Too often insurance buying decisions are based on price and assumed product benefit. This trend is being fuelled by Aggregators who base their marketing on saving money – making price the predominate differentiator. In reality the buying decision for Insurance should be based on assessing the claims process should it ever be put to the test.
Underwriting and claims settlement are the two most important aspects in the functioning of an insurance company. In the present highly competitive and economically challenging environment, claims settlement should serve as a market differentiator and put the Insurer at the forefront of industry leadership and innovation. CII policy and public affair director David Thomson made that point in the 29th August 2013 edition of Post Magazine. He says:
The proof point of insurance is the claim. It is about having clear terms and conditions and not wriggling out of them
Success depends on two elements:
Firstly the Insurer has to be sure of the clarity of their terms and conditions and the operational efficiency of their claim operation to support their promises. Delivering an operating model that can minimise claim costs and eliminate the unnecessary expenses associated with claims handling is a vital step. Implementing effective supporting technology to improve claims management across the organisation is essential. However, supporting technology is only one part of a total claim improvement initiative. Often overlooked are the people and process components of a more holistic improvement initiative. There are inherent similarities to the claim process whatever the product, so by applying the best core business practices across the organisation it is possible to ensure that the optimal claim process is available and can be used for any product offered by the Insurer. This means that, rather than having to build the process from scratch every time, insurers can focus on the product differentiators, thereby reducing expenses and dramatically improving agility and time to market. This is exactly the approach we have taken with our software – and it works!
Secondly, the Insurer then needs to offer all potential customers access to relevant claims statistics, the equivalent of “trip advisor” for the insurance market. If feedback from previous claimants was readily available, then those with a slick claims service offering the best customer service would start to really stand out from the competition and buying decisions could be made on a more relevant factor than price. Equally where problems are identified the process can be easily reviewed and improved.
Amanda Blanc, chief executive of Axa commercial lines, ably summed up the insurer ideal by saying:
I really want customers to know what they are buying, why they need it and when they can and cannot claim without needing to go to page 26, Section three, clause F.
If Insurers do that and then measure the claims service and publish it alongside the premium, customers will be making informed decisions that are not solely focused on price. Scary? Not if you are good!