How do carriers measure up when it comes to their claims service?

Customer experience is paramount to success in the insurance sector. It’s a key differentiator, a source of competitive advantage, and a driver of operational efficiencies.¹ The trick for carriers is delivering superior customer experiences not just when times are good, but in times of need: during the claims process.

There’s a lot at stake, as the effectiveness of a carrier’s claims process has bottom-line impacts. In the Canadian Underwriter 2024 National Broker Survey, sponsored by Sovereign Insurance, brokers were asked how important certain factors are when considering which products to recommend to a customer. The quality of the carrier’s claims handling landed at number two on the list (88%), behind policy terms and conditions (91%). Claims handling was rated even more important than the carrier’s underwriting ability (82%), the client’s price point (77%) and the carrier’s capacity (68%).

“At Sovereign, we know that claims service is a key differentiator, and we ensure our focus is on providing exceptional customer service,” says Larissa MacLean, AVP, Claims, at Sovereign Insurance.

Claims professionals know the importance of the claims process to both financial and reputational health. A carrier with a reputation for a prompt and fair claims process will attract more clients, maintain customer loyalty, and boost the bottom line. Conversely, those with an inefficient claims resolution can struggle to attract and retain business, ultimately impacting profitability.²

“Claims teams are aware that it can come down to claims service when our partners are placing business and when an account is up for renewal,” says Larissa.

So, how are insurer carriers measuring up? In a new question on this year’s National Broker Survey, which covers a range of challenges facing the broker distribution channel, respondents were asked to rate insurance carriers’ handling of claims from start to finish.

Where carriers excel is the claim submission process, with 84% of brokers saying carriers meet or exceed their expectations. That’s followed by claim settlement (66%), collaboration with their insurance partner (61%), speed of claim payment (60%), and communication/transparency throughout the process (56%). Last on the list was speed/efficiency of the claims process at 44%.

The results indicate that, while brokers are generally satisfied with the claims process, there is room for improvement, especially when it comes to speed and efficiency, and communication.

“The results we are seeing from our broker partners are not surprising,” says Larissa. “Claims service is so important to our customers in their time of need.  As an industry it is imperative that we continue to look for ways to improve our service and constantly look at our process and procedures.”

Why might some carriers be falling short? Like many other sectors, insurance is faced with changing customer expectations, driven by technological advancements.³ Clients have come to expect speed and seamlessness in the claims process. However, many insurance carriers still rely on legacy systems, which can make the claims process time-consuming and complex. When it comes to communication, clients expect to receive immediate support when and where they need it, and traditional channels like phone calls may be time-consuming and no longer meet their expectations.⁴

“To remain competitive, claims processes and procedures need to be constantly reviewed to ensure efficiency as customer expectations continue to increase,” says Larissa.

Building a better claims experience

Given brokers’ pain points, there are opportunities for carriers to enhance the claims experience.

To meet the need for speed, it’s no surprise that technology plays a pivotal role, with automation at the forefront. McKinsey & Company estimates that, by 2030, more than half of current claims activities could be replaced by automation. One example is robotics process automation (RPA), which can help with repetitive or manual tasks such as data entry and claim status updates. This then frees up employees to focus on more complex aspects of claims that still require human judgment.

Digital tools can also help fill communication gaps. In fact, a recent J.D. Power study found that digital communication has become the key to maintaining customer satisfaction throughout the claims process. In auto insurance claims, the research and analytics firm found that personalized text messages, status updates via mobile apps and providing guides to help claimants understand estimates can dramatically improve the customer experience without significantly raising customer service costs for insurers.⁵

Findings from the National Broker Survey support the idea of digital status updates. When asked what technologies the insurance industry can offer (or improve upon) to better support brokers’ business objectives, online claims tracking was number one on the list (72%). Rounding out the top five are quoting tools (64%), broker portal (64%), online claims submissions (52%) and online policy renewals (45%).

While digital tools can unlock new opportunities, carriers must balance technology with the human touch. This is especially important during the claims process when an insured has experienced a loss and requires empathy and reassurance.

“We know that automation is the way of the future, and it will support our claims processes,” says Larissa. “The key here is that we still will require human touch and critical thinking throughout the claims process. Automation will not be able to replace these important aspects of the claims process.”

 

Sources

¹ McKinsey & Co., “Elevating customer experience: A win-win for insurers and customers,” Sept. 21, 2023

² Mike Vestil, “Navigating The Insurance Claims Resolution Process”

³ Decerto, “5 Principles of Effective Claims Handling in the Insurance Industry,” Jan. 24, 2024

⁴ Insurance Thought Leadership, “Why Do Insurance Claims Take So Long?” March 3, 2024

⁵ J.D. Power, “Many Insurers Struggle To Deliver Seamless Digital Experiences as Repair Cycle Times Rise, J.D. Power Finds,” Dec. 5, 2023