Balanced scorecard is a performance measurement system which is widely used across various industries. This article discusses about the potential application of balanced scorecard in controlling, improving and enhancing performance of insurance companies.

The insurance industry is growing rapidly all over the world. The growth, both in terms of quantity and quality, is notable. However, the growth is more lopsided towards the quantity part than the quality. Moreover, there are very few tools available to the insurance players to help improve their quality of internal processes and services. Therefore, their quest of quantity is most of the times achieved at the cost of the quality. They are too focused on reaching the maximum number of potential customers and fail to optimize their resources and capabilities to enhance the value of service they provide to the customers.

There are several factors which make the insurance operations very complex and uncontrollable. One important factor is lack of control or less control over the internal process or insurance operations. Insurance industry being in the business of protecting the economic interests of its customers and simultaneously managing the costs and losses occurring perpetually, is focused more on raising the number of customers, giving importance to collection of premiums to expand its financial base. This is a conflicting goal where the business tries to collect the maximum amount from the maximum number of customers. This means it tries to manage the expenses at an optimal level, striving to maximize the customer value as well as stakeholder satisfaction at the same time. Therefore, the interest shown in collection of premiums and new customer account must be shown in the disbursal process too. This has become very important due to the pressure and demands of the customers. And with poorly managed internal systems, it is not possible to satisfy the customer's expectations. On the other hand, management of internal systems is not a new concept to the insurance industry. It's an ongoing process, which involves handling a lot of sensitive and complex operations daily. It is this complicated area of insurance business which will be managed effectively by a comprehensive and strategically imperative toolbalanced scorecard.

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