Performance management and incentive design for Insurance companies: incentives that reward renewals and fair dealing, not only new business
Incentives shape how an insurer's people behave. Paying only on new business pulls attention from renewals, service and fair dealing, and sets branches against each other at year end.
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Share your requirementsWhy performance management and incentive design matters in insurance companies
Insurers often run a sales incentive built on premium or policy count, paid monthly or quarterly. It is simple and it works for volume. It also rewards the sale of whatever is easiest, invites a year-end scramble and says nothing about whether the policy stays in force or the customer was well advised.
A balanced scheme adds renewal, quality and conduct measures for sales, and speed, accuracy and customer feedback for service and claims. It spreads payment across the year, uses team elements where branches share the work and explains how a month-end rating turns into pay. Fewer, clearer measures work better than a long list.
How to set it up
1. Choose measures by role
Sales: new business, renewals and policies in force. Service: turnaround and accuracy. Claims: decision time, quality of reasons and complaints. Pick two or three per role.
2. Set targets from data
Use territory potential and past results, not a flat uplift. Explain how targets were set so officers can see they are fair.
3. Spread payment across the year
Pay part of the incentive on a quarterly or annual cycle that includes renewals, so the final quarter is no longer a cliff.
4. Add a conduct gate
A serious complaint or breach of the company's selling rules reduces or removes the incentive. State the rule clearly and apply it evenly.
5. Review and adjust yearly
After each year, check which measures changed behaviour, what went unexpectedly well or badly, and adjust before the next cycle starts.
Check these first
Before changing anything, find out what is true today. These take an afternoon and use your own records.
- Read your incentive scheme and list the behaviours it rewards.
- Ask three officers whether they could calculate their own payout.
- Check how much of annual incentive falls in the last quarter.
- See whether service and claims staff have any measure at all.
GullyHR can do this with you. Read how we approach performance management and incentive design in general, or share your requirements and we will tell you where to start.
Questions owners ask
Be careful. Pay linked to rejecting claims can distort decisions. Use measures like turnaround, accuracy and complaint handling, with recognition rather than a payout tied to outcomes.
Often enough to motivate and not so often that the year-end rush rules everything. A mix of monthly or quarterly payment with a year-end element tied to renewals works well.
Yes, where staff share customers and work. A small team element beside individual pay encourages cooperation. Keep it modest so strong individuals still feel their effort counts.