Retention Attention

At the end of the day, property and casualty insurance is all about claims. More particularly, it is about the claims experience – the way claims are handled, and, just as important, the way customers believe that they have been treated by their insurers.

Accenture’s research – including a global survey of nearly 8,000 auto and home insurance customers conducted earlier this year – indicates that customers are generally satisfied with the way their claims are handled. Worldwide, only 14% of those who had filed a claim said they were dissatisfied with the way their last claim was handled. Canadian respondents, for their part, were less likely to be dissatisfied (11%).

Unfortunately, that is where the real problem begins for p&c insurers. Of that global 14%, a remarkable 83% plan to switch to a new provider, or have already done so. (Again, Canadian respondents were less likely to switch, or to plan to switch, at 70%).

Even when customers are satisfied with the claims process, the claim itself is a trigger for switching. Customers who have filed a claim are nearly twice as likely to switch as those who have not (41% versus 22%).

Respondents were asked about a number of factors that influence customer satisfaction, aside from the perceived fairness of the settlement itself. Key determinants of satisfaction include the following:

1. the speed and transparency of the claims process (each identified by 94% of respondents who had filed claims);
2. the customer’s ability to contact the insurer at any time to check on the status of the claim (90% worldwide);
3. detailed, timely communications that keep the customer informed (90%);
4. empathetic interactions with the insurer’s staff (86%), and
5. the ability to engage with the insurer, using the channels that the customer prefers (80%).

FACTORS CONTRIBUTING TO SWITCHING

The claims experience plays a powerful role in influencing customers’ decisions to switch providers, but other factors are also important. For example, 44% of respondents said that they would switch providers if their preferred digital channels were not available for actions such as first notice of loss (FNOL), checking the status of a claim and checking the status of repairs or replacement.

Canadian respondents, at 38%, were somewhat less likely to switch.

Customers are also quick to turn to social media, either to report on a good claims experience or to complain about a bad one – 29% of respondents said they had either posted or planned to post about a positive experience, while 30% said they had either posted or planned to post about a negative experience.

In addition, 44% of those taking part in the survey either read or planned to read such reviews.

Canadians are somewhat less avid users of social media when it comes to claims; only 22% of respondents said that they had posted or planned to post about a positive experience, while 26% either had posted or planned to post about a negative experience. Just 35% of Canadian respondents said they read or plan to read such reviews.

ENHANCING CUSTOMER RETENTION

The thought is anything insurers can do to increase the proportion of satisfied customers will have a direct benefit in terms of customer retention.

Insurers that are also able to use their claims performance as a differentiator – establishing their reputation (especially on social media) as an insurer that is committed to settling customers’ claims quickly, fairly and transparently – will increase retention, but will also improve its chances of picking up other insurers’ dissatisfied customers.

That is easy enough to say, but optimizing the claims function takes hard work at a number of levels.

Customer service

Insurers need a deeper understanding of their customers – and the claim is an opportunity to capture a great deal of information to which they might otherwise never have access. Carriers that can acquire and analyze this data will not only be able to enhance their segmentation and provide more differentiated, relevant service, they will also improve their claims-prevention modelling and fraud-detection capabilities.

Many insurers spread service initiatives too thinly in a well-intentioned attempt to delight every customer every time. Instead, they should adopt a more focused, segmented approach based on value analytics and propensity to defect.

Technology

The foundation of a digitalized claims operation is a modern core processing system that delivers efficiency, precision and agility. It should enable a high degree of automation, freeing up claims professionals to concentrate on more complex claims and value-added activities. It should also support all channels that have become an essential part of the digital insurer.

Ideally, insurers would employ digitally enabled, end-to-end servicing to optimize the customer claims experience. This would include e-tracking for claims consultation, document consultation and the claims agenda; e-pre-claims services for claims simulation and claims prevention; and e-FNOL, including data capture, document upload coverage and liability checks.

The workforce

For the customer, the claim is an appeal for assistance following a traumatic event, and empathy and authentically personalized support are the least that are expected. For the insurer, efficiency, accurate settlement and a keen eye for fraud are key to minimizing loss costs.

Property and casualty insurers face the challenge of an aging claims workforce and the imminent retirement of a great deal of skill and accumulated wisdom represented by these individuals. To attract skilled, enthusiastic younger workers, the claims-handling job needs to become less transactional and more consultative.

Systems should be in place to ensure the right people are working on the right claims. Collaborative tools, for example, can provide access to experts working from a wide range of locations.

Data and analytics

Insurers should be able to collect and organize the vast quantities of data available from all parts of the enterprise, as well as from new sources such as social media, telematics, GPS and other innovations. Claims professionals have been responsible for collecting most of the information during the claims process, which is time-consuming and costly. Technology captures so much data from so many sources (both structured and unstructured, such as voice, text, video and pictures) but much of the information is lost or never used.

Most insurers would benefit from having a dedicated claims analytics organization, as well as a centralized portal system for customers to view their claims status, submit personal preferences and monitor follow-up actions, entering or updating data as needed.

The ultimate goal should be to acquire a 360-degree view of the customer, and to create a data-driven claims lifecycle that unlocks the hidden value in the claims organization.

As the survey research indicates, customers dissatisfied with how their insurers handle claims are not only likely to switch insurers, they are also likely to turn to social media to share their unhappy experiences with a few million of their closest friends. To prevent switching – and to differentiate themselves from competitors – carriers must take an outside-in approach, reviewing the claims organization, its processes and its skills from the customer’s perspective.

Insurers pursuing this path can create a solid foundation for cost reduction, growth and an enduring competitive advantage.