By Simon Penny, head of insurance at DST
The general insurance market is more competitive than ever. Customers face a wide array of options when deciding which insurer to choose, from long-standing industry stalwarts to dynamic new challenger brands. Therefore, it’s vital that insurers are able to consistently deliver a positive experience for consumers.
To this end, we undertook research into both consumers’ and insurers’ current views of the insurance claims process. This revealed that the ‘positive customer experience’ isn’t necessarily a reality across the board, with claims processing being the main area in which insurers aren’t meeting customer expectations. For example, more than one-quarter of consumers surveyed had switched insurers following a bad claims experience, and almost one-third said they were ‘not satisfied’ with the claims process or the speed with which it was handled, based on a recent experience.
Looking into this issue in more detail, our research discovered that the issue of greatest importance for consumers, when it comes to claims, is customer experience. Almost half (42%) of the 2,000 consumers surveyed cited customer service reputation as one of the main factors they consider when choosing an insurer – whilst just 20% said they would always choose the insurer that paid out the most claims.
So whereas pay-outs may have traditionally been the key factor that consumers value in an insurer, today’s consumer rates customer service and communication far higher. This issue was echoed in the Financial Ombudsman Service’s annual review for 2014/15, which revealed similar concerns across the board when it came to insurance related complaints. These included comments relating to long waiting times for a claim to be processed, and lack of communication from the insurer during this time.
To help tackle this issue, it’s crucial that insurers are using the up-to-date technology. Fewer than four in 10 consumers (38%) surveyed by DST believed that their insurer used the very latest technology to handle their last claim, yet just 11% of insurers considered staying up to date with technology to be a priority for improvement. This is not a terrible figure by any means, but it does indicate that there is room for improvement.
Technology can help to address most of the key concerns raised by consumers – such as speeding up the claims process and improving communication – as well as addressing some of the main areas for improvement identified by insurers themselves, including reducing the cost of claims, strengthening the brand and reducing leakage.
Effective claims handling is vital to an insurer’s success. Problems in this area are often caused by systems that inhibit, rather than facilitate, efficient claims handling. These inefficiencies can stem from a wide range of sources, but often come down to the insurer’s people, processes and customer service – as evidenced in our research.
Insurers that are slow to invest in the latest claims technology will be more likely to have dissatisfied customers, and risk losing much of this business going forward. The lesson for insurers is therefore clear: listen to what your customers are telling you and act on it now – or risk losing them to a more proactive competitor.