It is unsurprising that most people hate buying insurance. Not only the process is not the easiest, despite price comparison websites have made shopping around much faster, but also – and especially – most people will go through it with a niggling feeling that they are not fully understanding what they are letting themselves into. Whether it is choosing the right policy or selecting the right add-ons for their own needs, whether it’s understanding the exclusions in the small print or setting the right level of cover – most feel it is all a bit of a gamble.
And in the end, the biggest question is: will it actually pay out if I ever need to claim? The most dreadful thought is not about the risk of damaging your car or having a leak at home, but it is about having to go through the claim process. Claims are one of the few occasions when customers have to interact with their insurance provider, but often become horror stories of frustration and bad endings.
Several calls, endless questions, annoying procedures and forms to fill, police-like inspections and assessments, days upon days… during which you are made to feel guilty about having an issue, and even more guilty about trying to get your insurer to pay for the service they are meant to provide to you. Weeks during which you are keeping your fingers crossed that eventually they will agree to pay, and during which your life gets put on hold because there is nothing else you can do to make things faster… other than keep chasing them… while you still have no car, no water…
And yet, getting to a positive decision is only the beginning of the actual claim process! You then have to go through all the repairs and settlement. More chasing, more waiting, more stress…
The good news is...
Not all Insurers are that bad, despite the sector bears that terrible reputation. Many have invested a lot of time and resources to improve the end-to-end claims journey – and indeed when I worked in the Direct Line Group, this was one of our biggest areas of priority. For all those Direct Line, Churchill, Privilege and GreenFlag customers out there, I am sure you have noticed massive improvements in the way your claims are being handled. And I am proud that Direct Line has been winning the award for Best Insurance Provider for customer experience in the UK since then – for a staggering 4 years in a row!
In the Insurance sector, customers buy on price or brand trust, but they stay for the customer experience – and especially they leave due to a bad experience. Claims are the biggest Moment of Truth and therefore key to customer retention and to building that brand trust. Make a claim process easy and effortless for the customer, and they will think many times before they leave you, even if they are tempted by others with the promise of lower prices. But let them down during a claim, and they are out at the next renewal! In fact, in DLG we proved that customers who were Promoters at the end of a claim renewed at a rate of 85%/90%, while persistency dropped to <30% for customers who scored 0-3.
Therefore, it is very important to deliver a good claims experience and avoid getting customers in that deeply dissatisfied area. This requires a combination of deep customer insight, clear customer journey design and effective transformation capabilities. Tactical and operational changes like better handler training and stronger supply chain management can help improve some aspects of the claim process. However, true claims transformation can only be achieved through strategic and technological changes, using an integrated combination of effective offline capabilities with digital capabilities, process automation, AI and connected technology solutions.
I believe that this type of transformation offers insurers a great opportunity to differentiate themselves in 3 ways:
1 – Engaging customers
Almost paradoxically, online self-service capabilities can strengthen the relationship with the customer. Whether via App or online portal, they make interactions quick, easy and straightforward. Customers no longer need to make phone calls, wait in queues or end up speaking with people who are not familiar with their file and cannot help – leading to more hold, transfers or repeat calls and lots of frustration. Customer contact is no longer limited to agents reactively answering random customer calls or providing sporadic updates – often after having been chased by the customer. Instead, customers can be engaged 24/7 with progress and co-own it with the handler – a continuous direct link between the Insurer and the customer, making it easier to reach them with automated updates or requests for further information.
Also, digital capabilities create a route to share other value adding content directly related to or generally relevant to their claim – e.g. useful links, videos or advice on how to handle their situation, while the Insurer focuses on getting their life back on track.
2 – Simplifying processes
Creating digital capabilities doesn’t mean simply delivering a digitised version of existing processes. This type of transformation offers a great opportunity to simplify and streamline – especially the customer-facing aspects. Design Thinking and Agile methodologies can define and build seamless end-to-end customer journeys, leveraging technology and automation to smooth out many of the transactional pain points and allowing human intervention to focus on the most complex and value adding interactions.
For example, if supplemented by photo or video evidence provided by the customer through smart device links, claims could be approved and paid out within minutes – without loss adjustors and time delays. In DLG, we also leveraged our extensive supplier network to integrate items replacement – the customer could receive a replacement TV or fridge or other household essential item in a matter of a few hours.
The use of telematics and GPS technology after a car crash not only provides detailed information about the driver’s behaviour and overall circumstances and location, but also results in a more accurate and faster response with less burden on the customer. Similarly, data from other devices like smartphones, wearable technology, smart meters or other connected household systems can be used in many ways to accelerate and simplify FNOL processes.
3 – Improving efficiency
Technology and automation can improve and accelerate processes, and therefore increase operational and service efficiency. Fewer resources are required, especially to process low complexity claims. For example, a cognitive learning system like IBM Watson can use historical claims data to identify the critical factors that determine whether a claim needs to be paid out. This is especially valuable for high volume, low value policy decisions and it enables the insurer to pay customers quickly and with minimal disruption – and low risk.
Cognitive systems can also reduce the process duplication caused by the fragmented claims ecosystem – forming a cognitive layer linking legacy IT systems and suppliers, reducing repetition of data entry, providing end-to-end updates and overall reducing the time and effort invested in each claim.
Integrated machine learning can also boost efficiency by providing more robust claims-handling data and analytics processes which offer clear line of sight to total cost to serve, leakage cost and other areas – enabling a better management of expenses and overall combined ratios.
Introducing technology and automation at the right stages makes the claims process faster, easier and painless for the customer – delivering a seamless and positive experience for both customers and employees. Also, it demonstrates that the Insurer is there at the time of need to support the customer – which is still a key differentiator and driver of retention and positive word of mouth.
My advice is that there is no need to wait for big transformational programmes, but it is important to start testing new technology solutions and ways of working in an agile way – and progressively build it up.
But also, it is essential to start from the customer needs, to rethink and redesign the end-to-end customer journey and introduce digital and technological solutions at the right time… not necessarily pushing everything to self-service and automation, but with the right balance of systems-customer-agent interventions.
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