In his book "Predictably Irrational," Behavioral Economist Dan Ariely reveals the curious interconnectedness between two forces. First, that people's choices are influenced by their emotional or "hot" states, and are often irrational. Second, that this irrationality is oddly systemic, and forms patterns — suggesting that, if studied closely over an extended period of time, they could be predicted. In the insurance world, events that trigger a claim are examples of hot emotional states for a claimant — meaning ones in which they may be predisposed to act irrationally. Combine this interesting insight with the growing belief that the nature of the claim experience can either make or break a customer's relationship with an insurer, and all of a sudden, it seems to makes sense to preemptively understand how people react to a claim incident, and then get ahead of them to service them accordingly so that they are not just satisfied, but pleased every step of the way.

The Customer Satisfaction/Loyalty Connection

The case is simple. Research conducted separately by J.D. Power and Associates and Diamond establishes that customers who have a positive claim experience are significantly more likely to remain with an insurer for a longer time and become "evangelists" so to speak in their circle of influence. Over time, this creates tremendous value for the insurer. Yet, when it comes to tightening purse strings in tougher times, claims is the area that insurers target shrinking the most. A recent study by Arthur J. Gallagher & Co. revealed that "it now takes insurers significantly longer to settle large claims than in the past," leading to frustrated clients and tremendous inefficiencies in the claim process. This Catch-22 situation will persist, as pressure on reducing losses is critical to insurers' survival.