Why Insurance Companies Need to Mind the Gaps When it Comes to Customer Experience

Andi Dominguez | Friday, Dec 21st 2018
Cute and playful female child jumping in a puddle of water on the street wearing yellow rubber boots and a raincoat

Anyone who has ever had to make an insurance claim knows that even when it’s a minor claim it’s an inconvenience.

The arrival of digital has improved the process significantly -- from digitizing communications to automating processes (digital has transformed how insurers operate and how they communicate).

Up until a few years ago if a person had an auto or home insurance claim, they had to book an appointment with a claims adjuster, rearrange their schedule, and meet the adjuster at their car or home.

Digital has turned that part of the process on its head allowing the insured to take the claims adjuster experience into their own hands. Now all the insured has to do is take out their smartphone, snap some pictures of the damage, attach them to a digital form and submit the first notice of loss via email or text.  Taking this a step further, technology has also allowed for some insurance companies to capture images and videos using drones and satellites to improve and expedite the claims process and overall customer experience, especially when processing the high volume of claims that originate from natural disasters.

In other words, digital has made the first step of filing an insurance claim simple, convenient and straightforward. Herein lies the problem. “If the first step is this easy,” consumers are saying, “why isn’t the entire process?”


Customer Expectations Have Changed

Let’s face it, digital has transformed consumers behaviors, expectations and experiences.

Thanks to the ease and simplicity that digital has brought to consumers’ lives, customers have a higher expectation for what it should be like when interacting with an organization.

And it doesn’t matter what industry that organization is from.

Retail, services, fast food, parcel delivery, a fresh cup of coffee—consumers expect their experience to be great no matter what or who they are dealing with. With insurance, the expectation is no different – and it’s changing quickly.


Drop the Ball on Customer Experience and You’ll Drive Away Customers

So, what happens when the customer experience that’s being provided doesn’t measure up to the expectations that the consumer has?

A study by Forrester Research confirmed that the impact can be extremely negative. Review the table below to see what customers have to say after feeling annoyed, disappointed or frustrated with their insurance company:


Why insurance companies need to mind the gaps when it comes to customer experience



Now compare the information above with the table below -- when consumers have a positive customer experience with their insurer:



Why insurance companies need to mind the gaps when it comes to customer experience


Striving to meet the customer experience expectations of today’s digital consumer is good for business. In fact, keeping customers from switching to another insurer is an important way to grow revenue. Studies conducted by Forrester Research have shown that if an insurer can improve their customer experience satisfaction score by just 1% it can translate into millions of dollars in additional revenue.


The Claims Process is an Insurance Companies Time to Shine

Insurance is one of those things consumers and businesses purchase and then don’t think much about until they need to make a claim. That’s why the claims experience is the moment of truth for many customers.

Insurance employees, especially those handling claims, see it this way too.

According to Forrester Research, the people in the insurance industry they spoke with view the claim process as, “when we really get to show our stuff, we get to be there for our claimants, this is where we get to prove ourselves.”

A good example of this took place in the US in 2017. In total, natural disasters affected 8% of the US population making it one of the highest claims years ever.

The cost was mind boggling.

One million vehicles were damaged or destroyed by Hurricanes Harvey and Irma, with losses from Harvey alone estimated at as much as $4.9 billion. The Northern California wildfires destroyed 14,000 homes, causing more than $3 billion in insured losses.

Due to the sheer volume of claims that had to be dealt with in 2017 and the amount of time it would take to process them, Forrester Research expected to see a decline in customer experience satisfaction. It proved to be not the case.

In a survey Forrester conducted the following year, customer satisfaction actually increased by 1%. Why did this happen? Forrester affirms it was because the insurance companies made an extra effort to communicate with their customers during these trying times, keeping them informed throughout the claims process; some insurers even texted their clients to make sure they were safe in the aftermath of the storms. This high level of customer experience made their clients feel appreciated, respected and valued.



So Why Do Insurers Struggle with Customer Experience?

The majority of insurers are doing a good job with meeting customer experience expectations at the First Notice of Loss (FNOL) stage, providing their customers with convenient ways to file a claim.

The problem is that after the First Notice of Loss stage the claim experience depends on a vast ecosystem of different stakeholders. For example, an auto claim would involve the insured, carrier, agent, adjuster, body shop, parts supplier and the inspector.



Why insurance companies need to mind the gaps when it comes to customer experience

Source: Webinar: Drive Better Business Performance by Improving Your Claims Communications


The issue is not that the ecosystem is complex, but rather that the stakeholders are disconnected from one another. There is no way for all of these stakeholders to communicate with one another and as a result the customer isn’t able to get an accurate or timely answer to where their claim is at in the process. Naturally, this leaves the consumer feeling uninformed, annoyed, disappointed and frustrated because they don’t know what is happening with their claim.

The good news is that insurers are investing in technology that allows them to gain visibility into the customer journey, connect stakeholders within and outside of their organization, causing a shift from being responsive to claims to proactively communicating with their customers. For example, some insurers are looking for ways to proactively monitor if customers are close to an affected area or will be impacted by a natural disaster, communicating with them in advance and providing a different type of customer service before the claim is even submitted. We also see insurers who offer smart home devices or use telematics to reach out to customers proactively when the sensor provides information that indicates a need for attention before the damage occurs. This approach is shifting the insurance industry away from claim response to prevention altogether.


Improving Customer Engagement

How can insurers lessen the gaps in the claim experience? One way is to begin communicating and providing updates digitally and leveraging the Cloud to decrease the burden on IT to customize and send communications within the claims cycle. Anyone who has ever had to make an insurance claim knows that even when it’s a minor claim it’s an inconvenience.

Settling a claim quickly and accurately is as important for the insurer as it is for the customer. And while insurers may still need to work across the complex ecosystem of stakeholders – within and outside of their organization – how they collaborate and streamline processes can change. For example, using a cloud solution would allow regional insurers to reduce their reliance on (their already limited )IT resources, and improve the speed at which they can  end claims communications from start to finish: from shortening the time to create and approve communications, to sending and receiving information from the claimant digitally.  This also empowers employees, especially frontline claims representatives who can personalize content and provide a better experience to the customer.


Today’s digital consumer wants to be more in control and understand what’s happening when making an insurance claim. Learn how empowering them this way will boost your revenue. Watch the webinar “Driving Better Business Performance by Improving Your Claims Communications”.