The Claims Team That Met Its Numbers and Lost Its People
You lead claims for a regional insurer. For 18 months, the VP of Operations has tracked two metrics: average cycle time (target 12 days) and cost per claim (target $1,150). Both are green. Meanwhile, voluntary turnover among adjusters has risen from 11% to 29%, and exit interviews cite 'constant pressure to close fast' and 'no time to investigate properly.' Reopened claims have doubled, and two large commercial claims were mishandled, drawing regulatory attention. The VP wants to add a third dashboard metric: reopen rate. A senior adjuster tells you privately: 'We game the cycle time. We close and reopen instead of investigating. The dashboard made us do it.' Your CEO is satisfied with the current numbers and questions why you would change anything.
1. Diagnose what is happening to the performance measurement system and explain why adding reopen rate to the dashboard is unlikely to fix it.
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This is a classic case of metric fixation and goal displacement: the organization optimized the measures rather than the underlying purpose. Three symptoms confirm it:
- Gaming: adjusters close-and-reopen to hit cycle time. The measure now records activity, not quality.
- Unintended behavioral consequences: turnover and mishandled claims are outputs of the measurement system, not separate problems.
- Goal displacement: the legitimate goal (accurate, fair, timely claims) has been replaced by the proxy (12 days, $1,150).
Adding reopen rate is a proxy-patching response. It treats the symptom (gaming one metric) rather than the design flaw (single-loop measurement that rewards speed without coupling it to quality). Adjusters will simply find a new way to game the composite - for example, reclassifying reopens or rushing investigations differently. A measurement system must couple efficiency and quality metrics and be paired with qualitative feedback and periodic audit, or it will keep producing the same dynamic.
2. The CEO asks why you would change a system that is 'working.' Draft the core argument you would make, including what you would propose instead.
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Frame the argument around risk and sustainability, not around the dashboard's aesthetics:
- The numbers are green because behavior has been distorted. Reopened claims have doubled and two commercial claims drew regulatory attention - these are leading indicators of loss, currently invisible to the CEO.
- Turnover at 29% carries a real cost: recruiting, training, and error rates rise. The current 'efficient' cost per claim is subsidized by burnout.
- The senior adjuster's admission is evidence the system is not measuring what the CEO thinks it measures.
Proposal:
- Rebalance the scorecard: pair cycle time with reopen rate, quality audit scores, and complaint/escalation rates; never let one metric dominate.
- Add a quality gate before closure for claims above a threshold (e.g., $50k).
- Audit a sample monthly and feed findings back to adjusters.
- Track turnover and engagement as operational risk indicators.
- Run a 90-day pilot on one team and compare error and turnover outcomes before scaling.
Present it as protecting the CEO from a hidden liability, not as criticizing past decisions.