Let’s be brutally honest shall we? Cleaning up after a flood of water has turned your kitchen into a Lido, or transformed your shagpile living room carpet into a swamp, is a total pain. When policyholders need insurers to sort that mess out, things can drag on for months and then social media becomes the platform for all that insurer/broker flak, and subsequent bad PR. If our industry can one great thing this winter, it would be streamlining flood and water leak claims using the latest tech and joined up thinking.
Change is long overdue and it is good news to see two companies doing things better, faster and smarter;
An innovative escape of water claims process devised and delivered by specialist insurance business Pen Underwriting, in partnership with third-party administrator Davies Group, has the potential to reduce related industry indemnity spend by almost £100 million a year — as well as slash the time taken to handle and resolve customer claims.
Only nine months after launching its comprehensive overhaul of the claims process for escape of water, Pen Underwriting has recorded reductions in average claim lifecycle and average claim spend that significantly exceed its own targets for the initiative.
In January 2019, Pen set itself a target of a 10% saving on indemnity spend and a 15% reduction in the time taken to settle domestic escape of water claims having worked in close collaboration with Davies to re-engineer the entire process from first notification of loss to final resolution. To date, average claim spend has been cut by 15%, while the revamped process has delivered a significant reduction in average claim lifecycle from 50+ days to only 23 days — a reduction of 46% — while achieving a strong Net Promotor Score of 75 from customers on all closed claims to date.
Escape of water remains one of the largest peril spend in domestic property claims, costing the industry an estimated £657 million a year according to the Association of British Insurers with insurers paying out £1.8 million for it every day. Cutting that collective claims spend by 15% could see the industry save £98.5 million.
But the biggest impact of the initiative has been on radically reducing inconvenience for customers, with remote evaluation and quicker decisions using video to identify and implement the right solution — often completely eliminating the need for claim validation appointments. The initiative also uses virtual reality technology to intensively train dedicated handlers within Pen’s claims hub in the nuances of water damage and the exploration of creative solutions, alongside traditional methods, to deliver the best possible customer outcome. Customers experience improved interaction too, through the ability to monitor their claim in real-time and provide feedback online.
Gareth Crosbie, Claims Director for Pen Underwriting, said: “The impact of this new claims process has been transformational. Together with Davies, we recognised that a different approach to claims handling on escape of water claims was needed.
Using our expertise combined with both readily available and new technology – not only in the training of claims handlers, but also in the interaction with our customers – has allowed us to quickly identify the severity of an escape of water claim and direct the claim appropriately. This minimises the inconvenience of a claim for the customer, increases customer satisfaction and reduces both the claims lifecycle and indemnity spend.”
Russell Crewe, Managing Director at Davies Group, said: “Using video technology from the very first notification of loss allows early identification of any customer vulnerability together with the appropriate level of response. It therefore also enables us to quickly discuss and agree the right solution with policyholders on every loss. We have seen the rest of the market is experiencing increasing escape of water claims costs, yet Pen Underwriting is seeing a reduction of spend against this peril, and we are pleased to be helping them reverse that industry trend.”