This article was excerpted exclusively for Insurance Thought Leadership from a 43-page research report by the author and published by Aite Group on December 12, 2012 as further described here. This new report from Aite Group reviews the many different vendors, products, and services that help Property & Casualty insurance carriers achieve claims excellence. Based on a May through August 2012 Aite Group survey of North American Property & Casualty insurance company claims executives, the report assesses the executives’ views of and reliance on various vendors, products, and services.
The insurance industry has recently been transformed from operating in a product-centric model to operating in a customer-centric model across the entire enterprise, from sales and marketing to underwriting and from claims to billing. Today’s new consumers are better informed than ever, have a heightened sense of service entitlement, and are quick to exchange information, experiences, and opinions with one another using smartphones and social media, where their influence exceeds that of insurance company marketing. And over the past several years, in a fiercely competitive marketplace, North American insurance carriers have spent billions of advertising dollars on promoting their companies based almost entirely on the responsiveness and quality of their claims services.
It has long been understood that the claim is the “moment of truth” for property & casualty insurers with their policyholders, and it is truer today than it has ever been. When a claim is filed — by an average 10% of all personal lines insurance policyholders every year or, put differently, by the average policyholder once every 10 years — the claim is more often than not triggered by a traumatic or at least unpleasant event. Consider as well that the typical claimant has been dutifully paying his or her insurance premiums for years with nothing tangible to show for it and now, at this time of high anxiety, needs and expects prompt and attentive assistance.
Vendors play a crucial role in enabling carriers to achieve the elusive goal of claims excellence. Supporting the entire insurance claims process (though mostly transparent to claimants) is a large, well-coordinated, mostly virtual team of claims professionals with diverse skills and responsibilities. These professionals are supported by tens of thousands of claims software, services, and solutions vendors. Further, these third-party service providers frequently interact in-person with claimants earlier in the process and more frequently than do insurance claims representatives and as such become the face of the insurance company.
The extent to which all of these many different resources work together on behalf of the claimant and provide excellent customer service can dictate the claimants’ level of satisfaction and, in many cases, their intent to renew their insurance with that carrier as well as the opinions they will share and post about their claims experience. Because the challenges facing today’s property & casualty claims executives, including ongoing resource constraints and the many other factors described above, are unprecedented in terms of their number and complexity, claims vendors that best help them solve these challenges are the most highly valued and rewarded.
Carriers rely heavily upon a large and diverse variety of proprietary and third-party claims software systems and databases to manage every aspect of claims operations, from first notice of loss (FNOL) through claims payment. There are several hundred discrete operational processes across property & casualty claims, including auto, property, and workers' compensation lines of business. These processes include the claims management system (CMS) — the “core” or main operating system supporting the entire claims operation — and many other vendor software solutions — of which our report looked at vendor management software, automobile repair and property loss estimating software, and casualty management software.
Example: Claims Management System Software
Underpinning and supporting the entire claims operation is the carrier's claims management system, defined as the “core system” and the system of record for all activities and interactions for all claims. The extent to which internal and external applications, including vendor products and services, are integrated with the claims management system determines the overall efficiency and effectiveness of the claims process and, in turn, the policyholder satisfaction with the process.
Property & casualty insurance claims departments rely more heavily upon third-party claim service providers than one might imagine. Using the services, software, and solutions of about 250,000 claim service providers, U.S. property & casualty insurers spend approximately US$300 billion in the course of resolving 100 million claims. As discussed in this report's introduction, third-party service providers frequently interact in-person with claimants and are often the face of an insurance company. Moreover, the extent to which all of these many different resources successfully work together on behalf of claimants can dictate claimants' satisfaction with their insurance company.
For all of these reasons, successful carriers value these relationships and spend a great deal of time and effort selecting, managing, and working closely with vendors to ensure claims are handled quickly, courteously, and professionally, no matter how complex the process may be “behind the curtain.” While there are many others, the services and solutions included in our report include First Notice of Loss, claims analytics, insurance replacement rental cars, total loss vehicle valuation, salvage management, collision repair networks, national independent appraisal and adjusting services and litigation management solutions.
Example: Insurance Replacement Rental Cars
Insurance replacement rental cars are used extensively by insurance companies to provide temporary transportation to claimants whose automobiles are being repaired after an accident (most auto insurance companies include or offer temporary rental car coverage for a small additional premium). Of all the claims vendor services used by carriers, this category may be the most critical in terms of ability to influence the customer claims experience, policyholder satisfaction, and retention. In addition, it represents a significant overall claims cost for insurance companies and a major challenge for claims adjusters in terms of logistics, the many associated claims process touchpoints, and overall time consumed in managing the process.
Enterprise has come to dominate the insurance replacement rental car segment for a few simple but not-so-obvious reasons. Primarily, it focused on and perfected solving the unique needs of this very different segment of the rental car market. Its competitors treated insurance replacement rentals as just another small portion of their second-largest segment (the local market), choosing instead to focus on their larger and still-growing airport markets.
Enterprise quickly identified the many major pain points of insurance claims adjusters who were tasked with managing temporary rentals as part of the auto accident and repair claim process, and it ultimately simply assumed all of those responsibilities in exchange for the carriers' rental car business at competitive prices. Enterprise also understood the critical value of developing working relationships with local insurance agents and body shops, and it tasked their branch managers with doing both aggressively. Finally, Enterprise's family-owned and -run business philosophies have informed its business operations, including its college graduate-focused recruiting practices, its internal career-promotion policy, and its fierce focus on customer service.
Enterprise's impressive success may well be the insurance industry's best example of the rewards available to vendors who learn how to execute and manage insurance claims process outsourcing to the highest possible level of customer satisfaction.
The graph below illustrates respondent perception of the listed insurance replacement rental car vendor solutions' performance, regardless of whether respondents currently use them. As might be expected given the explanation above, perception of Enterprise performance is almost completely positive.
About This Report
This article is excerpted from a 43-page research report by the author and published by Aite Group on December 13, 2012 as further described here.
Companies with products and services named in the complete report are ABRA, Accenture, Acuity Management Systems, Aderant, Allegiant Systems, Allstate Insurance, Aon eSolutions, AQS Inc., Arbitration Forums Inc., Athenium, Audatex (a Solera company), Auto Claims Direct, Auto Injury Solutions, AutoNation, Avis Budget Group, BlueWave/Cover-All, Bottomline Technologies, Brightclaims, Caliber Collision, CARSTAR, CCC Information Services, CGI, ClaimForce, ClaimHub, Claim Toolkit, CodeBlue, Collision Revision, Copart, Corvel, Cox Enterprises, Craig/is, Crawford & Co., CSC, Cunningham Lindsey, CynCast, Detica NetReveal, Eagle Adjusting, Enterprise Rent-A-Car, Exigen, EXL Services, FairHealth, FairPay, FINEOS, Fiserv, FixAuto, Gerber/Boyd, Group 1, Guidewire, The Hartford, Hertz, HSG, HyperQuest, IA Net, IBM, Ingenix, Innovation Group, Insurance Auto Auctions, ISCS, ISO, Legal Services Group (LSG), LexisNexis, Lynx Services, Maaco, Manheim, Mitchell, Mitratech, MSB, NuGen IT, PDA Appraisal, Pega Claims, Penske, Performance Gateway, PowerClaim, Premier Prizm, Procura, QCSA, Quest, Ravello, Safelite Solutions, SAP, SAS, SCA Appraisal, Service King, Simsol, Sonic, Sterling, StoneRiver, SunGard, Symbility, Systema, Total Resource Auctions, Trillium, Tropics, Trover Solutions, Trumbull Services, Tymetrix, Van Tuyl, Verisk Analytics, Vista Equity Partners, Wipro, Wolters Kleuwer, and Zywave.