Collision Course

What matters most to customers when settling a total loss claim for a vehicle? A customer demands that the process be quick, provides fair market value for the vehicle, offers transparency and keeps him or her informed.

For the driver, watching his or her vehicle be towed away from an accident scene is upsetting. Not knowing how the insurer will treat the driver after submitting a physical damage claim will likely add to an already unsettling experience.

Insurance companies that implement total loss settlement best practices can have a positive impact on the customer experience by ensuring that policyholders – at least, more policyholders – are content with settlement outcomes.

Settlement transactions should be not only fast and efficient but, ideally, also leave customers with a positive emotional connection to the insurance provider.

As noted in Top Insurance Industry Issues in 2013, released by PwC this past February, most insurers are not meeting the changing needs of their customers and, as such, are “missing out on a vital competitive differentiator.”

The refrain by now should be familiar to all: consumer expectations are changing as a result of widespread combined effects of an e-commerce economy driven increasingly by mobile technology. These advances have created new distribution and communication channels that are changing how insurers conduct business and manage relationships.

Generation Y, for example, seems completely at ease with using digital platforms to become more informed consumers.

MAKING THE BEST OF OPPORTUNITY

Insurance companies that “get it,” understand that the first opportunity to make a positive connection with customers is at the first notice of loss (FNOL). Adjusters need to ask some pointed questions about vehicle damage to arrive at an assessment. These questions include the following:

¥     Were more than two vehicles involved?

¥     Is the car driveable?

¥     Which parts of the vehicle appear to be damaged? 

¥     Did the airbags deploy?

¥     Are any internal parts of the car that are normally not visible now visible?

¥     Are any of the doors opening improperly or cannot be opened?

¥     How fast was the car travelling at the time of the accident?

FNOL triage tools can help by quickly calculating the repair costs. However, not all tools are the same.

Given the complexity of vehicles today – including computerized suspensions, alternative materials and hybrid drive systems – adjusters need access to accurate and intelligent valuation information that covers all the unique and vehicle-specific options available from manufacturers.

Getting vehicle options right the first time ensures a fair and accurate market price is returned to the adjusters. Insurers are able to use vehicle identification number (VIN) decoders to accurately retrieve the individual vehicle content – everything from the model name to standard equipment, factory-fitted options and engine and transmission data. This vehicle-specific information is critical to calculate accurate damage repair costs and total loss valuation.

An options-driven database linked to workflow estimates takes the guesswork out of the equation by immediately alerting adjusters to the likelihood that the vehicle will be a total loss. The adjuster can then decide whether or not to submit the total loss vehicle for market valuation.

Automating FNOL using integrated tools that provide accurate and complete vehicle data can shave days off the total loss process. Reducing how long the customer is without his or her vehicle can save the insurer money in terms of cycle time and rental days.

A fast and effective triage regimen at FNOL can also improve the overall customer experience and, in the process, help set the insurer apart from its competition.

POLICY SHOPPING ON THE RISE

The PwC report notes policy shopping and switching behaviour is growing. Between 2009 and 2011, for example, the number of policy shoppers in the United States increased from 27% to 33% of total property and casualty insurance customers. Of those who shopped their policies, the number of policy switchers increased from 37% to 39% (representing 10% to 13% of all customers). In Canada, for the same period, about half of auto policyholders reported an intention to shop around at next renewal. Intention to shop is highest among direct customers, at 58%, and those younger than 45, at 46%.

The net result of the findings for p&c insurers is that their “at risk” market is growing and it is becoming increasingly difficult to retain policyholders. What can account for this trend? 

In February, the World Insurance Report 2013 was released by Capgemini, which provides consulting, technology and outsourcing services, and the not-for-profit organization, Efma. Based on 16,500 customer surveys, research data from 41 markets and interviews with 114 insurance executives, the report says only 30% of customers surveyed in 30 countries reported a positive experience with their respective insurance company. In Canada, 70% of respondents said they were satisfied, but only 45% reported feeling positive about their experience.

Of note, report authors observed a strong link between the ability of insurers to provide relevant products and services and their customer experience performance. This correlation suggests relevant products and services represent an important component of customer experience.

That said, this is certainly not the only consideration. “Insurers need to look beyond simple satisfaction with products and services if they are going to deliver more favourable experience to customers, and create a differentiating proposition,” the report states.

The report further concludes that significant opportunity exists for insurers able to “pinpoint the key elements of customer experience” in the areas considered most important by customers.

Nowhere is this more evident than when policyholders are dealing with a total loss claim. 

Once a vehicle is determined to be a total loss, it is imperative that insurers get the vehicle market valuation correct. Access to a comprehensive and locally sensitive database of comparable vehicles is key to determining accurate total loss values.

When providing a valuation, it is not sufficient to cite only dealer values. Insurers need to use research tools that leverage multiple data points, including privately advertised vehicle information that reflects local market values.

Being able to show the customer that the valuation is fair and accurate in an easy-to-read and understand report also goes a long way toward building trust.

An analysis last year of more than 600 reviews of home, auto and life insurance companies – conducted using InsurEye’s online insurance consumer experience tool – found that what almost a quarter of respondents most value in their insurance providers is “prompt and fair claims” processing.

Insurers can also go that “extra mile” and help remove the stress from the car-buying process by helping customers find a new vehicle quickly and easily through a vehicle replacement service linked to the valuation process.

PERCEPTION IMPORTANT

Keeping claimants better informed of the progress of their claims has been shown to improve customer perceptions of the settlement experience. Recent survey findings in the U.S. seem to bear this out.

J.D. Power & Associates’ 2012 U.S. Auto Claims Satisfaction Study looked at claimant experience related to FNOL, service interaction, appraisal, repair process, rental experience and settlement. The data reveals that there is a correlation between higher overall claimant satisfaction with the claims experience and those insurers who offered more opt
ions – either with web-based or mobile communication tools – to keep claimants informed of the progress of their claim.

By enabling customers to remain abreast of the status of their settlements and providing them with easily understandable market valuation reports, insurers can positively influence customer experience in a cost-effective way.

No driver expects to have an accident, let alone one that results in a total loss. Drivers want to get back on the road as quickly as possible – and expect they will be able to do so in a vehicle of the same or better condition than before the collision. Claims managers, too, want to get drivers back in their vehicles quickly. They are concerned about replacement values, storage costs, rental costs and delays in vehicle replacement.

By using a fully integrated total loss claims management solution, insurers will see productivity gains and reduced cycle times that result in a better overall customer experience, as well as help manage loss adjustment expenses.