How Benchmarking Your Property & Casualty Insurance Can Reduce Costs and Optimize Coverage

MARCH 4, 2025

An effective property and casualty benchmarking tool enables you and your broker to quickly and easily compare your insurance programs (workers’ compensation, property, and others) to those of similar organizations across a range of metrics. These can include premiums and rates, program structure and design, funding types, class codes, and experience modification factors (e-mods). This tech-enabled data can help refine and optimize your insurance programs with specific actions and better decisions.

Case Study: How Benchmarking Improved a Workers' Compensation Program

Challenge: USI helped a mid-sized manufacturing company — with a total payroll amount of about $2 million — combat rising workers’ compensation costs, which were impacting its overall profitability. The company's management sought to reduce these costs and secure more competitive rates from insurers by benchmarking their data against peer organizations in their industry, as well as those with similar revenue size, number of employees, and geographic location.

Solution: The client implemented USI’s benchmarking technology platform, which provided access to comprehensive data on workers' compensation costs for USI clients with total payroll amounts ranging from $1 to $2.5 million. The platform allowed the client to compare its workers' compensation metrics with those of peer companies and identify areas for improvement.

The benchmarking data revealed that the company’s workers' compensation costs were 15% higher than the industry average for similar-sized organizations. Key areas of concern included higher-than-average injury rates and longer claim durations.

Action Plan: Based on the benchmarking insights, USI helped the company develop a targeted action plan to address the identified issues.

• Safety training: The company invested in enhanced safety training programs for its employees, focusing on high-risk areas identified through the benchmarking data.
• Early intervention: The client implemented strategies like on-site medical evaluations and return-to-work initiatives to address workplace injuries promptly and reduce claim durations.
• Claims management: Partnering with specialized claims management experts helped the company streamline the claims process and ensure the timely resolution of claims.
• Carrier negotiations: The actionable solutions placed USI in a strong position to negotiate better insurance rates by demonstrating the company’s commitment to aligning their plans with industry standards and best practices.

Financial Impact: Within the first year of implementing the benchmarking-driven action plan, the client achieved significant cost savings.

1. Reduction in workers' compensation premium: The company’s premium decreased by about 20%, resulting in an annual savings of $45,000.
2. Improved injury rates: The injury rate dropped by 25%, leading to fewer claims and lower overall costs.
3. Shortened claim durations: The average claim duration was reduced by 30%, further contributing to cost savings.

By leveraging USI’s benchmarking technology and data, the company identified key areas for improvement and implemented targeted strategies to optimize its workers' compensation program. The result was a substantial reduction in costs and improved overall efficiency.

A Deeper Dive Into Analytics

The case above highlights the broad strokes of optimizing an insurance program. To fully understand how the process works, you must look deeper into the analytics and how it leads to targeted risk control to drive down premium and retained losses.

Assume that workers’ compensation accounts for 74% of total losses (severity) when compared to other business risks, and represents 86% of the total incidents (frequency). The organization experienced spikes in claim frequency and severity over previous policy years, prompting a more detailed analysis to identify loss drivers. In this case, the leading cause of loss was liquid/grease spills.

In this example, mitigating claims related to liquid/grease spills alone can create up to $850,000 in savings. To maximize savings and overall value, USI examines data from all workers’ compensation claims while isolating the activities and jobs that generate the most claims. Then, a targeted safety program must be designed and implemented to address the specific causes of those claims. At USI, our experience has shown that a targeted risk management process focused on reducing and/or eliminating claims and cost drivers can result in premium reductions of up to 30%.