February 27, 2012

The notoriety of GEICO's and Progressive's TV commercials have led some insurance industry observers to lament the commoditization of personal lines insurance products. However, some believe we may be on the verge of a new era of competition on claim service rather than price. Data analysis will continue to drive refinements in personal lines underwriting, and in the longer term it may make for some interesting product innovation as insurers are able to customize and bundle offerings based on increasingly comprehensive information about a variety of customer identification factors from a variety of internal and external sources. However, in the shorter term, the adoption of mobile, anytime/anywhere computing has opened the door to a new round of service competition.

Stephen Applebaum, a Chicago-based senior analyst, Property & Casualty Insurance with Aite Group, identifies three factors that driving customer claim satisfaction and dissatisfaction, all of which can be improved through the application of technology:

- Communication: including clearly communicated explanations and information, availability for questions on demand and frequency of pro-active claims status updates;

- Speed: the interval between the first report of loss and the claim resolution (settlement or return of the repaired) vehicle;

- Fairness: with the claim resolution (payment or repair) including a thorough explanation of the underlying process.

Other more specific areas of policyholder dissatisfaction, according to Applebaum, include unexpected/unexplained out-of-pocket expenses, strict insurer repair guidelines including parts-type utilization policies and the FNOL call experience - including the process involving repair facility selection and scheduling.

"When towing or roadside assistance services are involved, claims satisfaction is almost always lower, Applebaum adds. "A significant number of auto insurance policyholders do not have temporary replacement rental car coverage and others have rental coverage below market rate, both of which often result in unexplained and unexpected out-of-pocket costs, again negatively impacting customer satisfaction."

Applebaum says that most carriers could improve their auto claims customer satisfaction results by 10 to 15 percent by adopting the following proven best practices:

1. Utilize technology to further compress claim cycle times starting at the moment of the accident (even before the policyholder has reported it) and right on through to final claim resolution;

2. Implement claims self-service which enables claimants to report losses and select and order claims resolution alternatives and services online at any hour;

3. Communicate proactively with policyholders about their auto insurance coverage and their potential personal exposure during as well as after the initial policy sale -- including during a loss reporting call. Explain the risks and benefits associated with optional features such as collision and comprehensive deductibles and rental car coverage;

4. Communicate clearly with claimants concerning their auto repair process choices and benefits and any risks or personal exposures they may have as a result;

5. Communicate proactively and frequently with policyholders during the claim resolution process -- anticipate their questions and concerns and answer them before they are asked;

6. Communicate with individual policyholders by their preferred means – typically using the same channel of communication that they used to report a loss;

7. Conduct simple post-claim customer service interviews without delay and be prepared to address legitimate areas of dissatisfaction immediately;

8. Utilize all available technologies to meet and even exceed customer service expectations including automated claim and repair status text messaging;

9. Design and administer dynamic DRP (direct repair programs) which refer repair work to only the highest and best performing repair facilities based on customer satisfaction feedback and results.

ABOUT THE AUTHOR
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek ...