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Mitchell’s Latest Industry Trends Report Examines Measurement of Insurance Claims Metrics

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Mitchell International, Inc., has released the second quarter 2011 edition of its Industry Trends Report (ITR) — the company’s quarterly publication that highlights industry-related trends, news items and statistics.  

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This edition’s Quarterly Feature, "Are You Measuring Your Auto Insurance Claims Metrics Properly?" by Mitchell Vice President of Industry Relations Greg Horn, examines how the industry can best execute repairable estimates by drilling deeply into performance data in order to obtain an achievable performance improvement goal. Horn’s analysis shows how measurably better claims processing outcomes can result from a clear plan based on carefully defined metrics. By expediting the flow of information to accelerate and improve claim management performance, all participants in the auto repair process are empowered to go from good to great.
 
"The key to success is obtaining accurate, up-to-date benchmarks relevant to a company’s unique business strengths so that performance can be compared against the industry average. These metrics need to be granular, segregated by type, age and country of origin and the geography of the repair estimate. Only then can an accurate comparison be obtained," said Horn.
 
Horn added, "Narrowing the comparison creates an achievable performance improvement goal and enables the focus to be on those people, parts and processes that can be improved. Measuring metrics the right way is exacting and demanding, but worth it in terms of improved business performance and more satisfied customers."

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Other insights into measuring metrics for business performance gains include identifying the distribution of the claims by inspection type (or appraisal channel) in order to ensure the data is as close as possible for comparison. For example, in the case of lower dollar estimates, removing these from the comparison data set alters the overall average paid severity and also reduces repair vs. replace, paint hours metrics and part use when comparing estimates to appraisal channels that routinely see smaller claims amounts. Accuracy of data, and identification of which data matters, is key to measuring metrics properly, and at the heart of any performance improvement initiative.

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Other valuable points of interest in the current issue of Mitchell’s ITR include:
 
• Mitchell’s Q1-2011 data reflect an initial average gross collision appraisal value of $2,878 — $66 less than this same period last year. However, by applying the indicated development factor of 2.4 percent suggests a final Q1-2011 average gross collision appraisal value of $2,948. The average Actual Cash Value (ACV) of vehicles appraised for collision losses during Q1-2011 was $13,441 — an increase of $420 over the same period last year.
 
• In Q1-2011, the average gross appraisal value for comprehensive coverage estimates processed through Mitchell servers was $2,305 — compared to $2,357 in Q1-2010. Applying the prescribed development factor of 3.7% for this data set produces only an increase in the adjusted value to $2,392 — reflecting the seasonality of comprehensive claims.

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