Property claims, customer satisfaction, and good business
Here's why insurers must engage modern technology to empower customers.
The property insurance industry is as competitive as it’s ever been in this country, thanks in large part to the wide range of options homeowners have when it comes to selecting an insurance carrier.
It’s always great for consumers to have a wealth of options to choose from, but what it means for carriers is that their customer service processes have to be airtight.
When negativity goes viral
A bad claims experience is the number one reason a homeowner will switch carriers.
Should this happen, there are bigger stakes than meets the eye: If a carrier loses one customer from a bad experience, they likely lose four of that customer’s neighbors, too.
Let’s assume that customer acquisition costs are $500 for a new homeowner policy. This means that a carrier can stand to lose $2,500 every time they have a negative customer experience occurs (took too long, customer feels like they were left on their own, etc.).
If we think about the current state of affairs for property claims processing, there are quite a few moving pieces that could lead to an unsatisfied customer. A homeowner has to set an appointment with an adjuster. They have to take time off work to accommodate that appointment. The adjuster scopes the damage, reviews coverage, takes measurements, and then writes the estimate. It could be days — or even weeks — before the homeowner gets a check indemnifying them for their loss.
The process is inefficient for carriers, too. There are somewhere in the neighborhood of five million exterior damage claims each year in the U.S., and the property casualty industry pays out approximately $30 billion a year on those claims. On average, it costs carriers about $500 to send an adjuster out into the field to process a claim. That’s an additional $2.5 billion expense that carriers are bearing today. Given loss ratios over the last decade, that is a huge cost that is hurting the bottom line and causing homeowners to pay more for insurance.
Tech takes the lead
In a world where the phrase “every company is a technology company” has become commonplace, the insurance industry has a lot of catching up to do. Indeed, insurance is one of the last massive industries that will be disrupted by technology. There are technological advancements here and there — using AI and chatbots to help drive policies, keeping a home safer with connected home systems like NEST or Ring, and utilizing solutions that hook up to your water system to detect leaks.
But these are far from the industry-wide disruption we’ve seen technologically in other sectors.
While people are continuing to whittle away at pie-in-the-sky technological innovations that someday might move the needle, it’s important to think about what innovations we can roll out now to improve the process. If we don’t, carriers risk their customers losing patience and looking for other options on the market.
To that end, it’s also important to think about technological innovation from the perspective of the customer. Plenty of businesses will implement technological upgrades purely from the perspective of the bottom line, that is, what they can be streamlining on an operational or infrastructural level to improve their margins. There’s nothing wrong with this approach at all, but I propose that, in tandem with this approach, we should be more direct with our technological innovations and seek out improvements that improve the customer experiences.
Perhaps this approach means building accounting software that speeds up the indemnity process. Maybe it means creating a communication platform that allows homeowners to communicate directly with their adjusters to cultivate a personal relationship and have more clarity into the claims process.
Imagining the possibilities
At HOVER, we use computer vision and smartphone photos to involve homeowners more directly in claims processing and give them a more accurate, transparent look at their property. Whatever the case may be, technological innovation that directly improves the customer’s experience will ultimately be a great boon for the bottom line, because in the same way that a bad customer experience can drive away a homeowner and their neighbors, a good experience can create loyalty in a customer, who might then recommend your service to their neighbors.
This isn’t to say we shouldn’t be exploring every possible technological avenue to bring the insurance industry forward into the 21st century. What we’ll find in the long run is that so many technologies have the potential to complement one another; we don’t need to put all our eggs in one basket. But in a time where customer service can be a paramount competitive advantage, it’s worthwhile for carriers to investigate ways they can tailor their processes to the customer.
We don’t need to completely uproot existing workflows to see technology improvements in the insurance world. The processes may not necessarily be broken so much as in need of a touch-up, a boost of modernization. Keeping in mind that this industry, at its core, is a customer service industry, it’s important that we keep those customers in mind as we modernize.
Kevin Reilley leads business development and corporate strategy at HOVER. To reach this contributor, send email to kevinr@hover.to.
The opinions expressed here are the writer’s own.
See also:
The state of insurance technology in 2018