Few people actually think about their insurance cover until they hear a loud crash, smell smoke or discover that someone has made off with their possessions. TV news footage of people being rescued from floods, their homes devastated by water and rendered uninhabitable, are surely the best reminder that having insurance cover is a good thing. Or is it? Many flood victims will say, after they got over the initial shock of the damage, that is when their problems truly started. If the TV cameras revisit the scene months later, how many of the people who are interviewed say they are waiting for the insurance company to sort things out?
What should be the greatest advertisement for being fully insured, can turn into a PR nightmare for the insurance companies. They never seem to get their act together when they are needed most, but once again, this is not actually the case either. In fact everything hinges on the quality of the insurance companies claims handling.
The cameras will not revisit houses where they have been completely restored and look immaculate with new decoration and furnishings throughout. Neither will commentators mention the number of cars insurance companies swiftly paid out for after a flood.
An example of good claims handling is the speed an insurer will make a payment on account for emergency work or to enable their customers to move into temporary accommodation. Those affected will get to know where builders gut and rebuild a home at the insurance company’s expense, as they will those who seem to spend months haggling.
Quality claims handling is all about treating the customer as an individual and taking responsibility for the claim from beginning to the end. In contrast, those companies that just focus on the process and chiefly see their role as cost reduction, are almost incapable of delivering good customer outcomes. They are set up to fail, inevitably their complex system will ‘drop the ball’ at some point.
If their customer has to ring around and then sent from pillar to post to chase up their claim, they will immediately tell everyone that this is not what they signed up for. Being kept on hold for several minutes can be OK, provided the person who picks up the call can deal with the problem. But if they just send the caller to another queue to speak to someone else, this is just bad service in action.
Good claims departments make or break an insurance company. However, that is not just from the viewpoint of their first duty to deal efficiently with own customer’s claims. Not paying out is also very important. Particularly if they are good at detecting fraud, for example third party ‘claims rings’ where criminal gangs make money from staged accidents. In these cases a good insurance company will have the expertise and ability to gather evidence that could ultimately help with a criminal conviction. Ultimately, an insurer that is good at dealing with fraudulent claims, will see an improvement in their claims costs that in turn will enable them to price more competitively. In this case everybody wins, including their customers.
Are claims departments a good place for an insurance company to invest in efficient and customer focused service? The customer would say of course. An excellent example of where this can been seen in action is the niche on-line provider iprotectinsurance.co.uk. They have achieved outstanding feedback from customers, yet in their field of Mortgage Insurance, offer some of the lowest premiums in the UK. Since 2007 they have proven that offering a good claims service does indeed deliver low prices and has been critical to establishing their reputation and success.