The impact that a good quality has on a brand or a business is tremendous, it allows commanding premium pricing for a product and is a powerful driver for gaining customer loyalty and growth. In the insurance business, quality is an expected attribute and a necessity, because of which there is a cost for not meeting the expected quality standards. For this reason, it is essential to quantify the cost of bad quality.
Most insurance organizations look out for the cheapest and the fastest way to get accomplish a process i.e., get the quote or policy out of the door and instead get the revenue in. This often implies multiple errors and inaccuracies right from the start. Unfortunately, those errors are not visible so their cost does not show up in the new business bound and the premium booked records.
On an average, it is observed that a typical insurance policy is prone to have six to nine errors and they are definitely not minor errors. These errors are mostly in the key exposure or coverage areas. If there is a steady and consistent repetition or the errors this mars the image of the insurance enterprise and leaves a bad impression of the company as very few industries would venture to accept such poor quality of performance as their “business as usual”. The lack of attention to the hidden errors can often make them pass unaccounted, as it, takes time to work through to the system and reflect it upon the business. However, the impact is eventually felt with the blasting service costs and a hike in the endorsements, an overworked and overpriced service staff, rising numbers of irritated customers and a greater number of E&O exposure with a lower profit margin.
A calculated solution can help detect the cost of bad service on retention, E&O risk and employee morale that can represent a greater cost than the loss of revenue as stated earlier.