'Your claim is denied' & other tough policyholder conversations

Professionals from across the insurance ecosystem, from agents to carriers, offer tips on having difficult conversations with clients.

“Independent agents need to be part diplomat, part salesperson and part psychotherapist. They need a lot of skills, from empathy to legal knowledge,” says Bob Rusbuldt, president and CEO of the Independent Insurance Agents & Brokers of America. (Credit: Valery Kachaev/Adobe Stock)

By design, insurance is there for the worst moments life can throw at someone. At times, insurance professionals are tasked with delivering bad news in the midst of already volatile situations, from denied claims to premium increases and everything in between. This makes developing soft skills and the ability to tactfully approach these conversations vital.

“Independent agents need to be part diplomat, part salesperson and part psychotherapist. They need a lot of skills, from empathy to legal knowledge,” says Bob Rusbuldt, president and CEO of the Independent Insurance Agents & Brokers of America (Big “I”). “It is a unique skill set, and it is one that every good agent possesses.”

What follows are tips from carriers, insurance agents and industry experts on handling difficult conversations with policyholders.

Be in front of issues

“We aren’t in the business of holding on to bad news, so we try to get out ahead of any of those difficult conversations or decisions with the goal of being as transparent as possible,” says to Lindsey DiGangi, assistant vice president of marketing at Pennsylvania Lumbermens Mutual Insurance Co. (PLM).

Bob Fee, president of Fee Insurance Group, agrees it is critical to be prompt when delivering information on what is going on in the insurance marketplace. For example, when it comes to personal lines, policyholders should be kept in the loop on how inflation is hitting the insurance industry and the impact that has on insurance premiums.

“If they get that in advance, it is not a surprise,” Fee says.

Be excuse-free

Don’t make excuses or unnecessary apologies, cautions Tony Caldwell, co-founder and CEO of One Agents Alliance.

“When you are talking to somebody about a claim denial, say ‘your claim is being denied and here is why,’ don’t make an excuse for it,” Caldwell says.

He notes that at times agents and brokers have to deliver bad news that was caused by their own actions, such as failing to offer or suggest a certain type of coverage.

“Sometimes we have to deliver bad news that is our fault, and in those cases you need to apologize,” Caldwell says. “But if it is not your fault, there is no reason to apologize. That’s the flip side. If the premium is going up because of the hard market, you can be empathic with people but don’t take responsibility for something that isn’t your responsibility.”

Be an educator

In cases when a policy isn’t being renewed, for example, agents and brokers “really need to educate their clients, and potential clients, on arcane insurance issues and terminology, and try to boil it down to understandable language,” explains Rusbuldt, adding that advice holds true across personal and commercial lines.

“We work really closely with our agents, and how we educate them is really important because we want them to feel like the experts alongside us,” says Rachel Switchenko, vice president of customer solutions at Plymouth Rock Assurance “The way we think about our partnerships with agents is in collaboration with marketing, and making sure we all feel good about those conversations.”

She adds it is all about empowering agents and making sure policyholders’ questions are addressed.

According to Caldwell, putting a problem into context and helping the policyholder see the wider picture is a helpful way to ease into difficult conversations.

“Even if you are giving negative or bad news, it takes some sting away if the policyholder knows why and knows that they aren’t alone. Knowing those things makes a huge difference in how the news is taken,” he says.

Niche carrier PLM takes a unique approach to manage difficult conversations via proactive education through its triangular distribution model, according to DiGangi.

“Instead of focusing on a linear, traditional model where we speak directly to the agent or broker, and they turn around and deliver the message to the insured, we take it from a line and turn it into a triangle,” she says, explaining: “What we are trying to accomplish is open communications with both parties. So we want to make sure we are communicating with both the broker and the customer, and ideally at the same time.”

For example, when claims are denied PLM wants to be clear as to why it is making that decision and using it as an opportunity to educate both the policyholder and the broker. She explains this approach gives PLM the ability to deliver nuanced information and market insights as insurance experts in its niche market. This also helps take pressure off a broker, who might not have a similar wealth of information on the wood industry.

Be real

“I like to think about it as people helping people, and there is a need to bring empathy and authenticity to the conversation,” says Plymouth’s Switchenko. “Whether it is a customer or agent on the line, it is important to make sure they feel heard and that you address their concern. We hear a lot about scripting, but we don’t do that because we want to have real conversations.”

She adds this lets the client or agent know they are being heard and all the factors have been considered before delivering an answer.

As a vast majority of claims are denied because there wasn’t coverage, the Big I’s Rusbuldt says it is incumbent on the agent or broker to explain in detail.

“When explaining the denial, honesty is the best tool. They (agents and brokers) need to be honest with clients at all stages of the process,” he says.

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