Tag Archives: j.d. power & associates

The Connected World: How It Changes Claims

Automation is transforming claims processing in myriad ways. Damage appraisals that are completed in only a few hours are becoming the norm―shaving days off cycle time and making the claims process easier than ever before. Insurance customers are getting comfortable with snapping a few photos of their damaged vehicle and sending them to their insurer via a simple mobile claim app. Drones are often dispatched to inspect storm damage on a home, allowing property adjusters to complete virtual damage inspections. Data delivered electronically early in the claims process is revolutionizing the claims workflow, simplifying claim reporting and providing a wealth of actionable data to expedite claim settlements.

What do customers think about the advent of claims automation? How can insurers leverage today’s technology and real time data to wow their customers? These are just a sample of the questions we wanted to answer with our Future of Claims panel of experts at the LexisNexis Customer Advisory Meeting on Sept. 11, 2018, in Scottsdale, AZ. This session, which I moderated, included experts Dave Pieffer (P&C practice lead with J. D. Power & Associates), Jimmy Spears (AVP auto experience with USAA) and Lily Wray (VP emerging technology operationalization with Liberty Mutual).

See also: 3 Techs to Personalize Claims Processing  

Data from the 2018 J. D. Power Claims Customer Service Survey, presented by Dave Pieffer, informed our discussion around the following four themes (with the customer perspective for the themes shown in quotes):

  • Show Empathy―“Listen to Me”
  • Streamline Customer Communications―“Simplify for Me”
  • Improve Service Speed―“Prioritize Me”
  • Optimize and Balance Self-Service Options―“Empower Me”

Show Empathy

The survey found that showing empathy (“Listen to Me”) ―expressed as “ensuring the customer feels more at ease”―scores low, with an industry average of 66%. Pieffer shared that the only empathy category scoring lower was “taking the loss report in 15 minutes or less”―with an average of 59%. The panel explained the importance of listening to customers as a first priority and improving FNOL scripts to be more natural and conversational versus impersonal (such as simply providing a list of questions). Jimmy Spears emphasized the importance of adopting a user-friendly self-service claims reporting process. He introduced the term “digital hug”―an immediate digital response to a customer’s electronic claim report or message. Spears shared that often customers who report electronically will immediately also call to ask, “Did you get my report?” Providing a digital hug gives customers the assurance that they have been heard and action is underway. The panel audience participated in the session by answering real time electronic polling questions from their phones, and in this case responded that simplifying the FNOL process with fewer questions was the most important way to increase customer empathy.

Streamline Customer Communications

On the topic of streamlining customer communications (“Simplify for Me”), Spears explained that “pro-active communication is the key to success.” Pieffer shared statistics showing that customers are most satisfied when the insurer updates them with claim status information. The survey results supported this information through scores indicating deteriorating satisfaction when customers find themselves having to call their insurer or repair facility. The panel agreed that getting the claim to the right person quickly and avoiding multiple handoffs was critical to improving customer communications. This was confirmed by survey data that showed consumer ratings drop by 133 points when customers are asked to repeat information during the claims process. The audience’s real-time polling indicated that typically at least three claims employees touch even the simplest claims.

Improve Service Speed

Customers expect their insurance company to make them a priority (“Prioritize Me”) when they have a claim. While we often think this means fast claims service, Pieffer explained that the survey results indicated that setting an accurate customer expectation at loss report was equally important to processing speed. In fact, meeting customer expectations on time-to-settle increases customer satisfaction scores even more than simply providing a fast claim experience. Spears explained how his company has completely redesigned the total loss claims experience by simplifying not only claims processing but also the car purchasing process via USAA Bank services and the USAA car buying service, which allows customers to be in their next car within a few days versus a few weeks (the industry average). Audience polling revealed that the optimal time to pay a simple claim should be within three days. Pieffer noted that the survey indicated today’s industry average is about six days.

Optimize and Balance Self-Service Options

Our final discussion topic (“Empower Me”) focused on the use of self-service technology. Pieffer shared data showing that Gen X and Gen Y customers (younger than age 50) were most comfortable with submitting damage photos via a mobile app and receiving electronic claims updates. While this was not a surprise, it was interesting to learn that satisfaction with digital FNOL was low for all age groups. The panel spoke about the need to simplify the FNOL process to minimize the clicks it takes to complete a digital FNOL. This was validated by audience polling, which overwhelmingly supported simplifying FNOL apps and minimizing clicks. I shared the value of bringing real-time data into FNOL and self-service applications to electronically verify first-party information to minimize additional inquiry. Furthermore, I noted that real-time FNOL data also allows third-party information to be collected immediately and accurately to simplify the FNOL process and make self-service reporting much easier for customers, which should greatly increase customer adoption.

See also: The Missing Piece for Customer Experience  

The panel discussion and audience poll answers confirm that delighting customers at time of claim is all about listening to, simplifying for, prioritizing and empowering them. As the P&C insurance industry continues to advance in claims automation, these four customer expectations should be front and center to ensure greater customer satisfaction and retention.

Build a 720-Degree View of Customers

It’s a sad day when your local water utility or parking enforcement offers a better mobile or online customer experience than your auto or life insurer. Customers cannot easily quit their local utility or government. They can readily switch their insurance carrier — and customer defection now exceeds 10% (according to J.D. Powers & Associates), awakening CEOs and investors to the need for substantive change.

Consumer markets have changed dramatically. PRNewswire reported in December that 89% of consumers prefer online to in-store shopping. A decade ago, 80% of personal auto policies were placed with an agent, according to McKinsey. Those days are gone.  In addition to the alarming rate of customers who have already defected from their insurance carriers, a full 20% of customers are “at risk” of leaving their current carrier, according to J.D. Power & Associates. With the higher costs of acquiring new customers, these trends are expensive and troubling.

Customers have been sending loud and clear messages about their expectations and their willingness to change providers. Customers expect and demand all of the following from their insurers:

  • Price transparency
  • Self-service
  • Multi-channel access
  • Enriched and consistent customer experience
  • Personalized and painless service

Without all of the above, customers are likely to be dissatisfied and, ultimately, leave. New entrants are making it even easier for consumers to change carriers. In one industry survey of 6,000 insurance customers, nearly one-quarter said they would consider buying insurance from Amazon, Google or another online provider. Moves to online sales and service are accelerating, and new entrants have added a greater sense of urgency to knowing their customers and innovating to better serve them.

Customer loyalty is the key to long-term growth and economic performance for insurers. Bain research shows that the value of a customer who is a loyal promoter of her carrier is worth an average of seven times that of a customer who is a detractor of the carrier and two to three times that of a passive customer. Loyal promoters “stay longer, buy more, recommend the company to friends and family and usually cost less to serve,” according to Bain.

The economic imperative is clear. Insurers are hurrying to transform from product-centric business models to customer-centric business models. Many insurers have made, or are in the process of making, this transformation. Keep reading to discover how and why to jump-start your own digital transformation and evolution from product-centricity to customer-centricity.

The New Normal

Dozens of factors have changed how insurers must sell and service in today’s marketplace. Smart phones, Facebook, telematics and online quotes are only some of the factors. Demands for customer intelligence and customer engagement have never been higher.

The requirements for baseline customer engagement are significant, including integrated and realigned internal technology. The basic technology and data required to support seamless customer experience across channels can also be leveraged to do much more. But, for starters, insurers must implement:

  • A single view of the customer across silos, including third-party data and attitudes/preferences
  • Cross-channel interactions and access via more channels
  • Customized, personalized content
  • Continuous technological improvement

Enterprise-wide, comprehensive customer intelligence is the baseline. Gartner reported in August 2014 that insurers are most underinvested in data initiatives targeting customer intelligence (57% of survey respondents indicated that customer intelligence was the area most in need of greater budget). Most insurers continue to lack a single view of their customer — the major prerequisite to customer intelligence. Without the single, 360-degree customer view, insurers are ineffective at generating better service, segmenting, profitability and loyalty.

Achieving a complete and reliable enterprise-wide view of a customer is only the first step. The real business opportunities emerge when you synch your enterprise view with the 360-degree online and social media view of your customer or prospect.

Prerequisite:  The 360-degree View

Insurance CEOs agree that data and analytics will be the backbone of the transformation required in their industry, with 86% telling Gartner that this is one of their top priorities. The first application for data and analytics in customer intelligence is a single view of the customer. Yet it is estimated that only 25% of carriers have a single customer view.


The 360-degree view is essential for improving both bottom-line and top-line performance. Reliable, unified customer views enable major gains in customer service (retention) and marketing effectiveness (cross-sell and upsell), not to mention claims and fraud. The consumer 360 was the backbone and first step one insurer took to drive cross-sales revenue. This large insurance and financial services firm was able to quantify marketing effectiveness and audience behavior, enabling the company to make informed tactical decisions that ensure more efficient marketing spending.

In this case, the development and implementation of closed-loop marketing analytics across key enterprise business units, utilizing predictive models, segmentation algorithms, churn analysis, modeling and funnel analysis, delivered the ability to continuously analyze  and understand data from more than 25 million customers and prospects every week. With 360-degree customer views, insights can be delivered from data that allow this insurer to clearly see how enterprise marketing efforts can improve cross-sell and boost revenues.


Once an insurer has a reliable customer view, the work of improving customer experience and satisfaction can begin. Consumers value personalized experience. Two-thirds of consumers are more likely to trust and engage with brands that allow them to customize and share personalization and contact preferences. More than half of consumers feel more positive about a brand when messages are personalized. According to Harris Interactive, 86% of consumers quit doing business with a company because of a bad customer experience, up from 59% four years ago. That statistic should serve as a wake-up call to invest in personalization — the key to enhancing consumer engagement.

Implementing advanced consumer engagement (ACE) via a variety of data management and analytic strategies and solutions, there are five key elements of personalization:

  • Profile-based:  Move from generalized segmentation to personalization customer demographics, providing a “segment of one.”
  • Behavior-based:  Determine customer affinity through individualized understanding of customer insights coming from interactions, enterprise assets, dark enterprise assets and external assets, not just observations. Use these assets and customers’ behaviors to truly understand your customer and drive personalization.
  • Collaboration-based:  Customization should extend to integration with relevant tools, relationships and touch points (including experiential).
  • Adaptive:  Personalization features should leverage explicit consumer feedback as well as implicit feedback from closed-loop consumer responses and be flexible to changing behaviors and attitudes.
  • Channel-optimized:  Identify and personalize combinations of markets, segments and media tactics to adjust integrated marketing efforts to optimize market-specific channel effectiveness.

The following guidelines will also help ensure success, when embarking on an advanced consumer engagement (ACE) program:


Choose platforms that will allow you to grow by scaling hardware, rather than doing costly rewrites. Assume that your next step is market domination. This allows the enterprise to focus on innovative customer experiences rather than performance tuning.


Invest in architecture and standards that enable agility. Solutions should be as simple as possible.


Quality should always trump quantity, when it comes to data. Value your data by focusing on core data-quality issues, first. Information will always be more valuable to your consumers than data. Reliable information comes from quality data in context.


Position your ACE program to engage with consumers and quickly adapt to consumer feedback. Build in processes to show you value consumer feedback. Provide updates and enhancements quickly in smaller releases, continually enhancing the customer experience. By 2020, the customer will manage 85% of the relationship with an enterprise without interacting with a human, according to Gartner. There is plenty of room for improvement via quick iteration, especially in the realm of customer self-service.


Seek partners who specialize in applying a data and analytics mindset to customer engagement.

With ACE and robust data and analytics, the options for business optimization and growth are practically limitless. Three main areas for insurers to make strides in are cost management, customer acquisition and retention and new products/pricing.

Cost Management

With baseline programs in place (360-degree customer views and personalization), digital- and data-mature insurers can make significant gains in cost management. For starters, satisfied and loyal customers cost less to serve. Technology is a critical component of cost management, segmentation and customized pricing goals. Let’s start with cost management.

Customer Acquisition

Digitally mature insurers can improve customer acquisition by leveraging segment differences uncovered from a new wealth of customer intelligence. Opportunities are exposed by consumer analytics and competitor information gleaned from internal and external data sources. Real-time consumer and competitor data can be a goldmine for uncovering segment opportunities.

McKinsey has reported that while the motivation for insurance companies to invest in analytics has never been greater, firms should not underestimate the challenge of capturing business value.

New Products and Pricing

Real-time and third-party information is increasingly having an impact on pricing. Only insurers with robust customer and competitor data and analytics can take advantage of this. Insurers with ACE across multiple channels are best poised to exploit opportunities for new products and customized pricing to drive business growth.

An enterprise-wide, validated, timely view of all consumer interactions with the enterprise (from structured, semi and un-structured data) composes the first 360. Integrating this internal view with the consumer’s relevant online interactions adds another 360 degrees and far more data and touch points for influencing consumer behavior. Online is where buying decisions are being influenced and, often, made. Do you know which brands your consumer‘s friends are touting or bashing online? Can you predict a spike in demand or a specialty product, before your competitors? Developing a full 720-degree view of consumers is the next level of advanced consumer engagement.

Imagine having the ability to tap into customer behavior with the help of a self-teaching solution that continues to learn over time with each customer interaction, enriching each profile. This is the reality of today, supporting a comprehensive platform for consumer identification, attribute enrichment and engagement that enables personalized consumer conversations that evolve and improve throughout the lifecycle of the relationship. The ability to develop new products that can be delivered to consumers who want them, through their preferred channel, at a lower cost, is here today.