Customer satisfaction is the goal in settling claims, but the effectiveness of day-to-day claims processing is the key to reaching it, says Jason Richards
The two fundamental drivers for insurers which look set to stay are customer satisfaction and cost effective processing.
The first step to providing customer satisfaction starts with cost, as a policyholder seeking a personal lines product will usually base a decision on price.
The next step, and probably the most crucial - and one that needs to be seized by insurers - is the day-to-day claims handling process.
Insurers increasingly need to recognise that it is at this stage that they need to demonstrate their effectiveness which will ultimately determine if they keep their customer's business This has to be a good thing. But how many insurers have really focused on claims in this way? Surprisingly few.
Take fraud. This has been heavily discussed over the past two years.
The statistics on exaggerated or fictitious claims are startlingly high and are increasingly reflected in the costs.
Yet, as an industry, the implementation of solutions to cut fraud is at best patchy, and certainly slow. The benefit to genuine policyholders is faster claim settlement. But it is bound to have a significant impact on whether customers decide to renew.
Ultimately, such a process can deliver significant savings to both the insurer and, in turn, the policyholder. Each insurer needs to evaluate its position on fraud and how it wishes to handle customers. But the potential improvements to service and cost savings are too significant to be ignored.
In a similar vein, many insurers need to examine their core claims processing capabilities. Many would benefit from vast productivity improvements by replacing multiple legacy systems. This would drive both better customer service and lower processing costs.
Capita has invested in SAP Claims Management and has successfully implemented it on behalf of Norwich Union Clubline's domestic claims handling service.
For insurers with legacy systems we can now offer a very compelling proposition as it allows state-of-the-art future-proof technology, lower processing costs and better customer service. New systems provide the opportunity to build new services. This is especially relevant in volume loss adjusting.
It is generally accepted that this market has become commoditised with minimal differentiation between providers. Surely a more intelligent system-based approach would improve on this while providing more cost and service efficiencies. For example, if a claimant is genuine, and thus a valuable customer, there may be no need for a field visit.
This approach could be tailored for different books of business or customer segments. A 'one size fits all' approach appears antiquated, costly and unnecessary. Surely it is far better to focus on where loss adjusting can add value, as in the corporate area where it's imperative that businesses are operational again as soon as possible.
In the current personal lines climate of minimal premium growth, low interest rates and lower than historic equity returns, the need for improved efficiency is as strong as ever and customers' demands for improved service, driven by their experience in closely related areas such as personal banking, continues to grow.
Our industry has long talked of changing customers' opinion of insurance.
This will only be achieved by providing products and services that the customer wants, not by attempting to change their minds while continuing to deliver unacceptable levels of service.
Through the utilisation of technology that is now available and by taking a fresh look at processes and productivity, improved customer service levels can be achieved at lower cost.
Those insurers who embrace this thinking will ultimately be the winners.
- Jason Richards is managing director BPO, Capita Insurance Services.