Paying a claim is an essential part of the insurance value proposition; it’s a critical component of the promise that insurers make to their policyholders – to cover them in the case of loss. While the probability of a loss varies depending on the specific risk that’s being covered (i.e. auto, home, business, life, etc.), insurers build the promise of paying out a claim directly into their products and services. Not only does this mean that claims are an integral part of the insurance product, but also that the claims experience itself is a pivotal moment for insurers and policyholders alike. It’s in that often frustrating and distraught moment of filing a claim that insurers prove to their customers how much (or how little) they care for the customers they protect.
Given the significance of this interaction with customers—that directly impacts customer loyalty, retention, and the brand of the company—why does the claims experience have such a bad reputation for being outdated and painful? What is an optimal claims experience and how can insurers improve their current process? Based on our industry experience and work with dozens of insurer clients, we’ve compiled a quick overview of the why and how of improving the insurance claims experience.
Why the Claims Experience Matters
Imagine that your car is damaged, and you need to submit an insurance claim. You go to notify your insurer, either via phone or online. Instead of getting clear instructions and an efficient process for initiating and resolving your claim, you face complex procedures and a long drawn-out process. You need help but can’t seem to get the answers you need to feel confident that your insurance provider will take care of you. You’ll likely start questioning your relationship with the carrier and in a moment of frustration, you may even decide to switch to another provider.
The insurance claims experience described above is regrettably commonplace in the industry and may trigger even longtime customers to consider changing carriers. In fact, a survey conducted by Accenture found that 65% of dissatisfied claimants would switch insurers within a year based on how their claim was handled. As a matter of fact, even with satisfied claimants, an entire 39% would consider switching insurers. Given these statistics, it’s obvious that there’s an undercurrent of dissatisfaction that runs between policyholders and the claims experience they have with their insurers.
What exactly are policyholders complaining about in the claims experience? Common grievances include the lack of visibility (transparency) throughout the claims process, frustration with impersonal interactions, and inefficient communications—any of which can turn a good experience into a sour one.
Main Challenges of Creating a Better Claims Experience
Improving the insurance claims experience is a big project and one that requires insurers to evaluate many areas of their organization, including, in particular, their technology environment, processes, and how their organization views claims. These three areas constitute the main challenges of creating a better claims experience, and addressing these areas will be key to moving above and beyond the traditional claims experience.
- A legacy environment with outdated, disparate systems is by far the biggest challenge for any insurer trying to become more digital and provide better experiences to their customers. With regards to claims—a process that requires data to be pulled from multiple internal systems, as well as received from and sent to various external vendors—outdated and siloed technologies make it significantly more difficult to achieve speed and quality in the claims experience.
- An inconvenient intake process makes the first notice of loss (FNOL) and other initial steps an unpleasant experience for claimants right from the beginning. In a digital world where consumers expect the ability to access their policies from any device, anywhere they want, having to submit a claim in one particular channel and going through one standard process seems inconsistent with the times and the expectations of the market.
- Customer service that doesn’t put the customer first and doesn’t empathize with the claimant’s condition is a bigger setback to customer experience than outdated technology or inconvenient processes. Although consumers are embracing digital technologies and generally prefer an easy and quick process, many would rather speak to a person when filing a claim when there is a loss. Relating to policyholders as to how they feel during the claims process, understanding what they need, and having different options available to meet those needs will require a cultural change.
Three Steps to Improving the Claims Experience
To overcome the technology, process, and cultural challenges of the typical insurance claims experience, insurers must be willing to adapt their processes and overall business model, as well as implement omni-channel engagement to improve the handling of claims. Three steps insurers can take are:
- Streamline the Claims Process
The first place to make improvements in the insurance experience is in the claims process itself. Insurers should ask themselves, how complicated are the steps for submitting a claim? Are the instructions easily understandable? Recognizing and removing any unnecessary steps will streamline the entire claims process. Another good area of improvement is the FNOL process. Customers want convenience, ease of use, and transparency. Hence, insurers should provide an easy way for claimants to submit a claim, offer different channels so that claimants can submit documents through their channel of preference, and keep claimants engaged by actively updating them on the status of their claim.
- Provide Consistent Customer Service
Customers want friendly, reliable, consistent service every time, not just during the sales stage of the relationship. As policyholders are usually distraught when they experience a loss, the claims experience is an opportunity for carriers to strengthen their relationship with the customer and emphasize the values of the company. Setting a customer service standard (i.e., guidebook) and holding conflict de-escalation training for customer service representatives may help insurers achieve a higher level of customer service during the claims process.
- Upgrade Data Management
The realm of insurance involves vast amounts of data, which can be leveraged to speed up a process, customize a service, or offer better products. In order to leverage all that data, insurers need the right architecture (such as APIs for integrating with third-party data sources), as well as the right tools, and a skilled IT team. Although achieving all of this may seem daunting and time-consuming, insurers should know that they can streamline their processes and offer more user-friendly experiences by simply improving their data management practices, and knowing what kind of data they need and where the data comes from.
Improving the Insurance Claims Process is Essential to Business
Insurance companies that aren’t focusing on improving the claims experience are missing out on critical growth potential. While every customer touchpoint is important, the nature of the insurance claims transaction makes it a golden opportunity for insurers to strengthen relationships and build loyalty with their customer base. In that way, proving to customers that their insurer effectively and efficiently delivers on their promise of paying out a claim is key to improving the insurance claims experience, increasing customer retention, and driving business growth through brand trust.
Are you ready to make the changes you need to win new customers and delight your current ones? Find out how ValueMomentum’s Digital & Cloud Services can help your firm improve the insurance claims process.