As an insurance professional, claims will affect you in some capacity or another throughout your career. Whether you’re in underwriting, finance, or strategy/leadership, carriers feel the weight of claims expense and distribute that burden throughout the organization.
This leads to joy and bonuses during periods in which policies written has risen in the face of lower claims cost, or resentment and layoffs during periods of fewer written policies and higher claim volume/severity. What can we do as insurance professionals to minimize the impact that external factors place on the claims process?
Retention is one of the most important metrics an insurance company can measure. Independent Insurance Agents of Dallas stated that insurers incur some of the highest acquisition costs in any industry, with costs of acquisition being 7x to 9x more than retaining an existing customer. They go on to point out that there’s a strong correlation between high customer retention rates and sustainably high profit margins. Many business-minded insurance professionals would agree with this sentiment, but how does it translate to actionable changes a carrier can make?
LexisNexis reported in a 2019 study on the future of insurance claims that carriers are embracing virtual claims handling (95% of carriers are already using automation or are considering it), and that those who do make the switch from analog to digital processes are benefiting from “significant efficiencies along with higher customer satisfaction”. Reading through the study, it becomes clear that the “how” behind the integration of new technology matters just as much as the “why” of wanting to secure consistent business with higher customer satisfaction; in other words, carriers need to be strategic with the solutions they choose to manage claims.
If the goal is to increase customer satisfaction to boost retention, we should understand why customers leave carriers in the first place. Insurtech World goes into detail on what creates churn within our industry; the fact is that insurance is a complicated industry, and yet everyone in the country must participate with it as a consumer. This can lead to frustration when customers feel that they’re not in consistent communication with the company that they pay to provide safety and security in the event of a loss. A lack of clear communication during a loss can be the nail in the coffin if a policyholder walks away with a feeling of betrayal and broken trust.
Maintaining a level of communication that makes policyholders feel secure provides its own challenge. When claim volume and severity pick up, often in accordance with catastrophe season, adjusters can be overwhelmed by the increased workload and will in turn provide a less communicative customer experience. This is the critical thread between customer satisfaction and adjuster efficiency: when adjusters have the tools to manage their workload, they provide better customer service and policyholders leave claims feeling more secure with their insurer.
In the past we’ve discussed the value of offloading low-complexity claims to a technology/automation solution. Doing so increases customer satisfaction as consumers often reason that “simple” claims should be handled quickly and effectively by their insurance carrier. Failure to meet this expectation leads to severe disappointment and motivation to switch carriers that might not have existed before the loss.
Most claims fall under the umbrella of low-complexity. Having a partner that can leverage technology to take the burden of these high-volume claims allows the adjuster to focus their attention on the complex claims that require extra human touch. In this way, integrating the right automation service with your existing claims systems will make for happier customers, more efficient adjusters, and sustainably high profits for the carrier.
HOMEE has specialized in a low-complexity solution for some time and is an expert in the analog to digital transformation of claims handling. Moreover, we’re entering the catastrophe space with our newest solution: MyCAT Marketplace. For more information on the insurance industry’s first and only holistic catastrophe marketplace solution, click here.
ABOUT HOMEE
HOMEE is leading the digitization of property claims. HOMEE’s pioneering technology connects insurers, policyholders, and skilled service providers throughout the lifecycle of a claim. The HOMEE Direct Repair Marketplace & Claims Management platform, in combination with a highly curated network of service providers, is utilized by leading firms in the insurance sector to dramatically improve the claims experience for policyholders. HOMEE is backed by investment from leading insurance companies such as Liberty Mutual, State Farm, The Hartford, Desjardins, as well as Ferguson Ventures. For additional information on the HOMEE Claims platform visit www.HOMEE.com.