The whole point of insurance is that it kicks in when something goes wrong, and you get your car fixed, your stuff replaced, or a tidy sum to get some new stuff. Naturally, you’d like that pay-out quickly, especially if your home is flooded and you have nowhere to live but a local Travel Tavern.
But new research from insurtech firm, CoverGenius, has found that on average, customers are waiting 10.5 weeks for insurance pay-outs after a claim. This equates to 74 days, or 2.5 months, of customers being left with no money and often distressed after something has gone wrong.
The research found that this delay in claims payment is the biggest source of dissatisfaction among insurance customers. The need to chase up claims payments causes stress and inconvenience among customers, and is even putting strain on customers’ relationships and negatively affecting their work.
Many institutions within the financial services industry are waking up to the need of prioritising the customer experience. In turn, customer expectations are changing. If our banking providers can provide us with online services, an easy-to-use app, and an integrated approach, why can’t our insurers do the same? If the insurance industry is to shake its stuffy, obstructive image, it needs to start putting the customer first.
- 35% of customers say the worst thing about making an insurance claim is the time it takes to receive payment
- 36% of customers find chasing insurance claims payments stressful, but refuse to give up
- 10% of respondents said they find chasing insurance claims so stressful, they do not bother
- 9% of customers doubt they will receive any payment when they make an insurance claim
- 18% said chasing an insurance claim was harder work than it needed to be
- Customers would pay more to guarantee instant claims payments, especially for home (44%), car (44%), and travel insurance (30%)
- Customers cited the following challenges as frustrations with the insurance claims process:
Multiple conversations required to give information (29%)
Chasing the status of your claim (24%)
Delays in waiting for insurer to respond (22%)
Being treated with suspicion by the claims operator (22%)
Unfortunately, the results of this survey will come as no surprise to those within the sector: the insurance industry is well-aware it has a problem with customer satisfaction and public perceptions.
While up-and-coming firms are pushing ahead to improve their offering and customer experience, there is much discrepancy, and incumbent players in the field still lag behind.
It is not all doom and gloom: technology exists that can overcome many of the friction points that are creating customer dissatisfaction. A new generation of insurtech firms are creating solutions such as instant claims payments, and AI-powered product recommendations to provide a more customer-centric insurance experience.
Angus McDonald CEO and co-founder of Cover Genius, said:
“It’s no secret that the insurance industry has a problem with customer engagement. While insurtechs are using innovation to tackle this problem head-on, many incumbent firms – who don’t have the agility to adapt as quickly – are taking longer to shift old habits, and as a result, the negative customer experience is still there. Customers are wising up, and expect better. Ecommerce brands must prioritise customers, and intentionally partner with insurers that understand customer-centricity.
“With customer dissatisfaction so high, there is a public appetite for change. The research shows that customers will pay more for a slicker claims service. Insurers that can put the customer at the heart of their service and expedite the claims process can reap the rewards of customer loyalty, increased renewals, and greater sales.”
The insurance industry in the UK manages £1.8 trillion worth of investments, making it the third largest insurance industry in the world and the single largest in Europe.
The 2016 Enterprise Act inserted a new section 13A into the 2015 Insurance Act, which introduced a new implied term into all insurance and reinsurance contracts entered into on or after 4 May 2017. This will require insurers to pay claims within a ‘reasonable time’ unless they have reasonable grounds for disputing it, and business and consumer insurance policyholders may now pursue their insurers in the courts if they do not settle claims within that time.
Further to that, in February this year, the Financial Conduct Authority has proposed that all general insurance companies (those that sell motor, home and travel insurance, for example) should have to report their “value measures data” every year, to improve market transparency.