Over the past decade insurance companies and the many service providers supporting the insurance industry, such as repair shops, inspection services, third party administrators, and contractors have built a myriad of communication pathways (phone, email, calls, websites, text, etc.) to interact with their customers. In both the J.D. Power 2018 U.S. Auto Claims Satisfaction StudySM and J.D. Power 2019 U.S. Property Claims Satisfaction StudySM the majority of customers (41%), reported more than five (5) different communication channels used by their insurance carrier to transact their claim. Rather than finding it reassuring to have all these ways of communicating, customers are overwhelmed and are quite frankly saying; enough is enough.
The majority of customers are laser-focused on how they want to interact with their carrier throughout the claim, whether that be directly with the carrier or with any other service providers that might be a part of their claim. Having options from which a customer can choose is absolutely necessary, but once they decide, customers will expect those one or two ways chosen to be the way the claim communications are transacted. For example, a customer might prefer phone or email to manage their claim and those should be the pathways the carrier uses to interact with the customer. It is clear from the J.D. Power claims studies that claim operations are not managing their customer’s communication needs as well as they should. For example, in the Property Claims Studies, 24% of customers surveyed used only one or two communication pathways, and these customers still felt the communication pathways didn’t match their preference 51% of the time. It is clear that customers struggle with how communications with their insurance company work but this struggle is not necessarily a claim issue only.
What insurance carriers need to do from the start (policy inception) is establish a customer preference profile that is available to the Claims Department at First Notice of Loss. Claims should already know when the claim is reported that customer June Smith prefers to interact with her insurance carrier by phone between 5 and 11 pm or by text during working hours or weekends. It should be up to the customer to change that preference, should they wish, but the customer should not have to decide what communication options they want while dealing with the other critical matters related to the claim.
The right number and mix of communication methods is also an indicator of “providing adequate communications” during the claim. Providing adequate communications during the claim is a key performance indicator for overall customer satisfaction, and adequate communications is one of the top five most impactful indicators. Being proactive and offering relevant information is all critical to adequate communications but how you communicate is just as important. Within the Auto Claims Study, we reported a 13% drop in compliance with providing adequate communication based solely on the number of communication pathways used during the claim. Customers expect their insurance carrier to provide them with communication options and to use whatever pathway the customer chooses.
So why is this so Important
If you listen to all the insurance speak today, most carriers are focusing a great deal of their future on AI and machine learning to provide better risk management and customer experience throughout the customer journey (policy lifecycle). AI and machine learning will certainly advance the capabilities and efficiencies of carriers, but the fact that something as simple as communicating with the customer in the manner they choose is still an issue for many insurance carriers causes concern.
Communications for an industry that has very few opportunities to interact with their customers is more critical than it is for industries that have many different customer touchpoints. Insurance customers may only interact with their carrier or agent a few times a year, if that, so every touch point is critical. In the latest J.D. Power U.S. Auto Insurance Satisfaction Study℠ ⅓ of customers surveyed did not interact with their carrier over the past 12 months. If a customer should have the misfortune to have a claim, their relationship with their insurance carrier changes dramatically. For customers who may never, or very rarely, interact with anyone at their insurance company being thrust into a claim situation where they are speaking to someone from their insurance carrier almost every day, the need for a smooth and effective communication process is critical. Given that a claim can last anywhere from a few days to a few months, this change can be dramatic for the customer, and, if not handled correctly, it only adds to the customers’ level of stress. In both the Auto and Property Claims Studies making a customer feel at ease is one of the most impactful indicators of satisfaction.
Communications = Brand Loyalty and Potential Reduction in Shopping
Recently Accenture Strategy conducted a brand loyalty survey in the UK, and in their findings, they noted that consumers want to feel that a brand understands them personally. Therefore, 44% stick with brands that interact with them through their preferred channels of communication, while 34% were faithful to brands that offer them the opportunity to personalize products.
Given that the personal auto and home markets are not growing, and that the top 10 auto carriers control 75% of the marketplace, most carriers are simply trading customers, which makes retention the key focus for carriers. To retain customers, they must remain loyal to the brand regardless of the pressure they have to shop. Key to retention is communication, and if the carrier can’t get the communication part of their relationship with customers right, especially during a claim, the carrier should probably send their renewal list to competitors because their customers will shop. Even when a carrier does everything very well, customers may still shop, but if the carrier fails something as basic as how to interact with their customers during a claim, they’re more likely to create a shopper, and if customers shop, the outcome is generally not good.