The personal auto insurance business has long been extremely competitive, and was the first to be affected by commodification, digitalization and consumerization. These trends have left tier 2 and tier 3 insurers with the arduous task of remaining profitable in an increasingly crowded, price-driven and homogenous market.
Grange Insurance and its subsidiaries offer personal and commercial P&C insurance and sell through independent agents in 13 states: Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia and Wisconsin. To differentiate itself, Grange has focused on claims to increase customer satisfaction and retention, and has several technology initiatives intended to help achieve those goals.
“It’s the recognition that we fulfill the promise our policyholders buy when they purchase an insurance policy,” says Ken Kozek, VP of claims for Grange Insurance. “We’re recognized for this at Grange. Plus there’s also the benefit to the insureds. If we can give them the ultimate claims experience, then our chance of retaining them is elevated.”
While growth is important, the cost of customer acquisition is high, Kozek says, and so retention is critical and is the justification for two large-scale projects at the company, Immediate Repair Service and a customer-communication document-management project. “The competition is so tough, you have to retain those customers and invest in claims to do that,” Kozek says, adding that the longer customers stay with the company, the more profitable they are, and longer they stay, the propensity to stay increases.
IMMEDIATE REPAIR
Claims traditionally have been measured from when they’re opened until when they are closed, explains Jason Manns, AVP of auto and casualty claims. Insurers would refer a claimant or insured to a preferred shop. The shop would write the estimate, and the insurer would paid for the repair and walk away. “This is a change in perspective,” Manns says.
Grange’s Immediate Repair Service is intended to reduce claim durations and get insureds back in their own vehicles more quickly. Throughout the repair process, the insured now receives text or e-mail messages updating him or her on the status of the repair. “We truly help get the customer a priority repair,” Manns says. “We’ll drop the vehicle off the same day and put it in the repair process. We find out what the customer’s choice is for receiving information, and then we script it, or personalize it, to that customer’s choice,” greatly improving transparency into the repair process, Manns says.
The technology was created in partnership with NuGen IT, an Internet integration consulting company, and currently is being rolled out in Ohio, Grange’s largest state in terms of insureds. Other states will follow. “We piloted it heavily in the Columbus Metro market. It’s a time consuming process, but it’s now a well-oiled machine,” Kozek says. “We’re trying to make our folks, whether in claims or any other department, more efficient. And we’re making it as easy as possible for agents to do business with us and want to place business with us. We’re just trying to get better; so everything else being equal, agents are more likely to place the business with us knowing that they don’t have to worry about a claim when it comes through the door.”
So far, customer response has been extremely positive, as measured by the company’s Net Promoter Score (NPS), which determines whether customers are likely to promote, detract or remain passive about their interactions with companies. “Our Net Promoter Scores are incredible when they go through this system,” Kozek says, adding that Grange’s NPS is 69 for insureds and claimants with repairable vehicles who use the Immediate Repair Service, and 51 for those who do not. “When you compare folks who take their cars to our preferred shops versus other shops, the scores are increased by 26 percent.”
The project began in 2010, was piloted in 2012 and currently is being rolled out to 40 locations in Ohio, Manns says. Next, Grange is looking to integrate the Immediate Repair system with its claims system for prefill. “It is at the top of our prioritization list for 2014,” Manns says. For the time being, the system is a standalone that links adjusters, loss reporting, appraisals and the repair shop, he explains. “The end game is that it is automated,” Manns says. “Once the customer identifies what form of loss-report communication they want, then the status will occur per their desire in an automated format. The interface will allow us to do that, because it’ll pull over e-mail addresses and other methods of communication, whether text or phone. But right now it’s kind of a manual process.”
Manns says customer adoption and response has been good, adding that in general 85 percent of auto claims are repairable and 15 percent are total losses. “A quarter will elect to not repair or self-repair and just take a check. That takes us down to 60 percent of our vehicles that are repairable,” Manns says. “We have 40 percent of that 60 percent accepting our Immediate Repair process. So, I think that’s the success.”
Manns says homegrown predictive analytics are built into the loss reporting function to help adjustors determine whether a vehicle is repairable. Then, through a scripted conversation, customers are asked for their communications preferences. “If they do want to get the vehicle repaired and they do select the Immediate Repair process, then the ball starts there.”
The Immediate Repair Service started as a tactical solution, according to Manns, but now is becoming a strategic differentiator. “We know when customers go through the Immediate Repair process that it’s a win/win,” Manns says. The average duration from when a claim is reported to when the repaired car is delivered now averages 13 days, he says. When a customer chooses his or her own shop, the process averages 27 days. “We know that this is a great customer proposition model,” Manns says.
CUSTOMER COMMUNICATIONS
Customer communications offered another opportunity to leverage technology to increase customer satisfaction, streamline internal processes and significantly cut costs, says Cybil Gilmore, manager of claims operations at Grange. The project, which the company began 18 months ago, is intended to make claims reps more efficient, improve quality and reduce costs by standardizing letters to customers and automating the process of sending them.
Grange claims adjustors had more than 2,200 letters, Gilmore says, and by standardizing and automating the process of generating and sending them, Gilmore says the time to prepare each has declined from 15 minutes to less than two and eliminated the potential that letters don’t conform to state regulations.
“The objective was to use HP Live to consolidate all the letters, because you can write logic into them,” Gilmore says. “For example, certain letters might have different criteria depending on the state, so we ended up with multiple letters by state. With this new technology, we can create one letter and it has logic variables for each of those states. It just makes it more efficient.”
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The Immediate Repair Group is next to be implemented, according to Gilmore, and about a third of the company’s business users currently have access to the HP Live system. “It’s an intensive process to consolidate all the letters and get the business to agree to that single letter,” she says. “We look at it as an operational excellence initiative, and one that benefits from integration with Grange’s claims system.”
Gilmore says users now create correspondence with a few clicks of a button, and through integration with Grange’s claims system, the letter automatically pulls details including address, policy number and claim number. Users also can type in specific information and access a drop-down list for other details. They also can attach additional correspondence and forms, all of which are automatically saved to the claim file. Users then can print locally, send the letters and forms for batch processing or e-mail them to the insured, she says.
The HP Live system also has cut mailing expenses and reduced duplicated efforts, Gilmore says. “Our checks and letters used to get mailed out separately, which wasn’t a good thing. With HP Live, we’re able to make it so that the checks now can go out with the letter, explaining what the payment went for,” and reducing the number of mailings and increasing the company’s opportunity to use bulk mail discounts.
CANDOR AND CHANGE MANAGEMENT
While many insurers struggle with change management and effectively using innovation, Manns says Grange is succeeding with these and other technology projects through effective internal communications and a supportive culture. “We have a very collaborative culture at Grange and everybody works together very well,” Gilmore adds. “We have open communications across our lines, and that contributes to the success of these projects. It’s something that feels unique to our company. You don’t get penalized for coming up with ideas. There’s no fear.”
Those values, she says, are communicated in the company’s associates manuals, and in visuals throughout the organization.
The company also actively seeks out innovative ideas and technologies. Kozek says Grange regularly attends the International Autobody Congress & Exposition, a trade show where Grange executives meet with vendors, software developers and body shop aggregators to explore new ideas and gather competitive research.
“When I was a claims rep, a long time ago, it was paper and pencil,” Kozek says. “We can do so many more things to make our reps more efficient and get to that ultimate claims experience for our customers. That’s really what it’s all about. We’re a long way from when I was out in the field and you’d drive around looking for a pay phone.”
