Performance and control management is one of the most crucial responsibilities of any manager in an organization.
Not only does this activity transcend managerial levels but also organizations and industries. Stated in simplest terms, it means keeping a track of what one is doing and taking remedial actions to undone any wrong action taken during the process. One of the best methods to scrutinize delivery of results is to implement a Balanced Scorecard strategy which is developed using Key Performance Indicators (KPIs). An industry like Health Insurance certainly needs some mechanism to take care of its activities as it is a highly service based domain.
Health insurance is among one of the fastest growing industries. The rising awareness among people and their growing exposure to hazards of life is propelling the industry to grow. It is a service based industry and hence requires taking care of the way it works. The industry has its own specific criteria to tackle the performance and control issues to deliver better services to its customers as well as meet its own overall objectives. Some of the benchmarks against which the players in the health insurance industry can judge their performance include number of policies sold, claims processed, premiums paid, operating profit, consumer complaints and so on.
The health insurance industry is vulnerable to a large number of risks. These risks can be classified as risks related to corporate governance, politics, legal issues, documentation, technology and frauds. A company providing health insurance services should employ people having appropriate knowledge of the health industry. It should be dynamic enough to respond to changes in the government policies. Also, it should be prepared to tackle any legal issues which might crop up as a result of entering into a contract with a third party. Moreover, such a company has to deal with accuracy of documents, security of data and reinsurance administration. Cut- throat competition obviously remains an important issue to be considered.
Now if we take a closer look at how KPIs help, we find that KPIs assist managers to learn about the achievement of targets by translating them into numerical figures. They let managers develop strategies with greater accuracy and detail. KPIs with reference to health insurance industry can be broadly categorized under the following heads: Financial, Operations, Service and Customer Perspective. These can be further refined to give more specific measures such as new business premiums, IRR on new business, policies sold, value of policies, consumer complaints, access to insurance, claims processed, average processing time and the likes. All these parameters help an organization assess its place in the fiercely growing health insurance sector and concentrate on lacking areas.
Business of any kind calls for periodical performance management and control of deviating activities. Health insurance business is no exception. Rather it calls for more precise supervision because of the very nature of the work. Huge funds are involved and there is public accountability. Not to forget the ever increasing rate of competition. In a nutshell, health insurance industry needs to manage its own risks first to successfully be able to manage other's risks. KPIs and Balanced scorecards are useful tools in the hands of the managers to simplify this task to some extent.