Segmentation - Significance of Segmentation for Insurance Organizations

Segmentation is an important aspect for most insurance organizations. The goal here is to offer balance with the service provided. By evaluating the company’s present service models, existing line of customers and account revenues one can get a brief outlook of the most and the least profitable customers and then on account of this segmenting the service models can help create the balance desired. A segmented service model allows focusing on greater resources according to the client requirements, build and develop stronger customer relationships and utilize the operational resources more wisely and efficiently.

Here is how to segment the book of business effectively:

  • Calculate the major steps in the current process and the minimum time spent on each.
  • Total number of clients possessed.
  • The revenue generated by each client.
  • Ensuring that the client generating more revenue gets more time span and attention from the organization.
  • Contemplating upon the clients who generate less revenue and take more organizational time.

The goal here is to offer profitability. One can calculate the cost of servicing each account within each segment. The processing time can also be assessed easily to know for instance the amount of time required to renew an account. Overall, one can have the producer’s time to pre market the renewals and the account manager’s time market the accounts to several carriers for renewal quotes. Even after this, one can look up into their staff’s compensations. This might also be inclusive of the annual salaries and additional expenses and other costs such as benefits, taxes, bonuses etc for each employee involved in the account to ensure how much is spend on an average per account on an hourly basis. It is also important to know how profitable each account is and where the processes could be refined to make them more profitable.

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