Introduction
Benchmarking is an interesting and unique method for evaluating your company performance or products. With benchmarking you can compare how you are doing, according to a specific indicator (benchmark), with direct competitors or with companies considered among the best in your sector.
Once the performance of your company has been assessed in the context, the purpose of this type of analysis is to calculate the distance from the top of the ranking and, therefore, to search for models or actions that can improve your business efficiency in order to reach or outperform your competitors.
It is very useful to use benchmarking to get a more objective idea of your performance, but let’s explore why in the example below.
Let’s consider an increase in sales of one specific product as our indicator to analyze: maybe our company registers a + 3%. This data alone could make us think that our current strategy is working well, therefore no improvement action is needed. However, if we take into account the performance for that same product of all the main competitors in our analysis, we could find that they register an increase of 15%. In this situation, we should ask ourselves: why is our company not reaching the same sales standards as the others?
With this simple example we have highlighted how the same data takes on a completely different meaning if analyzed in different contexts.
In this article we will talk more in detail about benchmarking. We will focus on the different types of benchmarking there are and on why using it effectively is so crucial during this Covid-19 pandemic. Finally, we will see some features of AgrEGG Benchmarking, a tool natively integrated into AgrEGG that is also available as stand-alone software.
Types of benchmarking
Benchmarking can be divided into four types, each one has different advantages over the others:
- Internal Benchmarking: this type of analysis is carried out within the same company comparing different departments or production units. The aim is to identify those who register the highest efficiency in order to emulate their practices in the departments that show worse results. However, you would be limited by the restricted area examined which does not allow a broad spectrum comparison.
- External or Competitive Benchmarking: as suggested by the title, this analysis takes into consideration your competitors and overcomes the limits posed by the internal one. With this method you can get an idea of the performance of the companies operating in your same market, but you are also able to gather information on what actions and practices have allowed these companies to reach the top levels. Unlike in the previous type, however, the data for comparison is much more difficult to find since it comes from competitors.
- Functional Benchmarking: with this type of analysis you are not necessarily comparing your performance to that of your rival companies, but rather to the ones that excel in a certain category of interest. The objective is to identify which innovative action or best practice has led these companies to excel in that specific category. In this case the companies are much more willing to share their data.
- Generic Benchmarking: with this, the best company practices are identified to try and import them into other sectors, even when different from the reference ones. In this case too, companies are more likely to share data, but it is more difficult to introduce the practices identified for inhomogeneities of the sectors.
Covid-19 in the Insurance Industry
To understand the impact that Covid-19 is having on the insurance industry, let’s take into account what the performances of insurance companies have been in the first trimester of 2020 . Data shows that this impact has been huge, to the extent that, amongst other interesting facts, European insurers’ volume of premiums seems to have fallen by roughly 30%.
With this alarming statistics, you can probably see for yourself why limiting your view to the internal data could turn out to be a real threat. Understanding the impact it had on your company alone is no longer enough. Almost everybody is experiencing a significant decrease, so knowing you are one of the many, surely does not help you to find your way out of it. What you need to know now is how your decrease compares to that of the rest of the market. Your goal should be to understand how your company solvency has been affected in a contextualized way, because with Covid-19 it is hard to know what is an acceptable decrease and what is a threatening drop. After you have considered these factors, you will have a better understanding of the situation and you will be able to act on it by foreseeing future consequences and preventing them from becoming an issue.
Focus on Solvency and Complaints
Using AgrEGG Benchmarking tool, our team of experts managed to extrapolate the solvency and complaints data of the main insurance companies. Now, let’s see how a hypothetical company would position itself among its competitors.
Thanks to this graph, not only we can evaluate their performance between 2019 and 2020, but we can also get an idea of how and with what severity Covid-19 has impacted their competitors. Amongst other things, we can also devise intervention measures to decrease the gap between them and other companies or identify actions that do not further decrease their trends.
Moreover, by analyzing the graph above, we can evaluate the number of complaints to extrapolate, for example, information about customer satisfaction and consequently understand which services make the customer more or less satisfied. In such a competitive market, being able to satisfy your customers is of fundamental importance in order to retain them.
As we can guess, without comparing ourselves to our direct competitors, it would be difficult to objectively evaluate our company since internal data alone would not enough to give us an idea of our actual performance in the market; for this reason, benchmarking becomes an essential ally for a complete analysis.
Why AgrEGG Benchmarking for Insurance?
So why choosing AgrEGG Benchmarking for Insurance? In this unprecedented time it became essential to understand how the market is dealing with this crisis, so make sure to be prepared.
If you choose AgrEGG, our team will be extrapolating the data you need from different reliable and verified sources in order to provide you with all the information you need, and it will offer a service of data sharing to always be on top of things.
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