November 13, 2017
Using Catastrophes to Rethink Claims (Part 3)
by Denise Garth
Applying the right customer experience and technology can take a traumatic, frustrating experience and turn it into a positive, loyalty-building one.
Claims is the most emotional segment of the insurance value chain. Because it is the primary point of brand promise, and because it is so emotionally charged, it is also the point at which insurers can affect customer experience, loyalty and long-term reputations. I know this firsthand because my husband and I had a major homeowners claim because of a significant hailstorm this year (deemed a catastrophe as a result of the extent of damage in the region). It was our first homeowners claim ever!
Applying the right customer experience and technology solutions at this volatile stage has the ability to take a traumatic, frustrating experience and turn it into a positive, loyalty-building one. Exceeding expectations is vitally important. What may be most important, however, is shepherding people through the process from first notice of loss through complete restoration in a clear manner.
In our past two articles in this series, we discussed the importance of insurance preparations for catastrophic claims. We looked closely at how catastrophes, in particular, highlight the strengths and weaknesses of the claims value chain.
In this post, we’re going to look at the claims process from the standpoint of relationships. How can we build more relevant touchpoints into the claims process, how might we rethink the process and how can we build value into the process?
The digital shepherd
A catastrophic event does more than damage property. It interrupts everyday lives and mentally taxes people with circumstances that are out of their control. In many cases, policyholders need direction — and even some hand holding. In pre-claim circumstances, they need direction on how to prepare for an upcoming event. During catastrophic events, such as storms and fires, they need direction on what to do in the midst of damage and relocation. After events, they need a helping hand to guide them through the hurdles of making a claim and restoring or rebuilding their property… and their lives.
This sounds natural, but it isn’t as common as insurers may think. Insurers must develop an end-to-end approach to personalized customer engagement and communication that takes into consideration that people likely need more clarity and guidance during the claims process.
See also: Rethinking the Claims Value Chain
Yet in the drive for efficiency, insurers have reduced their dependence upon human communications by automating many aspects of their processes. If you were ever placed into “automated voice purgatory” you know what I mean. While this may help with general and mass communication, it can be impersonal and a source of customer annoyance. The ideal claims process will act as much like a human as possible, involving human contact when necessary (even if through cognitive artificial intelligence), and it will be as personalized as possible so customers feel that communications have been tailored to their individual circumstances and needs. Customers expect and need a digital shepherding process that helps them to relax and lean on the support of their “trusted insurer.”
A holistic approach to rethinking relationships
Insurers use risk models and data models. But how often do they use relationship models? Increasingly, insurers are looking closely at customer journeys. What is the experience that we want our customers to have from the application process through the claims process? With claims, experiences can vary widely because of the diverse relationships involved: mortgage companies, roofing companies, contractors, restoration services and more… an ecosystem of partners and services that influence the ultimate customer perception.
The insured who loses a home in a hurricane and didn’t have flood insurance is going to have a remarkably different claims experience than the person who was rear-ended during a state-wide snow storm or one whose home exterior was pulverized by large hail. One claims experience model won’t cover all of these journeys, nor all the partners or services involved. But they should, because any misstep is likely a reflection, good or bad, on the customer journey and experience.
Most insurers today have established partnerships with automotive repair shops, ensuring the best prices and quality. Yet most do not have similar relationships for home repairs or restoration. Even more important are relationships with the banks or mortgage companies that have completely different processes and customer engagement approaches that can significantly influence the overall experience. I know from experience.
Our insurer was fantastic! First, our agent gave us a list of recommended “credible roofing companies,” making the selection process easy. The roofing company was awesome, as well, and knew how to work with the insurer to ease the process! The insurer immediately responded to our claim (submitted by our agent online) via phone and email, immediately scheduled the adjuster, provided a digital portal to provide constant status of our claim and continuously followed up on any changes or status. We did everything digitally or with a live person, with a copy of all paperwork mailed along with the checks.
Contrast that to the mortgage company (who bought our mortgage) that was involved because the size of the claim. I get why the company was involved to avoid fraud. But it was not customer-focused. First, I ended up in “automated voice purgatory.” Once I got out, the service rep said they would send me the paperwork and instructions via email (the only digital interaction in the whole process) that needed to be completed so that the money from the insurer could be disbursed for payment. The completed paperwork was, literally, nearly two inches thick, had to be completed manually and, as we found out later, did not specify things accurately. Three times we had to resubmit new paperwork — but only after we got a “generic standard letter” that was sent via regular mail to get us to call them. Once I called them, they said “Oh, we sent that to get you to call and do this.” Never once did we get an email or personal phone call (which we requested in every submission for confirmation). Suffice it to say the experience was horrible!
Why is this important? Because unlike me (who knows and understands insurance), most people do not look at the difference between the insurer, mortgage companies and service providers — to most, the good, bad and ugly is all part of the experience. As such, insurers’ brand reputations, net promoter scores and, ultimately, whether customers stay customers are influenced by these relationships. In today’s digital world, an ecosystem of partners and influential relationships are part of the experience, necessitating a new relationship paradigm and review.
Just consider companies like Apple, Amazon and others that have large ecosystems of partners and relationships — they are no longer separate from the process or experience. The customer experience is integrated and seamless. These factors are so important to the future (as we mentioned in our recent report, Cloud Business Platform: The Path to Digital Insurance 2.0) that corporate valuations will soon be partially based upon platform ecosystems and digital assets.
That is what insurance needs in today’s digital age.
Avoiding fraud without building a culture of claims curmudgeons
As I noted above, fraud is a concern for insurers. It is a small slice of the claims value chain where insurers increasingly are focused on fraud mitigation, an important slice that is critical to profitability. Insurers would like to avoid fraud and remain both service-friendly and fiscally-sound.
Most insurers keep notes. They retain recorded phone calls. They gather data. They respond when needed. But most don’t have the depth and breadth of sophisticated cognitive capability within their human resources needed to keep close ties to every individual or entity in the process. Cognitive computing can help insurers do better fraud analysis, even assessing upfront whether there is a propensity of fraud to alter the process and avoid less consumer confrontation.
Within the claims call center, for example, artificial intelligence can be applied to voice analysis. Unstructured texts, recorded calls and documents throughout the claims cycle can be analyzed to pick up patterns that might indicate fraud. Fraud investigators are assisted by cognitive capabilities operating on new data sources. Artificial intelligence will be uncovering unexpected patterns and relationships between key parties. It will be able to take in a larger set of data sources to improve its potential to relate data patterns.
See also: 20 Likely Changes in Ethics on Claims
Majesco, in its partnership with IBM, is building cognitive strategies and solutions that will augment existing capabilities throughout the claims value chain, including fraud detection. Artificial intelligence and cognitive computing will enable insurers to be much smarter about how they interact with customers from the beginning and throughout the process — providing a personalized customer experience that adapts to the situation, the potential of fraud and much more.
Claims will be a true “learning” environment for AI systems. AI and cognitive will help insurers use claims to rethink the claims process.
Adding the value to the value chain
Claims range from simple to complex. Catastrophic claims are often highly complex. My hail storm damage is an excellent example. While the insurer experience in contacting a reputable roofing company, processing and assessing the claim and cutting the check was great, the insurer’s involvement ended there. But the complexity for me (the insured) had just begun.
Some of the hardest work of the claims process is still in the customer’s hands, and they may not be having a wonderful experience. The digital claims experience needs to trend toward increased insurer control of the whole restoration process by rethinking the value chain and developing an ecosystem of partners that redefine the experience.
What if pre-approved contractors are contacted just after FNOL, the process adjusts based on propensity of fraud, lenders are digitally integrated into a paperless process and customers receive insurer service through the final inspection? Insurers now have the ability to build and use cloud-based/digitally-operational/partner-enhanced claims ecosystems. The value in filling these service voids is the retention of valuable customers, the ability to control both costs and satisfaction and the protection of the insurer’s brand.
The customer experience should be rooted in a new insurance philosophy that is based more in customer experience, claims prevention and customer retention than in claims ratios and payouts. At some level, all customer relationships will involve digital touchpoints from pre-claim through post-claim. And digital touchpoints will be one of the ways in which insurers will begin bringing real value to the value chain.
Are you ready to build value into the claims value chain? Are you ready to rethink the process and integrate partners and service providers into a holistic process? Is your organization prepared to give award-winning service during catastrophic claims?
As we’ve seen throughout this series, the insurers that are preparing for next-generation claims service will uncover enhanced value and improved loyalty — but only if they think outside their traditional thinking and business processes.