Benchmarking Your Insurance Coverage

By Messick, Richard | Journal of Property Management, March-April 1998 | Go to article overview

Benchmarking Your Insurance Coverage


Messick, Richard, Journal of Property Management


One of the hottest topics in property/casualty insurance is benchmarking. Risk managers in all industries are interested in obtaining a relative idea of the effectiveness of their property/casualty risk and insurance management programs. Benchmarking provides a method to measure this effectiveness by comparing an organization with its peers.

Common insurance benchmarks are:

* limits of insurance,

* premium costs,

* retention levels,

* loss amounts, and

* types of coverage purchased.

Property managers can use benchmarking to determine how their insurance and risk management program compares to the competition. However, sloppy or misguided benchmarking can cause more harm than good.

Doing it Right

An effective benchmarking exercise will provide a relative measure of how you "stack up" when compared to similar organizations. Although benchmarking against outside organizations only provides a relative comparison, the accuracy will be increased if the companies are most similar to one another in size (revenues and number of employees) and in scope of operations. In order to conduct a meaningful insurance benchmarking analysis, follow these three keys to success:

Key One. Compare yourself to peers. It is surprising how often companies compare themselves to companies in different industries for benchmarking purposes. This "apples-to-oranges" comparison is seldom helpful and can often be misleading. The better the match here, the more useful the benchmarking results will be.

Frequently used benchmarking surveys, such as Towers-Perrin's "Cost of Risk Survey" divide the responses into broad industry categories. The intention of these groupings is to lump the results from organizations with similar risk characteristics together. However, the results for each industry are comprised of responses from varying types of organizations. Asset size, overall financial strength, and the scope of operations will differ somewhat for the survey respondents. Therefore, these industry groupings include both large and small organizations that may have differing operating characteristics.

Conversely, benchmarking surveys often group results based on asset size, without regard to industry classification. In this case, the only common thread between the survey respondents is their financial size. Information from property management companies might be grouped with retail stores, manufacturers, and financial service companies. The usefulness of such data is limited, as these companies are not truly "peers" to one another.

How do you overcome the limitations inherent in much of the published benchmarking data? Try conducting your own "mini" benchmarking survey. Identify companies that have similar operations, exposures, and financial size as yourself, and ask the questions! In some cases, it may be difficult to obtain the information relating to deductible/retention levels, limits, premiums, losses, etc., as these are often considered confidential. One successful approach is to approach peers that are not in your immediate geographic area, so that there is no perceived competitive conflict. Even if this is not possible, we have seen good results by honestly stating your intention to assemble a confidential insurance benchmarking survey. State that the results will be shared with all of the respondents, with no company names being mentioned. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Benchmarking Your Insurance Coverage
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.