It's a Monday morning and you accidentally slept in. You jump out of bed in a mad panic, and now you're rushing around the house trying to get ready, the kids are going to be late for school, and you're thinking "Monday's suck". As you're now frantically rushing out the door and driving to the office you get into a fender bender, and you were already late. Great.
You're at work and the kids are at school. The house is empty. A pipe decides to burst in your basement. That afternoon once you arrive home, you discover your new "indoor pool." Perfect.
Scenarios like these happen to millions of policyholders each year (roughly 5-7%) and result in having to *GULP* contact your insurance company and start the grueling process of filing a claim. Here comes the claims investigation, meeting with adjusters, discovering policy exclusions that may or may not provide coverage, photographing and documenting the damages, not to mention the major inconveniences of having your car in the shop for a week or two, or dealing with contractors traipsing through your home as they clean up the water and replace drywall.
Now for most people, making a claim with an insurance company ranks right up there with doing your taxes. It's a process that isn't pleasurable but it needs to be done.
So why have claims experiences been so miserable for policyholders, and more importantly, what do we need to do in order to change them?
First off, most legacy claims processes were not necessarily geared towards providing a positive experience for the claimant. The focus was more about making sure insurance contracts and procedures were followed and contractual obligations were met with little regard for how the consumer felt after all was said and done.
Times have somewhat changed. Policy wordings are still important, but the influence of Millennial's and subsequent generations has shifted consumer demand and expectations around the claims process. Combined with the internet, it has now become easier than ever for customers to find brands that reflect their values and service expectations. This also means that it's easier than ever for consumers to shift away from brands they don't like or have had a negative experience with.
So how can insurers create a positive claims experience? It's actually quite easy. You just have to ensure your messaging is on the right TRAC:
These four elements are core to building trust, and trust is the main ingredient in providing a positive claims experience as well as maintaining post-claim retention of policyholders. Provide your insureds with communications that are meaningful and engaging or risk losing them at an exponential rate to competitors that are willing to adapt (or already have.) The challenge most insurers need to overcome is providing this level of detailed messaging en-masse.
There is an influx of digital-first insurers that are providing immediate solutions to consumers' insurance needs and they are willing to meet them in their channel of choice while leveraging data to create a seamless, client-centric experience. Failing to keep pace with new customer demands will be detrimental in capturing new business and staying competitive as well as relevant in the market. In fact, recent research published by PwC shows that 44% of directors believe that most traditional insurance companies will not survive in their current form.
The other advantage provided by a digital-first approach is automation through AI. Considering that, on average, upwards of 60% of time spent by claims teams is related to updates and notifications; there seems to be significant value through intelligent automation of, for example, claims status updates. State Farm, Geico, and Allstate have historically managed between 250 and 500 clients per claims agent. Digital-first competitors in the market have the automation and infrastructure to handle approximately five times that amount - 2500 clients per claims agent. This represents not only a significant cost savings for the insurer, but faster and more relevant messaging for clients. This leads to engagement, trust, and substantially higher client retention rates.
So…is your messaging on TRAC?
Technology Partners like SPLICE have helped created thousands to superior claims experiences for insureds. If you'd like to get your messaging on TRAC, Schedule a Consulation.
Editor's Note: this blog was originally published in January 2020 but was updated in September 2020 for consistency and freshness.