Benchmarking with specific data by insurance agents and brokers for their clients is a relatively new and growing phenomenon, and technology is driving the efficient development of effective benchmarking services for some lines of business. The concept of benchmarking in insurance is simple: provide guidance to a buyer that the terms, including coverage and cost, are reasonable relative to other similar organizations.
The authors of a recent article on the topic (see here) take a broad view of benchmarking by including specific benchmarking services as well as general studies on buying trends. Benchmarking services vary, from general reports with broad perspectives to account specific and analytic benchmarking service. Examples of studies and services include the following:
It is too early to say whether the more expensive and account specific benchmarking services will gain ground, or whether insurance agent and brokers, and their clients, will continue to rely on the general studies.
There are some downsides to benchmarking, one being cost. The cost of account-specific benchmarking services can be significant, and possibly a threat to smaller insurance agents and brokers.
In order to be effective, benchmarking relies on the accumulation of data from many insureds. If the data set is not broad enough the benchmarking comparison will not be effective, and could provide misleading information.
One question not openly discussed is whether there are any privacy issues related to the sharing of data. Some insureds may consider the provision of their data to a benchmarking service by a broker or insurer a breach of confidentiality, particularly when it will ultimately be used by competitors to make business decisions.
eSpecialty Insurance is your specialty insurance expert. We have developed a streamlined marketplace to provide multiple proposals from a range of competitive insurers, along with expertise to help you evaluate your exposures and choose the best combination of comprehensive coverage and price. We look forward to working with you.
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