Canadian Underwriter

Stopping Claims Churn with Customer-Centric Strategies

September 19, 2016   by Dara Banga, President & Chief Adjusting Officer, DSB Claims

Print this page Share

Customer loyalty. It’s the Holy Grail for any business, isn’t it?

Yes, every business owner wants as many sales as possible. But most business owners want something more than one-time customers. They want raving, lifetime fans who will identify with their brand, stick with them, and spread the word to spark referral business.

But these days, that kind of brand loyalty is harder than ever to come by. That’s because consumers have changed, and the bar is continuously being raised on what it takes to achieve that kind of loyalty. Marketing strategies that once lured customers in and kept them loyal are no longer effective.

Dara Banga, President & Chief Adjusting Officer, DSB Claims

Dara Banga, President & Chief Adjusting Officer, DSB Claims

Today’s consumers are smarter and more demanding. They’re digitally connected. They want more choices. They want the experience and the relationship as much as they want the product they’re buying. And their expectations of that relationship are evolving.

Insurance buyers are no different.

Today’s insurance buyers want more from an insurance company than just a policy. They want the relationship. They want life advice that’s relevant to their situation from a professional who will meet them on their terms. And they want a partner who will go beyond selling to genuinely make their lives better.

The claims process is a microcosm of the overall experience for insurance buyers.

A claim represents one of the most critical times in the insurance relationship, and is a key measuring stick of satisfaction for policyholders. It’s a time when the policyholder is vulnerable and relying on the insurance company to be a trusted advisor. Depending on how it goes, the claims process can make or break the relationship.

Of course, when a policyholder files a claim, he wants the best settlement he can get. But even a satisfactory claims experience is no longer enough to keep a customer coming back. Consumers have high expectations of the experience. They want it to be quick, convenient, painless, and transparent. And if the claims process doesn’t meet their expectations, there’s a good chance they won’t be policyholders for very long. A new insurer is just click away, in many cases.

As you know, during the claim process, potential stumbling points abound. Policyholders often don’t understand the policy terms and conditions or nuances of coverage. They may not document the circumstances surrounding the claim or have any way of showing the value of the items damaged or destroyed.

In some cases, they may not submit the claim on a timely basis. No matter what the circumstance, if your payment is not congruent with the policyholder’s expectation, satisfaction will suffer. These days, policyholders aren’t quietly dissatisfied. They often take to social media to explain their sides of the story, casting you in a very unfavorable light.

In fact, 14 percent of policyholders who have submitted a claim in the past two years are dissatisfied with the way it was handled, and 83 percent of those unhappy customers plan to change, or have already changed, insurance companies.

That’s one of the findings of Accenture’s latest Global Insurance Customer Survey of nearly 8,000 auto and home insurance customers in 14 countries.

But here’s the real kicker: even if policyholders are generally satisfied with the claims experience, that’s still not enough to guarantee their loyalty. Average claims satisfaction doesn’t cut it anymore. Even among the vast majority of policyholders surveyed who filed a claim and were satisfied, 41 percent say they are likely to switch insurers in the next 12 months. In other words, insurers lose a high percentage of policyholders who file a claim, no matter what.

There are two crucial pieces of the customer loyalty puzzle.

To get a handle on this claims churn and achieve that elusive policyholder loyalty, you have to meet and exceed customer expectations on many fronts. That includes giving policyholders the kind of claims experience they expect. Two of the most crucial pieces of that puzzle are speed and transparency.

Ninety four percent of the Accenture survey participants noted speed of settlement and transparency of the process as two of the biggest expectations of policyholders during the claims process, and two of the most important contributors to customer loyalty. Policyholders want a speedy, efficient settlement process, and they want to be kept in the loop throughout the process.

Technology can bring that speed and transparency to the claims process.

Today’s insurance buyers want conveniences such as digital options to interact with their insurance agent and instant access to the status of their claims. They want engagement.

According to the Accenture survey, consumers are even willing to share data about their vehicles and homes with their insurance companies to speed up the claims settlement process and get personalized recommendations that can help them better manage risk and reduce their losses.

Technology exists that can greatly streamline the claims process. For example, with an auto accident, sensors could wirelessly call for help automatically, notify a repair shop, and get a tow truck on the scene, all without the policyholder even making a phone call. The car could be fixed and delivered to the policyholder’s door.

Consumers understand that the technology is available, so when they file a claim and bump up against a slow, antiquated system, they’re naturally going to be on the lookout for something better.

Unfortunately, the financial services industry – and insurance companies in particular – have been among the slowest to adopt the mobile and other new technologies that many consumers crave.

Sticking to old-fashioned ways has proven to be the perfect recipe for claims churn. Forty-four percent of policyholders in the Accenture survey said they would switch insurance providers just to be able to take advantage of digital channels to monitor the claims process.

It takes more than technology to create a positive claims experience for policyholders.

Of course, a policyholder’s overall satisfaction with the claims process depends on multiple factors, including how they’re treated, what channels are used to communicate with them, and other variables that all work together to create the experience. According to the 2015 TeleTech P&C Customer Satisfaction Survey, the most influential attribute of the claims process is whether the policyholder feels the insurance company acted in his or her best interests.

With so much riding on the claims experience for insurers, your choice of an independent adjusting firm or third party claims administrator is one of the most important business decisions you’ll ever make.

It’s crucial to pick the right team. They need to have integrity, be expert listeners, provide a professional and attentive service, be champions of your company’s claims-handling philosophy, and be savvy with evolving legislation and reporting requirements.

And they need to provide the kind of claims-handling experience policyholders expect. That means not only embracing technology, but helping to create the positive experience and foster the productive relationship with the policyholder. •

Dara Banga is President & Chief Adjusting Officer of DSB Claims.