What difference, if any, do the motor claims and accident repair experiences of policyholders make to the renewal rate? This fairly simple question is usually met with blank stares. The information is either not available or is perhaps considered irrelevant by those charged with merely managing claims or keeping costs down.
Yet in these days of customer relationship management, critical mass and brand differentiation, one would have thought that the renewal rate of accident victims was of paramount concern. Given a tremendous chance to demonstrate the superior service levels offered and a genuine concern for customer needs, there appears to be little idea of the affect on the policyholder. Each contact between insurer and insured is defined in marketing speak as a “moment of truth”, yet one of the most traumatic events in a policyholder's life is largely ignored as a defining opportunity.
The reason for this is hinted at above. Claims and engineering departments do not have a brief to aid customer retention. Neither do the accident repair centres that undertake much of the work of managing the customer through the repair process. Call centres are charged merely with gathering relevant information within strict time limits on the length of conversations. Standard correspondence is often written by those steeped in insurance terminology and, as often as not, designed solely to protect the potential liability of the insurance company.
Remuneration for repair centres, engineering inspections, estimating and imaging systems, outsourcing to accident management companies, have grown up as vast empires for cost control, an essential aim, but not the complete picture.
Meanwhile, at the sharp end of the customer service supply chain and the prime deliverer of the moments of truth so beloved of marketing people, is the accident repair centre. Here, large sites will turnover £4m per year, but most fall into the £2m to £3m category. So, relatively small and ill-prepared businesses are required to assume the mantle of insurance company responsibility. Clearly, they are experts at repairing vehicles and the “repair quality” debate of years ago is, by and large, no longer an issue. But nowadays it is their levels of service, communication and responsiveness that will be the major determinant of policyholder attitudes and, possibly, renewal rates.
A market that is losing hundreds of millions of pounds per year is prepared to leave approximately 20% of its motor policyholders to the tender mercies of relatively small and inexperienced service providers who are lacking the equipment or capital to invest in staff and modern systems. They also lack incentives to improve, as I have never yet seen a remuneration system that offers any form of bonus for superior levels of service or renewal rate.
The repair industry is not equivalent to McDonalds. The belief by some insurance company personnel that they can create consistency of delivery across the country merely by the production of yet another service contract, is sadly misguided. Indeed, it is fortunate for insurers that in some respects such consistency is not available. Successive industry surveys demonstrate that the supposed core skill of repair cost estimating is poorly executed. Up to 80% of estimates are reckoned to be incorrect and under priced to the benefit of the insurance company.
What hope then for customer service? There are several possible answers to the customer relationship dilemma. The first lies within the insurers themselves and a lesson is to be learned here from the now discredited “re-engineering” management ethos of the early 1990s.
The most significant concept to be introduced then was the functional silo. That is where departmental responsibility assumed paramount importance over the ultimate aims of the corporation, where marketing would never work with claims because of their apparently disparate roles. Where engineering sees its role solely as one of cost control instead of policyholder management. Where call centre staff have never seen the inside of a repair centre, let alone understand how the repair process impacts on customer retention.
Working as a unified whole does not deny the need to deliver superior service. So the next issue is exactly who should be providing this service? Modern technology brings solutions. To track the progress of a repair and to have this posted to a website is not difficult. For claims staff to access this information is equally easy and at this point the responsibility for customer communication can revert back to the insurance company or a highly skilled outsourced service. The moments of truth become the responsibility of insurance company staff – where they belong.
Such radical solutions may not be appropriate, in the short term. In which case it cannot be beyond the wit of man to devise new training and remuneration solutions to be provided by insurers to their approved repair centres. The start of the vaunted “partnership” approach?
It is also appropriate to re-visit the whole panoply of extra services repair centres are required to provide – such as free collection and delivery, courtesy cars and valeting. If insurers, and accident management companies on their behalf, are to control and develop the customer relationship, then the logistics of extra service provision should also remain within their control. For example, electronic ordering of a courtesy car from an external provider is simplicity itself and would relive the logistical burden from hard-pressed repairers.
So, “joined up” claims management will undoubtedly aid the retention process. New technology provides in-house service solutions not previously available. Repairers can be left to provide the true quality of accident damage restoration that they are very good at. And policyholders are more satisfied. A virtuous circle indeed.