Managing Claims: The highway to loyalty

Do you agree with the opinion, widely held, that most consumers buy their home insurance based on its price and that detailed policy cover is frequently seen as a mere standard commodity? When it becomes time to renew, do you think the same considerations generally apply and there may be little loyalty to the current insurer if insurance can be found more cheaply elsewhere.

No insurer can prosper and deliver shareholder value, long term, by offering the cheapest premiums to everyone always. Strategies based on customer inertia, or automatic renewal, or discounting on appeal, have had only limited commercial success. Those insurers discounting upfront or trimming the premium on consumer appeal at renewal, face an inevitable and ultimate, decline of profitability and market share.

There is however strong evidence that consumer buying determinants may not be entirely price led and there is emerging an alternative, or additional, strategy which achieves a healthy growth in both new business and renewal retention. What is this evidence?

In November 2013 the Financial Conduct Authority (FCA) reviewed the sale of home insurance through price comparison websites (PCWs). It found that whilst consumers wanted their home insurance at the lowest cost this preference was consistent with the best cover for their needs. Furthermore, it reported that there was clear consumer suspicion surrounding the very cheapest quotes offered and that these were less likely to be considered by consumers. In fact, the evidence from the panel of prices presented by the pwc tended to a median price selected by consumers, if they judged it a better balance of value.

“Although costs of policy dominated initially, many looked beyond this to reassure themselves they have the right level of cover. …The need for reassurance also resulted in many opting for a well-known insurance provider brand, even where this resulted in a higher cost.”

Indeed, the report suggested that many consumers subsequently telephone the potential provider to check the price and quality of cover. This seems to further indicate that the consumer quest is value, not price led.

Further evidence of non-price led consumer determinants is provided by the reliance of consumers, generally, on the brand value experience measures “Trustpilot” and on the independent research comparator “Defaqto”.

The established psychology of choice suggests all consumer perspective, regardless of product, is rooted as much in a qualitative emotional impulse (i.e. an unconscious judgement of need and value) as by quantitative statistical facts (i.e. this is the cheapest, what’s wrong with it?).

It is reasonable to ask then, why does the market position adopted by so many insurers focus on a price-led proposition that will ultimately erode their profitability? Has the advent of PCW’s forced this strategy upon them? Why isn’t the insurers’ approach governed by the perspective of the buyers’ journey where value and need is, at the very least, on a par with costs.

Clearly a better non-price strategy is required and those few insurers that are adopting it seem to be having noticeable success.

At this point, it is reasonable to ask what possible emotional non price-led propositions both add value and reinforces specific needs to the buying proposition. There are several and you will probably think that they are so obvious that in the real world they are taken as “read” or “go without saying”. That’s just the problem, we don’t say them enough; we don’t emphasise them sufficiently and we don’t capitalise enough on the value of these non-price led propositions.

One of the strongest of these propositions surrounds the perception of confidence by the consumer in the insurer’s claims process. The knowledge that they as policyholders:

• Are safe in the hands of a financially secure company
• Possess a complete and thorough range of policy cover
• Are going to benefit from an astoundingly high-level sympathetic claims service

Embedding these thoughts and confidence at the point of quotation is of the greatest relevance to a successful sale. Additionally, of course, paying claims is the whole point of insurance, the product begins there, ends there and is ultimately judged upon the claims experience.

To deliver an “astounding” claims service must be at the heart of the business, not just a departmental claims function with good claim handling and an adequately prompt settlement. Not at all much more is needed, it requires that attention to the consumer claims experience is the obsession of every director, executive, manager and staff colleague on an organisation-wide basis, not just the claims staff.

An insurer dedicated to the consumers’ claims experience that permeates all its customer facing activities, promotions and process design will have a towering presence in the market.

Specifically the claims experience is only as good as its weakest link which
unfortunately is all too frequently the claims system.

It’s simply not possible to deliver an “astounding “claims service, however dedicated claims people maybe, if it is delivered by decommissioned legacy systems,
crammed full of “workarounds” which cost staff time and produce delay because the system hasn’t kept up to date with changes to the products and the operational decisions made by the business.

Worse still is a new claims reporting system that is little more than a standard claims form. For policyholders to request, wait for delivery and complete and then do most of the subsequent supporting work themselves, all at a time when they need help and sound advice to guide them out of what may well be for them a very stressful situation.

So, what is the ideal “astounding” claims system? Let’s start where it should always start, with the policyholder, your customer. To answer this question, I am using the CICERO claims system as an example.

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These claimants need:

• The ability to use their mobile phone, or tablet to find their policy details and click” to notify a claim directly without needing to contact call centres with their interminable messages and long wait times.
• Once notified to automatically receive immediate confirmation of notification, reference and contact information and a complete set of clear context-based simple guidance instructions as to what they should do next to pursue their claim and what you the insurer (or claims management company) will do and when this will happen. A named personal claims handler should be automatically allocated at this early stage.
• This process will then incorporate a claims “agenda” in which all future notes, contacts, photos et al can be attached for claimant viewing etc. together with all details as the claim progresses.
• To receive directly and promptly to their mobile device, if required, contact details of other involved services such as adjusters, repairers, solicitors etc. This should enable the policyholder to click a link to the service so that appointments convenient to all can be swiftly arranged.
• NB instead of the above links, if it is clear at this early stage based on the notification details that the claim may not be covered, then details of a dedicated claims handler should be given click together with a link to the handler so that an appointment to speak conveniently to all can be arranged. It would be sensible to manage expectations with a message suggesting that claims eligibility is not yet clear!
• The capability, in fact the preference, for all communication about the progress and results of the claim to be via messages and emails etc. to and from the mobile device.
• Photographs, using latest time/date location should be taken by the claimants’ telephone of scenes; such as the place, aftermath, damaged items damage to property etc., in such a way as to be capable of transmission to the claims handler and as a record on the claims agenda.
• The ability to photograph all relevant documents, invoices, letters, estimates etc. as to be capable of transmission to the claim’s handler and as a record on the claim’s agenda.
• The capability to raise standard and bespoke letters to be sent by email promptly to the claimants’; repairers; third party services etc.
• Naturally enough for all agreed payments and disbursements, by or on behalf of the insurer, to be made promptly to the claimants’ accounts of choice.

These features will certainly transform a rigid bureaucratic forms-based process into a fast, convenient and assistance-centric system.

In preference to treating the claims process as an “end of product” service, rather, by emphatically promoting the excellence of the claims service at the point of sale /quotation stage, an enormous competitive sales and renewal advantage is gained.

Using the CICERO system as an example, let’s look at this from a claims executives’ point of view and consider what an ideal claims management system should look like:

• It should be relatively quick to build compared to legacy systems and because of its digital architecture, be much cheaper to develop compared to traditional software.
• It must be responsive to process changes to match the speed of normal operational and commercial change in the business.
• Because claimants handle much of the work for themselves, it should require the lowest possible human operational costs of claims handling. Extensive “rules-based” claims validation reduces the headcount.
• It must meet claimants needs for a simple convenient personal interface with the insurers' claims process. Using technology and techniques with which the average person is familiar and expects as a result of their daily interaction with web-based companies and apps.
• There must be fullest possible process integration with approved third parties such as adjusters, surveyors, solicitors, suppliers, repairers etc.
• It is essential, against a background of rising fraud, that there is effective
  monitoring for proactive and accurate fraud detection.
• Intuitive navigation and piloting of the system software, by staff, to ensure faster and more consistent training of claims handlers.
• To ensure faultless compliance by embedded full supervisory and rules-based governance of claim conduct, timescales, process flow and management information etc…
• Extensive local and cloud-based for customized hosting of data.

There are indeed very few systems that can “tick” all these boxes for features and service, but with the right system in the hands of a claims management service dedicated to “astounding performance”, the insurers' sales proposition and renewal opportunity is fully optimized for success.

http://www.vesuvio.io/#cicero

Vesuvio Labs is a Venture builder based in London helping entrepreneurs by accelerating the process of turning ideas into a scalable business.

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