Motor insurers have the opportunity to retain customers who have had accidents by ensuring their claims run smoothly, but the question of courtesy cars could be the decider. Claire Rowland reports

Motor insurers have a fabulous opportunity when it comes to managing claims, and one that, it seems, they're only just beginning to understand.

Fundamentally, drivers who have just had an accident are going to be angry, stressed and extremely unhappy. But if their claims are dealt with quickly and smoothly, so that their every worry is soothed and their every concern managed, it will have a favourable impact when they renew their policies.

Historically, motor insurers and brokers have competed mainly on price. There is little doubt that when it comes to attracting new policyholders, price is still the first thing they check. However, the picture changes when it comes to retaining existing customers. In that circumstance, the service level they received when they made a claim is going to make all the difference.

In fact, if the service were good enough they might not even bother to look around at competitors' policies. But if the service were poor, insurers might as well write off that customer and look elsewhere for revenue.

Because so many in the sector are now focusing on customer retention, service levels have been dragged into the spotlight as well. Sectors such as retail and leisure have understood for years that you don't just satisfy customers, you delight them. Insurance is finally catching up.

So how can the motor insurance sector go around delighting its customers? There are two key areas and both revolve around how the claim is managed.

The claims process can be a long and drawn-out one, with a damaged car sitting at the repairer for days or even weeks. Although little can be done to improve repair times, insurers have become a lot more proactive in dealing with claimants throughout that period.

So instead of a single phone call to say the vehicle is ready and needs collection, some insurers now offer regular updates by text message and email. In order to have this information at their fingertips they have had to build closer relationships with bodyshops - traditionally a sector that has had a love-hate relationship with the insurance industry.

Drivers who lose the use of their own cars are no longer satisfied with poor-quality courtesy cars provided by the repairer, or worse, no replacement vehicle at all. People have to get around, whether for business or personal reasons, and for that they need cars.

If insurers want to compete more heavily on price they can keep courtesy cars as an optional extra, but most now offer them as standard. And not just standard Class A runabouts either: enhanced courtesy car schemes (Norwich Union's, for example) allow drivers to pay a little extra to upgrade and get a larger, more powerful car.

If all that drivers need is to be mobile, courtesy cars are not an issue, but some people may feel uncomfortable driving a Corsa while their Mercedes is in for repair, particularly if they have an important meeting coming up.

By the same token, another major growth area is the policy that provides a replacement car even when the customer's vehicle is stolen or written off. No bodyshops will offer a car under those circumstances, because they are getting no repair work to offset the cost, so these vehicles have to come from rental companies.

The value is in delighting the customer. Indeed, many claimants may actually be unpleasantly surprised if they're invited to read the small print on their policy to find out they don't get a courtesy car because their car was declared a total loss - they will assume they're getting a replacement no matter what.

With customers demanding 'like for like' replacement vehicles and policies that cover them under total loss and theft, insurers can no longer afford to rely on courtesy cars run by bodyshops. A garage or dealership that focuses on vehicle repairs is hardly likely to have a big enough fleet to offer a 'like for like' replacement car to 20 different drivers, as well as to another 10 who aren't even providing them with any repair work.

The truth is that bodyshops don't want to offer courtesy cars. They have to pay for and run them, with all the attendant financial and legal responsibilities, and they simply are not part of their core business. The growing body of health and safety legislation affecting car fleets is also not making the job any easier.

The sooner insurers realise this, and stop forcing bodyshops to operate a courtesy car fleet if they want to remain on their approved repairer networks, the better. A modern policyholder may be satisfied with a courtesy runabout, but merely 'satisfied' does not mean a renewal is in the bag.

Service response

There is evidence to support this. For example, back in the 1990s Enterprise carried out research into satisfaction among its own customer base. It found that those who had ticked the 'completely satisfied' box on the customer service response form were three times more likely to rent from Enterprise again.

Fundamentally, it revealed just how huge the difference was between satisfied and completely satisfied.

In the end, the motor insurance industry will only encourage repeat business by understanding and carrying out those activities that lead to complete customer satisfaction. Competing on price alone is a road to nowhere, as is failing to do everything possible to manage claims swiftly and effectively. The claim, after all, is an insurance company's greatest opportunity to sell. IT

Claire Rowland is UK sales manager at Enterprise Rent-A-Car