Insurers and their technology solution providers know that the claims process is one of the most important and impactful experiences a claimant has with their respective insurance company. Statistics show that from the First Notice of Loss (FNOL) until the claim is closed, policyholders who have suffered a loss can feel vulnerable, frustrated, and even angry if the claim is not handled properly and to the claimant’s satisfaction. Unfortunately, over the years, this aspect of the insurer/policyholder relationship has likewise negatively impacted the industry, and [P&C] insurers continue to fight forward to be considered an expert and a trusted advisor.
For forward-thinking insurers, especially those that have embraced digital modernization of their core systems, the claims experience represents a new opportunity to turn a negative into a positive by using top-notch technologies to help facilitate outstanding claims-related customer service.
For both internal and external customers—from internal operations throughout the entire distribution chain—this means being able to easily and seamlessly interact with all stakeholders (insurer, claimant, agents, adjusters, etc.) in the claims process.
Current Claims Challenges
Customer satisfaction is an elusive and challenging priority for many insurers, as they attempt to respond to improved digital technologies, competitive pressures, and increased demands for speed and convenience from an evolving demographic. In the claims area this is especially true.
“When customers call an insurance company about a claim, chances are that they are doing so during a time of distress either for themselves or their business,” says Susan Crowe, CPCU, AIC, ARe, is a director of content development at The Institutes, a risk and insurance knowledge group. “It may seem simple, but the biggest differentiator among insurers is often the lengths they go to understand the individual's unique situation and to provide them with a personalized experience.”
Accordingly, insurers readily understand that improving claims processing is paramount to improving the customer experience, but because claims is a cost center, insurers still tend to fund front-end improvements in an intermittent fashion.
“The first widespread insurance app for a smartphone was actually a First Notice of Loss, some 4 years ago,” says Donald Light, Director, North American P&C Practice at research and consulting firm Celent. “Apps took off in general at that time, but FNOL more so because it relied on putting in rather than getting out information from core systems.”
However, this effort waned somewhat as insurers shifted their focus to creating apps designed to improve policyholder communications, adds Light. “A lot of energy has been going into policyholders’ services or new business, such as downloading endorsements, certifications and actually purchasing insurance online.”
An Underexploited Opportunity
That shift may be impacting how insurers are viewed by claimants. Although customer satisfaction in auto claims has steadily increased slightly, especially among pre-Boomers born 1946-1964, for the first time in five years, customer satisfaction among policyholders who made homeowners claims actually dropped, notes J.D. Power and Associates. The survey, which queried 5,700 homeowner insurance claimants who filed in 2014 and 2015, ranked insurers on satisfaction with initial response to FNOL, estimation, service, repair process and settlement. Satisfaction scores averaged 846 on a 1,000-point scale; down from 851, last year, reports J.D. Power.
The criticality of claimant satisfaction is confirmed by research published by Accenture, which reports that 41% of those surveyed that experienced a claim, compared to 22% of those that didn’t, are likely to switch their insurance provider.
“Claims processing isn’t just the most important opportunity for an insurer to improve customer satisfaction and overall business performance,” notes Light, “it’s the most underexploited opportunity.”
From an economic standpoint, it’s well known that for every $1 of premium an insurer earns, 65 cents pays for claims, either for the adjustment process or the claim itself. “So if you get more effective, less claims wastage, fraud, or higher claimant satisfaction (if you see 10% improvements in these areas), there is a better payout than applied to new business costs alone,” adds Light.
From a social/political standpoint, Light reflects back on the insurance industry’s value proposition as a trusted expert and advisor. “Insurance exists because bad things happen and the people who are injured or own things that are damaged want it fixed. If you can’t deliver on this social benefit, the industry has a big problem.”
So what are the drivers of claims customer satisfaction?
Conducted to determine how the claims process influences customer satisfaction, the 2015 TeleTech P&C Customer Satisfaction Survey reveals that multiple factors work together to effect the claims event, which could be experienced by all stakeholders within the insurer’s channel. When more than 300 individuals were asked to rank more than 30 attributes of the claims experience, research results found that competence (tools and processes) and relationship (ability to interact) significantly influenced a positive claims experience. Specifically, of the more than 30 attributes of the claims experience, among the top five most influential aspects were “initial filing of claim, obtaining approval, and overall effort required to file a claim.” (See Figure 1).
In many ways, all of these attributes funnel upward to fuel the number-one most influential aspect: the belief that the insurance company “acted in my best interest,” which results in the claimant feeling positive about the claims experience.
Cycle time (from FNOL to claim settlement) is also seen as having a positive impact on customer satisfaction, with “My issues were resolved the first time,” ranking among the top five predictors.
“Although cycle times can be complex, from the insurer’s point of view, claims that are settled faster lead to greater claimant satisfaction, so shortening that cycle is also a tremendous opportunity,” notes Light.
“Finding efficiencies in the claims handling process is less about improving life for the insurer but rather about showing the claimant that the insurer truly does care about making sure the process is smooth, as efficient as possible and fair to all parties,” says Crowe.
Technology as an Enabler
The good news is that the technology required to find efficiencies and respond to the drivers mentioned above is already at hand, and ideally should be user-designed so it can be applied to an omni-channel audience, giving users the ability to access pertinent data from a desktop, mobile device, or by telephone.
“The user, whether internal ops, an adjuster or the claimant, should be in charge of what place, time and device is used, so you need a streamlined interface that works on multiple browsers and renders quickly,” notes Light. “The ‘any time, any channel on any device’ idea is for a screen that can be adjusted from device to device, seamlessly.”
Light notes that many insurers are moving to an HTML5 development environment, where user flexibility (to modify what the policyholder sees and does) can be built-in to existing browser-based claims apps, then adjusted and refined.
“We have made great progress with HTML5, and leading insurers are now working to make everything intuitive, obvious, fast, and engaging for the user,” Light adds.
Since the claims process almost always involves multiple parties and points of contact, such as auto repair, homeowners contractors, doctors, rehab center, legal, etc., insurers benefit most from a modern claims system that boasts a single version of the truth and the ability to easily and seamlessly conduct transactions from start/stop, beginning to end.
Using a modular approach to this environment, such as working with pre-defined interfaces to 3rd party systems and additional software modules to round out the unique functionality of the insurer’s system of choice, creates further efficiencies. For example, leading insurers can now use an interface to import claims submitted electronically from their claim intake provider. The same business rules used when creating new claims within the claims administration system (coverage verification, auto-adjudication, etc.) are applied to this interface for speed of processing.
“Keeping it simple, intuitive and attractive is important, but so is providing the right information, so it’s important to create a user experience that allows for transaction input, query and more—a transaction environment boiled down to one or two clicks or touches,” Light says.
Getting a Head Start
Although there are no guarantees that using the latest, most efficient technologies to improve the claims experience will generate instant goodwill among policyholders, insurers that consider the user in their claims technology modernization plans will have a certain head start over their competition. And those insurers that exploit the opportunity to understand their customers and provide excellent claims customer service will reap the benefits of turning a negative experience into a positive one.
The bottom line, says Mark Garrett, director of insurance industry analytics at J.D. Power, is that consumers’ needs vary greatly based on their attitudes, preferences, plans, intentions, and behaviors. “Providers need to know their customers and focus on channels and solutions that work for them.”
Solution providers such as Systema Software are helping insurers successfully recognize and leverage the underexploited opportunities inherent in providing the ultimate user experience. Systema’s browser-based SIMS Claims system, recently refreshed with a new HTML5-enabled User Interface, is now able to deliver a streamlined experience on any browser or mobile device. These types of improvements in speed and convenience are a popular choice among insurers from both an internal and external perspective. From an internal perspective, it puts the insurer in control. For example, consider the insurer’s internal claims operations, where users can quickly drag and drop information from the desktop to the main claims file, or build or customize modules within the system based on the insurer’s unique requirements. This means claims processors can customize their screens to view status updates, notes or legal tracking.
From an external perspective, the SIMS Claims system’s flexible, appealing UI affords the agent, adjuster, examiner or third-party administrator the ability to quickly and easily access, view and communicate critical information, a key factor in being able to provide transparency to the claimant and reassurance that their claim is being processed efficiently and properly. In this way, SIMS Claims makes it possible to directly impact those significant satisfaction drivers listed in Figure 1.
Accordingly, the benefits of such solutions will be experienced by all customer stakeholders in the omni-channel. And todays’ improvements in claims customer satisfaction are destined to lead to better overall customer retention and tomorrow’s business growth.
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