A patient walks into a doctor’s office and says, “Good morning.”
The doctor says, “You better have that operated on immediately.”
The patient says, “Have what operated on immediately? You haven’t even examined me yet!”
The doctor says, “I’m following best practices.”
The patient says, “For what?!”
The doctor says, “Okay. Take some Ibuprofen, too.”
Can you imagine a doctor practicing medicine that way? Neither can we. By the same token, we can’t imagine insurance consultants practicing that way — prescribing remedies for operational maladies they haven’t yet diagnosed. Best practices connote the kind of preconceptions a perceptive insurance consulting practice can’t afford to have. In fact, the first work of an insurance consulting practice should be to assess and evaluate, rather than to prescribe.
A Benchmark is Just That
Insurance consultants should rely on industry benchmarks for just two reasons:
- To stay abreast of what transpires in the industries in which they work.
- To set minimum acceptable levels for their performances in service to their clients.
Insurance consultants should not exclusively rely on industry benchmarks for two other reasons:
- They indicate what has been done, rather than what could be done.
- They represent a status quo for which no consultant should settle.
The only thing that should worry you more than an insurance consultancy that has no benchmarking data is an insurance consultancy that uses industry benchmarking data as a principal measure of acceptable performance. Much like diagnosis of illness, meticulous examination is often required to diagnose operational issues and uncover the underlying dynamics behind any benchmarks or performance concerns. If your insurance consultant doesn’t aspire to more than that, it’s time to find another one.
Your Operating Model Should Be Yours
The consideration of industry benchmarks is especially important as you work toward, or validate, one or more target operating models for your core operations. But it’s always worth remembering and reiterating: It’s your target operating model — it defines your organization’s desired state. One size does not fit all forever. The model needs to be adaptable to accommodate your changing business conditions, market requirements, evolving technologies, and several other factors. To be sure, industry benchmarks are an important consideration in growth and competitive differentiation strategies. But no reputable insurance consultancy will look to write you a prescription for an operating model based on static industry benchmarks alone.
At Xceedance, we continuously collect industry benchmarks by industry segments for essential business priorities (including business line performance, digital readiness, customer centricity, workforce performance, technology deployment, and much more). By leveraging dynamic benchmarks in conjunction with our knowledge and expertise in the full lifecycle of insurance operations, we deliver Adaptive Target Operating Models for diverse insurance industry segments. And those models are personalized for your individual requirements and goals. We assess your current metrics, document as-is processes to help identify and design your optimal desired state, and continuously collaborate with your team to calibrate your Adaptive Target Operating Models — to ensure they are in line with your organization’s vision for growth.
To know if you’re talking with the right insurance consultant for your project, ask the following two questions:
- What industry benchmarks do you consider relevant to the work you’ll do for me?
- In what ways will you assist in modifying and/or exceeding those benchmarks in order to enhance the performance of my organization?
If the consultant wavers on the answers, it’s time to end the meeting. But if you get thoughtful answers that demonstrate deep industry intellect and take the nuances of your business into account, then you might want to consider an engagement, even if you start out with a narrow, exploratory scope.
When it comes to a determination of the right partners to advance your strategic goals, the only practices that matter are the ones that are best for you and your organization.
Learn more about how the industry-focused Xceedance consulting team supports insurer operations.
Tashi Singal is a senior consultant at Xceedance, with a focus on helping re/insurers achieve business and technology transformation.