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Nathan Golia
Nathan Golia
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How Insurers Can Prevent Post-Catastrophe Blowback

The insurance industry's reputation is taking a post-Sandy hit as vocal policyholders express their opinions that their claims are undervalued. It's easy to prevent this.

I have an ongoing Twitter search for the words "insurance sandy" in my Hootsuite client. My idea was that it would help me stay up to date on all the insurance-related news about the catastrophe. Instead, it's mostly filled with Tweets like this:

I'm sure that there have been plenty of insurance policyholders satisfied with their post-Sandy experience. But one thing is for sure: They're not as apt to take to social media as their negative counterparts.

If insurers have learned anything this year, it's that one post in social media can have widespread effects on their reputations. Many have said that it's impossible to provide a perfect experience every time, and they're probably right. But there are some simple things insurers can do to lower the amount of people who have experiences so bad they feel they need to warn others about the company.

One of them is make sure people are fully educated on what is and isn't covered by their policy. I asked Lauren Wistrom, senior P&C analyst for Corporate Insight, which evaluates the user experience on insurers' digital properties, if insurers were doing a good enough job of this when it came to homeowners coverage. Wistrom recently completed a study of the product pages on homeowners' insurance sites to evaluate the quality of the information available.

"Overall we were kind of disappointed that firms weren't doing much to differentiate themselves," she says. "Very few talk about what's not covered."

Specifically, earthquake and flood aren't covered by standard homeowners insurance, a fact that many homeowners in Sandy's path were unaware of -- and a source of many of the vitriol on Twitter and elsewhere.

"If I were a first-time homeowner, I would see a lot of promotional material, but not a lot of specifics," Wistrom says. "Many say you should call for more information, but most people want to look at the website for their research purposes and get their information from there, not have to call.

Not all insurers lacked in this area. Progressive included a chart of which perils are covered by each level of homeowners insurance, and Esurance and Allstate actually included links to where someone could buy the additional coverage.

Wistrom believes that P&C companies are spending more time on their auto experience than homeowners, which could explain the comparative lack of depth to the homeowners' experience.

"Because there's so much more involved with auto insurance, they do a better job discussing things and customizing it," she says. "With home it's basically 'Here's the basics, get a quote.'"

Spending more time on explicating the value and coverages of homeowners policies earlier in the process will go a long way toward preventing the kinds of attacks insurers are enduring post-Sandy. I'm sure this woman's carrier would've rather whoever sold her the policy had more clearly outlined the risks of her region and benefits of a $400 flood rider to prevent her complaining to a reporter about her policy.

But it's not just personal lines P&C carriers who can learn from this: Insurers across lines of business should heed the warning that you can't educate policyholders too much about the boundaries of their coverage to prevent acrimonious disputes later.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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