In this Opinion piece Nikki Ceko, Sector Lead for GI at Huntswood, takes a look at flood insurance, and how insurers and brokers alike can best respond to incidents. The customer experience during a flood claim can often be a deciding factor when it comes to renewal time, so it is wise to make sure the best possible response is in place. Communication with the policyholder is key.
We recently saw parts of the UK devastated by torrential downpours and subsequent flooding. The Environment Agency (EA) issued 147 flood warnings across Yorkshire, the Midlands and parts of South East England in November, with even the army being called in to support rescue efforts.
Understandably, emotions ran high throughout the period of heavy rain as properties were flooded and residents began to struggle with the aftermath. The EA estimated that 830 properties had been flooded, though this figure was challenged by The Guardian, which estimated that at least 1,758 properties had actually been impacted.
Following the floods, the insurance industry is once again in the spotlight. How insurers respond to flood victims, and all those affected by extreme weather, has been heavily scrutinised by the media, the general public and by politicians. Shortly after the flooding, criticism arose as some flood victims were told they could not begin to clean up their homes until insurers had assessed the damage. The Association of British Insurers (ABI) has sought to alleviate fears by encouraging homeowners to get in touch with their insurers and if need be “throw stuff away that is a danger to health”.
As you could probably imagine, insurers face long-term reputational damage if they don’t respond quickly, carefully and empathetically to customers in such challenging situations as those seen in November.
Throughout the winter months (and likely beyond that), insurance companies should expect a spike in claims and customer contact from those affected by extreme weather. While the outcome of claims will be dependent on a number of factors, the way insurers handle these interactions can be ‘make-or-break’, especially when customers are facing truly distressing circumstances.
Putting a highly skilled team in place
A smooth customer experience and delivering genuine support should be a top priority for insurers as they speak to any flood-stricken customers. This will only be possible if staff are fully trained and briefed on how to respond to a crisis.
And this cannot just happen in the moment – it is important to incorporate crisis training into employees’ core learning and development, especially as a company never knows when a disaster or extreme weather event may occur.
Spikes in customer calls and claims will also put additional strain on teams, so it may be wise to consider bringing in additional third-party support to bolster the customer contact function. It is essential to have sufficient staff in place to respond to enquiries, as any delays will only intensify customer frustration and potentially leave people in dangerous situations, without support.
Even if their specific issue can’t be resolved immediately or over the phone, just being able to speak to a trained complaint handler can provide reassurance to the customer and help them through a distressing situation.
Speed is of the essence
We know that customer retention rates are very closely linked to the average complaint resolution time – i.e. customers are much more likely to stay loyal if they receive an immediate resolution to their issue.
This time pressure is felt even more acutely during a period of crisis where even a delay of a few days will seem like a lifetime to flood-stricken victims. Of course, claims will take time to process but during this phase of waiting, good communication and regular updates will be vital for keeping customers happy and confident in their provider.
If insurers don’t achieve this, it is likely to lead to a loss of faith, encourage customers to speak negatively of their experience and potentially look to competitors for cover in the future. In contrast, if customers feel their claim is acknowledged, dealt with smoothly and fairly, then trust will deepen. and they will be more likely to become advocates for their insurer in future.
If seeking external support, insurers should look for a third-party organisation that can add value to a customer contact and complaints handling operation, not just add to the head count of the complaints team.
Ensure you have a holistic view of customer data
One key preparation to make ahead of any peak period is ensuring your firm has effective data amalgamation in place. Having a single view of customer interactions across any and all channels will enable front-line staff to quickly obtain a holistic view of the customer relationship and see all recent activity. This is essential for ensuring a seamless and consistent customer experience, particularly if multiple channels are used.
Having a holistic view will also help staff better identify vulnerable customers and deal with them appropriately. Of course, all customers will become vulnerable when impacted by floods, but it will be important to recognise if there are additional vulnerabilities affecting a customer in order to help them. For example, they may have limited mobility, or have trouble communicating. These factors may mean that the customer may need additional assistance from your team. Having access to accurate and up-to-date information is critical to relieve stress on your business and on the customer.
Over the last few years, the regulator has highlighted the importance of establishing a framework for vulnerability and putting robust processes in place that everyone understands and follows – successful data amalgamation to ensure a single customer view can really help staff with implementing these policies.
It’s also important to recognise that a ‘one-size-fits-all’ approach does not work when supporting vulnerable customers. Staff need to be both flexible and sensitive, as well as empowered to tailor their approach to specific customer needs.
Being proactive The Out in the Cold report, written in 2018 by Ofwat in response to the extreme week of weather nicknamed the ‘Beast from the East’, highlighted that, in some of the worst affected areas, 40% of customers impacted by water loss received no communication from their provider. When consumers received communication, it was not timely and lacked targeted or accurate information. Insurers should learn from this analysis and take a more proactive approach, regularly communicating with customers in affected areas.
Fast and responsive communication across all channels – phone, online and even social media – can make a real difference to people as they struggle to get their lives back on track. Insurers should use simple, clear language when they communicate and give concrete instructions about what to do post-flood.
Regularly reminding customers of contact details and keeping communication channels open should help avoid spikes in complaint volumes, increase customer satisfaction and ensure key messages are getting out to the right people.
On top of this, insurers will also have to continue working hard, and in collaboration with both the Financial Ombudsman Service and FCA, to ensure that flood claim results are consistent, fair and in-line with regulatory expectations.
As households try to re-build their lives post-flood, there is a real opportunity for insurers to be seen as trusted partners. Showing your genuine concern to customers and providing a speedy response to claims will make a real difference and demonstrate to regulators that treating customers fairly is your firm’s top priority.
Embedding a customer-centric culture is, simply, the right approach regardless of whether the business is experiencing an increase in customer complaints or just managing business as usual. It will help insurers differentiate themselves from the crowd and build a genuine rapport with customers.
And in crisis situations, this is needed more than ever.