UK motor claims handling has been miraculously transformed during the past decade. It's now an out-and-out customer service in its own right, having changed from what was once just a bureaucratic vetting process. Yet, US claims managers are amazed to find their UK counterparts still paper-oriented, re-keying data, and tiptoeing around the fraud problem. In addition, US insurers still grab third parties far quicker than UK companies do.
Admittedly, the two markets are not identical in every respect. UK claims managers can decline a claim for non-disclosure of a material fact to an extent unheard of in the US. In addition, UK insurers can often use the incidence of a claim to re-underwrite the risk.
The US advantage, though, is that authenticated risk information is available online at inception, and at present such data is unavailable in the UK. Even when this does appear, the information will not always be used, due to cost and administration.
For this comparison of US v UK motor claims, three areas are considered: customer service, the division of the roles among the claims handling partners, and cost control and fraud.
In the UK, despite significant improvements in service, there is still some way to go. UK claimants ringing for progress reports are still kept at arm's length. In the past, the barrier may have been an engaged phone, whereas today claimants have to battle with “dial one for underwriting, dial two for claims” recorded responses. When the caller eventually gets through, the person answering the call is not always able to help.
While most UK motor insurers believe themselves to be customer focused, the traditional claims department culture tends to pull out all the stops to the point of getting the repair authorised, but tails off after that. There is often little customer contact once the repair is under way. This differs from the customer's angle, who wants to know how the repair is progressing.
Outsource providers have taken the initiative in this area in the UK with what they call their “cuddly calls”, a series of telephone contacts keeping the insured up-to-date. Among insurers there is still much work to be done in understanding that service has failed every time a customer has to ring to find out what is happening on his claim. This represents a giant leap that UK claims handling has yet to make.
The viewpoint in the US sees claims handling as a means of distinguishing a company's service from its competitors. They see it as being a promotion which will set them apart from the crowd. In the UK, the previously adversarial relationship between insurers and repairers has been replaced with an atmosphere of cautious trust.
This is most successful where video links have been set up, allowing high-volume, high-speed repair processing. This is an area where the UK innovated first, with American operations later setting up remote claims offices to support inspection of damaged vehicles by in-house staff engineers and adjusters.
The claims service is the heart of insurers' core provision. In the UK, the tendency is still to see “underwriting” as the core task, with claims settlement something entirely different. The value of the customer benefit of prompt settlement cannot be underestimated.
UK Insurers have invested heavily in technology to track claims, but are still perceived by the public as not always knowing what stage a repair has reached. Collection and delivery of accident-damaged vehicles and courtesy cars may have enhanced the image of the overall service, but stories from the past of once-a-week claims cheque signing still remain. Contrast this with the US scene, where the culture of customer care is more deeply ingrained, and the aim has always been to get the claim settled as quickly as possible.
Document-imaging technology was introduced in the US around five years before the first working applications appeared in the UK. Even now, although a handful of fully paperless UK claims centres exist, they are the exception rather than the rule. Willingness on the part of UK insurers to invest in paperless office technology has been slow.
However, as mentioned, video imaging of damaged vehicles in the UK is ahead of events across the Atlantic. The concept of an insurer, or their outsource provider, taking stronger control of the damaged vehicle repair process, commenced in the UK in 1991. This included the provision of a courtesy car for the duration of the repair. This was not usual in the US at the time, and American insurers liked the idea because it enabled them to provide a “high touch” claims service to their policyholders, while simultaneously reducing claims' costs.
In the US, first-party rental reimbursement is an optional cover for which an additional premium is charged. The UK move to get repairers to provide courtesy cars at their own expense was greeted with disbelief in the US. It was unusual for US insurers to place responsibility for the provision of temporary vehicles onto repairers. It is unsatisfactory because vehicle provision is not a repairer's core skill.
The US answer is to use rental vehicles exclusively. This also better protects the insurer's service image. The expectations of the customer must be met – not everyone wants to drive a car emblazoned with a repairer's name. A repairer's courtesy car will often be inferior to the customer's own car in terms of size and features, and courtesy cars may not always be available. The
US solution provides a low cost, high-quality rental car on an “as needs” basis, allowing both bodyshop and insurer to outsource this respon-sibility.
US experience suggests that providing third-parties with a rental car and processing the repair more quickly allows insurers to control and reduce their costs. It also limits the involvement of dishonest providers. Meanwhile in the UK, many insurers are now able to obtain rental vehicles considerably cheaper than the bills they are being asked to pay.
With consumer power now dictating the pace in the UK, as it has done for many years in the US, the question is whether enhanced levels of customer service can be maintained without adding significant cost. The repair process is undoubtedly burdened with new costs, yet consumer demand will allow no going back. The costs of providing helplines, vehicle collection, cleaning, re-delivery, and courtesy cars did not exist in the UK before 1991. While recession-hit bodyshops initially funded some of these features, the savings that allowed them to do so have long since been absorbed. Technology and the closer working partnership with repairers is generating significant savings to off-set this, but there is still room for improvement.
This brings us to the respective roles in the claim equation. The UK is marked by partners sometimes carrying out tasks beyond their core competency. The glaring example is of repairers setting up customer contact on behalf of insurers. Relieving UK repairers from the customer contact role is now becoming an urgent priority. In an ideal world, insurers should insure, repairers repair, with all the other specialisation either handled by in-house teams or outsourced to an expert.
In the US, insurers seem to understand that it is a pitfall to be “penny wise, pound foolish”. They realise that any failure on claims handling reflects harmfully on their brand image. They go to great lengths to ensure that no damage can be caused by any outsourcer to that image.
From the outsource specialists' viewpoint, they must focus on their prime task, and they can only exist by being cost-effective, without becoming another mouth to feed in the chain.
On the fraud side it seems that fraudulent and artificially inflated claims in the UK have been encouraged by insurers' failure to manage third-party claims quickly enough. Frustrated drivers will turn to anyone who offers help, which has created a ULR and credit hire industry in the UK, something that is almost totally absent in the US.
Fraudulent claims present a conundrum. While the acceptable face of UK customer service dictates a reversal of the old rule that every claimant was treated as a potential fraudster until they proved otherwise, uninhibited settlement cannot ignore the fraudulent minority.
The way ahead is similar for both markets. Both have to contain costs, but without prejudice to customers or working partners. Repairers have to make a living so that they will still be there tomorrow.
Improved service is a cost, but customers now expect it, so there can be no going back. That means the working partners have to achieve efficiencies elsewhere, and this is exactly what many are successfully attempting to do.