• Improving quote-to-bind times by making it easier for customers to submit their information
• Using data and analytics to identify upsell and cross-sell opportunities 
• Allowing for real-time customer segmentation 

3. Customer retention rate

Customer retention is absolutely essential for long-term profitability, especially in an industry like insurance where customers have the potential to stay with a single provider for a lifetime. For this reason, measuring, tracking, and optimizing customer retention rate, or the percentage of existing customers who remain customers after a given period, is essential.

By collecting important customer data through highly accurate, digital means, digital data intake gives you better access to more accurate customer data. This information enables you to build effective retention strategies and offer personalized services, helping enhance the customer experience and, with it, your retention rates. This is especially important at a time when 60% of consumers report a willingness to become repeat buyers after a personalized purchasing experience. 

4. Net Promoter Score (NPS)

Net Promoter Score (NPS) is a metric measuring customer satisfaction and loyalty. This score is calculated through surveys asking customers how likely they are to recommend the insurance company to a friend or colleague. A higher NPS score indicates satisfied customers likely to recommend the insurer, while a lower one reflects the opposite. 

As a measure of customer satisfaction, NPS is another important KPI related to customer retention. This has a significant impact on ROI, as a 5% increase in customer retention can increase company revenue by 25-95%. 

As we discussed above, digital data intake optimizes the collection and analysis of customer feedback, helping you better understand customer sentiment and identify areas for potential improvement. Beyond this, the digital take intake process itself stands to improve customer satisfaction, as it is significantly faster, more convenient, and offers a better overall user experience than traditional methods of customer data intake. 

5. Policy renewal rate

The policy renewal rate is a metric measuring the percentage of insurance policies renewed out of the number that have been sold. A high policy renewal rate is an indicator of customer satisfaction and loyalty, which, as we have explored above, has a positive impact on insurance companies’ revenue.

By leveraging digital take intake, you can tailor renewal offers based on individual customer’s behaviors and needs, offering the all-important personalization that increases the likelihood of policyholders renewing their contracts. Moreover, digital customer journeys make it significantly simpler and more frictionless for customers to renew their contracts, directly impacting this key KPI.

6. Underwriting profit margin

The underwriting profit margin is the net profit you receive from providing insurance coverage, excluding the income derived from investments. It’s calculated by taking the net collected premiums and subtracting losses, loss adjustment expenses, and underwriting expenses paid. It’s a key indicator of an insurance provider’s underwriting efficiencies and pricing strategies.

With digital data intake, you can incorporate predictive analytics into your underwriting processes, ultimately increasing underwriting profit margins by:

• Identifying patterns, trends, and emerging risks that may have gone unnoticed with less accurate data and less sophisticated data analysis
• Allowing you to draw on both real-time and historical data for better risk evaluation
• Helping you fine-tune your pricing models, aligning premiums more closely to the actual risk associated with each policy

7. Claims processing time

Claims processing time is a fairly straightforward KPI measuring how long it takes you to receive, assess, and settle an insurance claim after it is filed by a policyholder. Fast claims processing is essential for success in insurance, both for operational efficiency and customer satisfaction. 

As you can imagine, digital data intake has a major impact on claims processing time. More traditional methods of data collection, such as physical forms, PDFs, and emailing back and forth, are slow – and may be held back by human error. Digital processes and tools allow for significantly more efficient data intake, reducing claims processing times as you can quickly gather and assess required information.

8. Digital data intake efficiency

Digital data intake efficiency is a metric measuring how effectively or quickly an organization can collect, process, and utilize digital data. Because data collection is so key to the insurance business, digital data intake efficiency has a significant impact on your overall operational efficiency and the ability to make smart, data-driven decisions.

While generally speaking, all digital tools are faster and more efficient than their manual equivalents, some do have a greater impact than others. The right digital solutions can help you collect, process, and use data more effectively, improving your organization’s digital data intake – and overall – efficiency. 

9. Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the cost of acquiring a new customer, measured by dividing the sales and marketing expenses over a given period by the number of new customers acquired during that period. A lower CAC indicates more cost-effective customer acquisition strategies, while a higher one may indicate the need to revisit. This KPI is particularly important in the insurance industry, where companies must pay seven to nine times the same amount to acquire a new customer as other sectors do. 

Digital data intake can help slash CAC in several ways, including:

• Enabling data-driven marketing and lead generation strategies so you can target the right audience for your offerings
• Creating a unified, ongoing, channel-agnostic customer experience
• Eliminating extra steps that may create friction in customer acquisition

10. Digital customer engagement metrics

Digital customer engagement metrics are a category of KPIs measuring how customers engage with your digital platforms. These include metrics such as:

• Click-through rates
• App usage
• Conversion rates
• Bounce rates
• Time on page 
• Social media engagement
• Email engagement 

These KPIs provide insights into customer engagement on digital platforms, a key indicator of health in our digital-first era of insurance. By tracking these KPIs, you can refine digital engagement strategies, making your customer interactions more effective, enhancing engagement, and crafting an overall better customer experience. 

Transforming insurance KPIs with data

As the insurance landscape (and the greater business landscape) continues to evolve, it only becomes more evident that the path to staying competitive is paved with digital data. Insurers that embrace digital data strategies will see an impact on KPIs across the board, able to deliver superior customer service, meet customer expectations, and stand out amongst the competition. The bottom line? To thrive in this digital age of insurance, monitoring and optimizing these KPIs with digital data is imperative.