A well-managed response to first notification of loss can result in a swift resolution to a claim, customer satisfaction and, ultimately, better customer retention
According to the Association of British Insurers (ABI), the motor insurance market last made an underwriting profit in 1993. Undoubtedly the highly competitive nature of the market is a major factor, one illustration of which is the ABI’s average motor insurance premium tracker. This shows the average motor premium for private motor vehicles has continues on a downward trajectory since collection of the data began, falling from around £415 ($643) in 2012 to £360 by the middle of 2014.
With premiums falling, it is increasingly important insurers adopt and execute sharp and efficient systems for the handling of motor claims. Having well-managed practices in place will create the basis for the smooth processing of the claim, from initial loss through assessment to compensation. Such a basis is crucial not only to minimise costs for both the insurer and the client, but also to build a strong customer loyalty and a first-class reputation.
Right first time
Getting it right, at the outset, is crucial. A well-managed, 24/7 first notification of loss process is vital in a number of ways. In many cases it will be the first time the client has been in contact with their insurer, so handling this contact well can create a good first impression and can dictate the success of the rest of the claims process. Timing is also critical. The first notification operation can be extremely time-sensitive.
The first notification operation has evolved in recent years in parallel with the increasing importance of the role. We have seen some firms offering the first notification service using a software-based platform, while others prefer a call centre model and to develop their own proprietary application. Some have an internal function within the insurance company, but increasingly many are outsourced to specialist providers.
However the service is provided, though, getting this first stage of the process right can be key to a swift resolution, customer satisfaction and, ultimately, retention. It also presents the opportunity for motor insurers to generate additional business.
Proactive third-party engagement and the benefit of having an effective process should not be underestimated. The main advantage of this “capture” is the party providing compensation is able to control the cost of the third-party claim – for instance, by using trusted third-party administrators, preferred vehicle repair shops and car hire firms. In straightforward motor claims – where solicitors or medical professionals are not required – such effective third-party engagement is the most cost-efficient way of settling a claim from the insurers’ perspective.
However, claimants’ lawyers argue their clients may be disadvantaged by it. The introduction of a new voluntary code of conduct for members of the ABI last year was a good step forward. The code, initially signed by 15 leading insurance firms, aims to ensure the interests of customers with a personal injury claim are protected.
The wider availability of nascent technology is hugely beneficial in this area. For example, smartphone apps are being developed that are able to identify a third party’s details and share them with insurers. Although this is an area that needs to be approached with caution, as it can give rise to data protection issues relating to the acquisition, storage, handling and sharing of personal information, it does give claims handlers and associated parties the opportunity to contact customers instantly.
Partnering for success
In another development aimed at streamlining the process, claims-management firms are increasingly teaming up with specialist insurance firms to share best practices and ensure the claim is managed in such a way that all legal bases are covered. Traditionally, a law firm would normally only become involved at the point where a claim became litigated, but by adopting a more collaborative approach, unforeseen issues can be sidestepped and legal costs kept to a minimum.
As well as having a close relationship with law firms, it is also crucially important to have the end-to-end supply chain, body-shops , hire companies, rehabilitation experts all managed by the claims-management companies. With direct contracts with the supplying partners and access to total claims costs at their fingertips, insurers are much better placed to control spend and defend claims, ultimately benefiting all policy-holders. There is also the added benefit of consolidated management information, which is crucial in terms of handling risk.
Insurers are continually evolving to provide a better service for their customers and to ensure costs are kept under control. Fine-tuning effective working practices, refining the “third-party capture” model, the use of cutting-edge technology and working closely with suppliers from day one are some of the ways in which insurers are ensuring they are ahead of the game and, importantly, keeping a keen control on expenditure.
Mark Gilbert is client partnerships director at Cunningham Lindsey and Nick Rogers is head of motor at BLM. Profecta is a joint venture between Cunningham Lindsey and BLM