Insurers stake their reputations and financial stability on the quality and efficiency of their claim operations. An outstanding claim experience can yield a lifelong customer and a cheerleader, while a process gone awry can lead to a policy termination and the ill will that goes with it.

The 2009 J.D. Power and Associates Auto Claims Satisfaction Study helps to quantify this impact. The study reported that, among customers whose insurers achieve high levels of satisfaction, 65 percent say they "definitely will" renew with their insurer, while only 43 percent of customers whose insurers have low satisfaction levels say the same. In addition, 57 percent of customers whose insurers achieve high levels of satisfaction say they "definitely will" recommend their insurer to others (the most powerful and cost-effective form of advertising), compared with only 35 percent of customers whose insurers have low satisfaction levels.

From an insurer's perspective, efficient and effective claim management is as fundamental to customer retention as it is essential to profitability. For every dollar collected in premiums, insurers, on average, spend 61 cents on claims paid out and 13 cents on claim expenses. There are many factors that contribute to efficient and effective claim management, including productive adjusters and processors as well as the ability to optimize reserves and prevent fraud. Each of these factors has a definitive impact on an insurer's bottom line.