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April 12, 2018

Even in Big Data Era, Relationships Count

Summary:

A positive customer experience isn’t driven by the slickest photo app, drones or the most streamlined first notice of loss (FNOL) process.

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If the buzz of the P&C insurance conference circuit is to be believed, whizbang new technology and “big data” analytics provide the answers to every problem the industry has ever experienced. More precise risk projections, streamlined customer service functions, 24/7 automated support, claims investigation – they’re all getting better with new technology, and the industry is investing heavily to keep pace.

However, while there is no question that carriers need to build better technology and secure better data, neither technology nor data alone will fundamentally improve the customer experience.

According to findings in the 2018 U.S. Property Claims Satisfaction Study from J.D. Power, a positive customer experience isn’t driven by which carrier has the slickest photo app, uses drones to survey properties or has streamlined the first notice of loss (FNOL) process to be highly efficient. Instead, customers want to feel their carrier has their back in a time of stress or crisis. Customers simply want to understand that everything is going to be okay; they want to know how the claim process will run; and they want someone to care enough to keep them informed about their loss. Technology can fill some of these customer needs, but before the technology or any type of enhanced processes can be effective, someone must set the right expectations.

See also: 3-Step Approach to Big Data Analytics 

Consider the Insurance Information Institute’s evaluation of homeowner claims from 2011 to 2015, which indicates that one in 15 insured homes has a claim each year. Excluding catastrophes, the claim frequency for homeowners is quite small, which means most customers have no idea what to expect when they have a loss. Beyond their lack of claim experience, there is also the emotional toll a homeowner loss takes on a customer. The empathy and guidance provided when a customer reports a claim can truly determine whether the customer’s claim experience will be successful.

Regardless of the severity or nature of the loss being reported, the carrier must set the right expectations at the beginning of the process. The customer needs to understand what will be covered, how the process will work and how long the claim process will take. Once these expectations have been set, the carrier must effectively manage the process to ensure the schedule is being met and communicate with the customer about whether the process is on track, or, if it isn’t, communicate even more frequently and in more detail. J.D. Power research on property claims has found that customers whose claim took more than 18 days to settle – which would normally create a very low customer satisfaction score – are more satisfied with the process than are those customers whose claims were settled in less than five days. The difference in satisfaction scores is based on having met customer expectations (in fact, the customer satisfaction delta in the 2018 J.D. Power study between meeting customer expectations and missing them is more than 100 points). Creating a speedy process without setting the right expectations does not improve customer satisfaction. If anything, a speedy process can hurt.

Setting the right expectations leads to creating the right experience. To a claim professional, a simple fast-tracked water claim may be part of their daily routine, but for the customer, such a loss could be the worst thing that has happened to them in a long time. Without showing empathy for what the customer is going through, the process might be efficient, but it likely won’t be effective. Artificial intelligence technology can certainly help align the right adjuster to the kind of loss being reported, as well as scrub the claim for potential fraud, help align reserves or even trigger a faster payment. However, there also must be a human element to the process.

For many carriers, the agent is the source for this empathy and is generally the one to set the level for customer expectations. Yet, as more claim operations move to a direct digital or customer care center, the FNOL process is shifting from the agent (who normally has a personal relationship with the customer) to a faceless website or a call center, where in many cases the process overrides the personal experience. A digital FNOL or a call center is not necessarily a bad approach. Indeed, quite a few carriers have successfully used these channels to handle claims, and digital with a call center or chat function is certainly the wave of the future. But without some personal way to create a level of empathy, the resulting lack of concern and guidance creates a customer who does not feel comfortable with what is happening. When such a customer doesn’t feel at ease, customer satisfaction suffers. Even Gen Y customers (who embrace technological transactions more readily than older customers) find a personal touch at the time of the loss to be a more satisfying experience than using a digital FNOL process.

Throughout the claim process, the carrier must maintain a clear, active line of communication with the customer. Simply sending a text notifying the customer that something has changed with a claim is not a sufficient level of communication if the carrier wants to provide a high level of satisfaction. Such a text needs to be informative by letting the customer know what has changed, as well as include what effect it might have on the claim (either good or bad), and it must provide enough information so that the customer doesn’t feel the need to call the agent or the carrier.

See also: Strategies to Master Massively Big Data  

J.D. Power’s insurance industry research affirms that carriers with the most successful claim operations understand how to balance the customer experience with the need for internal efficiencies. Using technology and data analytics as tools to reduce the level of stress and effort for their customers is a clear pathway to developing not only a strong customer experience, but also an enhanced return on investment.

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About the Author

David Pieffer is head of the property & casualty practice at J.D. Power. He is responsible for leading the development and expansion of syndicated studies and proprietary P&C insurance industry services in North America.

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