Opinion: Insurance Sector Needs to Raise Its Complaints Game

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This latest piece looks at the problem of how insurers and brokers handle complaints. Not only has social media given customers a new and very public channel of communication, but everyone needs to use tech to resolve complaints quicker. Huntswood has done some in-depth research to figure out why complaints reach the Ombudsman stage, and more importantly, how insurance companies and brokers can take steps to avoid that escalation. Time is money – why waste it?

Last month, the Financial Ombudsman Service (FOS) published its complaints data for the first half of 2019. General insurance complaints accounted for 10% of all complaints referred, making it the third largest source of dissatisfied customers behind PPI (49%) and banking and credit companies (36%).

Encouragingly, most insurance firms did register fewer complaints in H1 2019 than the previous half-year. Just thirty per cent of the 15,330 cases raised against insurance companies were resolved in favour of the consumer, however, which begs the question – why were the remaining seventy per cent of complaints raised in the first place, if the provider was ‘in the right’?

In the report, companies were ranked in order of performance. The simple mathematics of scale mean that large firms will always appear higher on these lists, but no company wants to be at the top of a complaints league table. There is always more that insurance firms can do to strengthen operational processes and complaints handling teams so that fewer complaints arise in the first place and that even fewer are referred to the FOS.

Revealing the root cause

One of the easiest ways to understand why complaints are escalated to the ombudsman is to conduct a root cause analysis (RCA). This is the process of looking at all complaints and identifying the underlying reasons – the root causes – that contribute to a problem or an event. Once the root cause is found, companies can devise solutions to correct or eliminate that issue. This prevents future occurrences of the initial problem, avoids systemic failures and ensures that company operations are always improving. The ultimate aim is to ensure there are no repeated complaints for known reasons.

It is vital to create a culture of regular, repeated and thorough analysis of the complaints case load to ensure that common themes causing spikes in customer contact are identified and rectified before problems escalate. For this to be effective, companies need to have sufficiently granular management information (MI) on the complaint caseload. Efforts should be focused on those issues that are likely to have the greatest potential impact.

Treating customers fairly

As well as using RCA to identify common themes, businesses will want to assess whether their handling of complaints is fair and if anything could be done differently. A business may need to strengthen its internal processes and procedures so that it can confidently map the complaints journey through the organisation. Ideally it will track individual outcomes in a dashboard that assesses whether these have been fair to the customer.

Once tracked and analysed, it is worth observing the number and nature of complaints that are escalated to the Ombudsman. These rates should then be benchmarked against the industry average. Each firm will have its own view on what ombudsman referral rate is satisfactory, but it goes without saying the lower this is, the better.

Communication is key Huntswood recently surveyed more than 5,500 UK customers as part of its Complaints Outlook 2019 report and found that only 26% were actually satisfied with their complaints experience. Alarmingly, 63% were dissatisfied with how they were communicated with throughout the complaints process.

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It is clear therefore that there is much work to be done around communication, and this may be a contributing factor to the number of general insurance claims escalated to the ombudsman, despite the fact that 70 per cent of the time firms were not found to be in the wrong. It may be that dissatisfied customers do not know how to resolve a complaint without bringing in a third party.

In fact, 64% of customers had to follow up with their provider to chase for an update on the status of their complaint resolution. Could more be done to communicate the standard complaints process so that customers are made aware of progress and know how to complain more effectively?

How can firms better demonstrate that they care about the customer experience and want to resolve issues? Insurance firms should commit to communicating simply and transparently at all stages of the customer journey to strengthen trust and two-way dialogue. If providers demonstrate they are doing everything in their power to communicate clearly from the very beginning, customers will feel more confident in approaching their provider with an issue or question, leading to better customer outcomes, continuing loyalty and fewer escalations. Perhaps most importantly, this will also allow more chances for firms to learn from their mistakes.

Meeting customer expectations The Complaints Outlook 2019 report also found that 75% of customers expect their complaint to be resolved at first point of contact (FPOC). 43% of financial service firms believe they are meeting this expectation however, only 18% of customers reported this to be the reality. This highlights a significant gap between customer expectations and firms’ perception of their performance.

Due to these expectations, delivering ‘first point of contact’ (FPOC) resolution is the single most effective thing a firm can do to drive deeper relationships with existing customers. Many customers, however, do appreciate that some complaints will take longer to resolve than others, but our research also reveals that this expected resolution time is still less than seven days. For complaints that take longer to resolve, clear and regular communication from FPOC is vital. For this reason, it is essential that firms reassess their operational processes when it comes to resolving complaints swiftly and efficiently in order to meet the expectations of their customers.

Digital innovation and new ‘disruptor’ businesses are making it much easier for customers to change provider, making it all the more important to build deeper relationships with customers through the complaints journey. It is estimated that firms could increase their long-term customer retention rates from 49 -75% by delivering a complaints experience that satisfies customer expectations in terms of speed and efficiency.

Building a customer-centric culture

Time is not the only factor to consider. When asked, 61% of customers were dissatisfied with the empathy of the staff member they interacted with. These soft skills can make a big difference to customer outcomes and it is important to increase the capability of not only specialist complaints handling teams, but all teams across the business. It may be necessary to upskill and multi-skill staff, empowering them to make more-informed decisions and helping to resolve issues before they escalate. This customer service can be the key differentiator in a customer’s decision as to whether they switch provider or not.

The overall reduction of complaints in the industry is encouraging but it is important to not lose sight of customer outcomes in the face of increased regulatory pressure. Firms need to be acutely aware of how they present data, communicate with customers and work towards speedy resolutions of complaints. While it is not always possible to fully resolve a customer’s complaint in the first instance, there are other steps firms can take to ensure the experience of customers is positive and satisfying.

As firms focus on fostering good, transparent communications and eliminating repeat issues, they will avoid the financial and reputational damage that comes with escalated complaints and benefit from improved customer relationships, advocacy and loyalty as a result.

About InsuranceEdgeEditor (2164 Articles)
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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