We realize the impact good quality has on a businesses and brands. It can give the liberty to command premium-pricing structures for the product and is a powerful driver for the consumer loyalty and development. In the insurance business precisely, quality is expected as a necessity. Because of this reason, there is a cost to not meeting quality standards. However we can quantify the cost of bad quality as insurance organization often look for the most economical and quickest modes to accomplish a process i.e. get the quote or policy out of the door and usher the revenues in.
The former also has room for plenty of errors and inaccuracies right from the very beginning. Unfortunately, most of these errors are hardly visible as such; their cost does not reflect in New Business Bound as well as Premium Booked reports. One of the commonest errors were spotted in a typical insurance policy accounting to more than 6-9 errors and none of those were minor. These errors were in the key exposure or the coverage areas. Very few industries would actually accept such a poor quality as ‘business as usual’ as compared to the greater resentment.
On the contrary, most of the hidden errors do not get the attention they deserve as it often takes time to work through the system and reflect upon the process. However the impact is eventually felt with the inflating service expenditures an increase in the endorsements, overworked service staff, most likely irritated customers, paving the way for lower retention, a comparatively higher E&O exposure and finally lower profit margins.
In order to mitigate these costs, risks and exposures a good quality system needs to be installed to ensure that new businesses and policies are streamlined to diminish the error rates.