The real test of an insurance policy is the claim. It is the one chance an insurance company has of demonstrating how good it is and proving it is worthy of a renewal. It is also the one area where an insurer can get it badly wrong.
Although customer service is the watchword of the day and all insurers pay lip service to response times, a recent survey found that 61% of claims handler time is spent on unnecessary paperwork and administration.
The London Market has attempted to combat this with its recently announced plan to unite Lloyd's and the Company Market with a joint claims handling initiative. The aim is to speed up the claims process. Market practitioners have so far welcomed the move, saying if the claims are settled faster it will win the market more business. One chief executive said the current system was "abominable".
Currently, other insurers are also analysing their claims strategies. One trend now is to see claims as incidents requiring immediate action so as to cut time and costs. It is also believed that responding rapidly to a claim and achieving consensus with the customer about required action helps to reduce the fraud bill.
The crackdown on insurance fraud continues and insurers are now trying out new methods that range from voice stress analysis to cognitive interviewing, in the attempt to identify genuine claims so they can be moved on for fast track settlement.
The industry has done exceptionally well in some areas, especially during the recent floods, but as one claims manager says: "It is the little things like a call being returned that influence a customer's perception."
Alison Boyle
Managing editor
