The Edge of Claims Handling

As the company’s senior marketing representative, this occasion was a command performance for me. My company was unveiling its new and improved 24-hour claims service, which included a fleet of modern cell phone, fax and computer-equipped cars to take our claims personnel and support staff on the road. We moved into the theatre and saw, coming towards us, my boss Fred Wilson, the company’s downtown branch office manager. He was accompanied by two of our longtime brokers: Harry, who ran a large suburban brokerage in the city, and Joanne, an ex-company person who was now a partner in a successful female-operated brokerage.

“I hope you’re all ready to be impressed,” Fred said jauntily and led us to a row of seats.

“Oh, sure,” Joanne replied with her trademark throaty laugh. “Gimme a free concert and some flashing lights and I’m in your pocket!”

We took our seats, and Harry held up a copy of the slick folder. “Is it my imagination, or are all you companies in a contest to see who can promise the best and fastest claims service?” Fred Wilson grinned. “Hey — you want contented customers, don’t you? We’re just keeping our policyholders happy. And you too, we hope.” “Let’s not forget,” I chimed in. “All our surveys tell us that fair price, and how well claims are handled, are at the top of the chart in how consumers rate what they want from the insurance they buy.”

There was a grunt from Bob Davies. “That’s fine, Dave. But your company has always had a good reputation for its claims handling. Why make such an expensive splash about it now?”

I looked over at my boss. Fred smiled briefly and spread his hands wide. “I’ll tell you why. You know we pay claims as well as anyone in the industry — maybe better than most. And we know we do. But we live in a very competitive business world today. We have to tell all out there,” he said waving his hands in the air, “that we’ll pay their claims quickly and fairly, round the clock, no matter what. They’re the people we have to convince, not you, or ourselves. That’s why we’re going on national TV, telling the story of how good we are at paying claims.”

“I guess there’s another factor at work here as well,” I added. “We want our policyholders to hear what we have to say, and to feel good about being insured by us. After all,” I continued, “it’s a lot easier and a lost less expensive to hold on to the good business you have, than to lose it to a competitor, then have to work even harder at replacing it.”

Fred nodded in my direction. “Well said, Dave. And so far as claims service is concerned, isn’t that why you brokers do your own follow-ups to your customers who have a loss?” I asked. “You want to make sure we’re doing the job we’ve promised to do.”

This time it was Harry who responded. “Yep. You’re right. It should be part of every broker’s service. The same day a customer calls in a claim, we fire off a letter to him, or her. The letter sympathizes with them for the loss, but also reminds them: ‘If you don’t get a response from the insurance company by the time you receive this letter, let us know, and we’ll get some action for you’.”

I could see Joanne Newman nodding her head. “It’s important to do this,” she agreed. “In our office, we have an automatic follow-up letter programmed into our client control software. Three days after a claim is reported by one of my customers, it demands a follow up. We do that follow-up by personal phone call. It takes a bit of time, but our customers have told us they appreciate it. And, every now and then you’ll uncover some sloppy or incomplete claims handling by the company. Then it’s our responsibility to fix it before it grows into a real problem.” As she finished speaking, the lights in the auditorium dimmed, a huge screen slid noiselessly down over the stage, and a fast-paced video began to tell us the story of how the company’s 24-hour claims service was being handled. An hour later, after brief speeches from our CEO, from our claims vice-president, plus a preview of the company’s new 15 and 30-second TV commercials built around this theme, the presentation was over.

“Very slick, Fred, and Dave,” Bob said as we gathered in the reception area for drinks and finger-food. “But you know, wouldn’t it be interesting if your company was making TV ads that were beamed exclusively at brokers.” He poked me in the ribs with a finger. “I have an idea they would carry a very different message.”

Fred Wilson took a sip of his wine. “I know. I know. And I get the strong feeling you’re about to tell me,” he said with a wry smile. “All right –” He cupped his free hand to his ear and leaned towards his three broker friends. “You’d all want the focus to be on…”

“Good underwriting!” Bob Davies growled. “Flexible underwriting!” Joanne clamored in while Harry intoned “creative underwriting!”

Fred shrugged his shoulders and nodded. “I hear you,” he said. “Good underwriting is always in season.” “Let me put it this way.” It was Bob speaking again. “As brokers, we all look for certain qualities, or abilities, in the companies we represent. Financial strength. Stability. Reputation. Good products, well-trained staff, dependable claims handling. Seems to me however, that the qualities we brokers look for in companies has been changing a bit over the past fifteen years or so. Partly because of increased competition and the impact of the aggressive new players in our market.” He scratched his chin. “Nowadays, I’d say we want more quality-content initiatives from the companies we represent, features that add value to our relationship. Whether that added value is a line of imaginative new products, or sharper pricing, or improved service, or better underwriting, it can solidify and strengthen the relationship…”

“But, you know, Bob, product lines are always changing,” Joanne interjected. “Service quality moves up and down. Staff change. On the other hand, solid underwriting ability has always been critical in our business — it’s what keeps you and us on track.” Absolutely!” Harry agreed. “And that’s why I want to see creative underwriting on the company side.” He paused for a second to marshal his thoughts. “Any company can handle the routine risks. But so much of the high-end commercial business doesn’t fit into a neat pigeonhole. That’s where creativity and imagination come into play. And that’s where companies with the most capable people tend to rise to the top…”

“Which is a real problem with some companies right now,” Joanne interjected again. “One of my biggest companies is losing a lot of its best people. They’re being headhunted and hired away by other companies who want to buy their expertise. The staff that’s left is overtaxed and stressed out. And that’s affecting the overall quality of their underwriting.”

That brought a grunt of agreement from Harry. “”I’ll give you a living example,” he said with a small chuckle. “I have a customer who bought himself a new car but refused to have collision coverage on it. Simply doesn’t believe in it. We call up Company A and give ’em the details and request a waiver depreciation on the car in case it’s stolen or vandalized, but the answer we got from the company underwriter was: ‘Oh, our system won’t let us do that’. We had to waste time convincing that underwriter that it’s a legitimate request, even if it has to be processed manually.”

There was a second of silence and I jumped in. “Sounds like a small case of inexperience. That should work itself out in time.” “Maybe so.” It was Bob Davies speaking. “But inexperience doesn’t have to mean inexpert work. Let me give you a case in point. We deal with a junior commercial lines’ underwriter at one of our lead companies. When she was first assigned to us, we frankly thought it was going to be a disaster. But it has proved to be the very opposite. She’s bright and she’s been well trained. That’s in her favor. But you know what makes all the difference?” He looked around at us thoughtfully. “It’s obvious she has a direct pipeline to her senior underwriter. I can outline a tough risk to her in ten or twenty words and she’ll say at on
ce ‘We can do this’ or ‘Sorry, it’s not for us’.” If she’s not sure, she gets back to me almost immediately with a ‘go’ or ‘no go’.”

Bob glanced around at his listeners. “Now the secret to this company’s success is that they not only train their underwriters pretty well, but they also give their junior people fast and efficient access to senior underwriting staff when they need it. They don’t hang their junior underwriters out to dry like some companies. Junior people don’t find themselves trying to cope with business they’re not qualified to handle.”

Joanne handed her empty plate to a passing waiter and turned back to our group. “Now that we’re talking about basic, commonsense issues here, most of all, I like the companies I represent to be responsive underwriters. That means returning phone calls promptly. Following up on our requests. Getting the paper work done efficiently, and in

reasonable time. These are the nuts and bolts of our business, and unless they’re snug and tight, the whole contraption starts to shake apart.”

Fred Wilson nodded. “You’re right on, as usual,” he said as we walked towards the entrance. At the doorway, small roadside emergency kits — emblazoned with our company name and logo — were being handed out. “Now what more proof could you need that we care about you?” I asked, handing one to each of our guests. “One more added value to our relationship.”