How To Measure Actuarial Performance Using Results-Focused KPI Tracking.

In the realm of actuarial operations, establishing a robust baseline for operational performance is paramount. To become high-performing, actuarial leaders must initiate the process by capturing a baseline of their team's performance. This will provide a comprehensive understanding of the team’s current position.

This involves identifying individual tasks within the actuarial function and meticulously recording the effort required to complete them. The recorded data creates an "initial" state, representing the expected time or effort (not necessarily optimal) for task completion.

Select the right measurement tool

Once you have completed this exercise you can shift your focus to which measurement tool is needed to track performance. Tracking tasks that need to be completed becomes imperative to evaluate whether the process exceeded or fell short of the baseline. For instance, identifying that only 13 out of 20 tasks were executed during a quarterly valuation period prompts crucial questions about the process, encouraging an exploration of what happened, why it happened and how to rectify issues in the future. Real-time measurement is crucial as it enables proactive support, preventing the team’s performance from spiralling downward.

Introduce relevant Key Performance Indicators

At this stage, implementing Key Performance Indicators (KPIs) becomes the next crucial step once the foundational elements are in place. KPIs are measurable values that help organisations and teams evaluate their performance against specific objectives and goals. They provide a clear and quantifiable way to assess progress, identify areas for improvement and make informed decisions. When applied within an actuarial team, KPIs are crucial in monitoring and enhancing operational performance. ?

At MBE Consulting, we advocate for a well-rounded and straightforward approach with KPIs centred around Quality, Cost and Delivery Time (QCD).

Quality is assessed by any deviation from agreed standards, cost measures the total expenses and delivery time gauges the process duration from data receipt to customer delivery. Focusing solely on one or two of these metrics can adversely impact overall performance.

Here's a breakdown of how you can apply KPIs within an actuarial team:

1. Define Clear Objectives

Clearly define the objectives and goals of the actuarial team. These objectives could include accurate risk assessments, timely financial reporting or efficient modelling processes.

2. Identify Relevant Metrics

Select KPIs that are directly related to the actuarial team's objectives. Common KPIs for actuarial teams may include:

Quality: Accuracy of projections, adherence to regulatory standards and compliance with best practices.

Cost: Efficiency in resource utilisation, the cost-effectiveness of modelling processes and budget adherence.

Delivery Time: Timeliness of reports, meeting deadlines for valuations and overall process duration.

3. Quantify Measurement Criteria

Clearly define how each KPI will be measured. For example:

Quality: Percentage of accurate projections or number of deviations from agreed standards.

Cost: Total cost it takes to complete a process.

Delivery Time: Average time taken for different stages of the valuation process.

4. Set Benchmarks and Targets

Establish benchmarks based on historical performance or industry standards. Set realistic targets for improvement. For instance:

Quality: Achieve a 98% accuracy rate in projections.

Cost: Reduce overall expenses by 10% without compromising quality.

Delivery Time: Decrease the average time for valuation by 15%.

5. Implement Real-Time Tracking

Use technology to implement real-time tracking systems for the chosen KPIs. This allows the team to identify issues promptly and take corrective actions.

6. Regularly Review and Analyse Data

Conduct regular reviews of the KPI data. Analyse trends, identify patterns and assess whether the team is meeting its targets. This analysis helps in making informed decisions and adjustments.

7. Foster a Culture of Continuous Improvement

Encourage a culture of continuous improvement within the actuarial team. Use KPI data to identify areas for enhancement and implement changes accordingly.

8. Align KPIs with Overall Organisational Goals

Ensure that the actuarial team's KPIs align with the broader organisational goals. This alignment ensures that the team's efforts contribute to the overall success of the organisation.

Our consultants fully understand how actuarial teams operate. We can help you to build relevant and growth-driven KPIs to help you lead your team to actuarial excellence.?