Your Frontline Partner

The average consumer sees insurance simply as a promise of protection and peace of mind. In fact, insurance could be viewed as a kind of bet, the consumer betting with their premium that they will experience a loss which, when they do, becomes a “win” situation. However, when the consumer does not realize a “win”, as no loss is suffered, then the renewal of coverage becomes a “grudge purchase”.

This is one of the reasons why interaction between consumers and insurers is often adversarial. Basically, there is no immediate gratification for the consumer upon paying for insurance. The only time the consumer realizes tangible value from insurance is at the time of a claim. As such, in the eye of consumers, the essence of insurance is really claims.

As a result, the typical consumer does not get excited when purchasing insurance. Buying an insurance policy is a grudge purchase, as are many of the industries that service the insurance company once the policyholder has had a claim. For example, collision bodyshops, restoration companies, rehabilitation services, law firms, etc. But, where the obvious reaction would be to adopt a resigned attitude to consumerism traits, there are real opportunities for insurers to build brand recognition through the notion of “grudge purchasing”. Consider the following:

A grudge purchase is not planned. Excluding fraudulent claims, consumers do not plan to have an accident. The average consumer is extremely busy. They work on a schedule, and if having a claim didn’t make the weekly list of things to do, then ensure swift and hassle free execution of the claims process. The insurer/broker can win points by helping the consumer get his/her life back in order.

Consumers do not know how to deal with a claim. A grudge purchase is characterized by low frequency claims, therefore chances are that consumers will not know what to do. Remember the consumer’s view of insurance is a promise to take care of them, protection when they need it and peace of mind. Here is an opportunity — coach and educate them through the claim every step of the way. This will demonstrate your knowledge and fulfill needs at a critical time.

Stress and emotion. When faced with a loss, people are sensitive, therefore make the claims process friendly. The front-line staff dealing with policyholders can really make a difference. When the claimant feels comfortable on a personal level, they will become raving fans. In this time of need they require a knowledgeable person that they can trust. The insurance representative must show genuine empathy toward the customer and lay out all the alternatives and the consequences so that informed decisions can be made. Remember that chances are this is a new experience for the consumer, and the way they are treated will determine whether or not they renew.

Purchasing insurance is an involvement buying decision. High involvement purchase decisions, like buying a home, cause the consumer to go through a major decision making model before they are ready to act. Consumers want to make the right decisions, and they often rely on referrals to make them feel more secure about their decision, especially in a grudge purchase. To demonstrate this point, consumers having recently had a collision repair experience were asked at random who recommended the facility they chose for repairs. The greatest portion of referrals came from the insurance industry. This verifies the fact that consumers rely on their insurance representative for guidance at the time of a claim. Pursuit of excellence in executing claims service will significantly accelerate the development of brand recognition and brand loyalty.

The claims service model

The claims service model is a hybrid of the “multiple-party exchange transaction” (M-PET), created by marketing researcher Ken Deal. Applying this business model will assist insurers in providing excellent claims service through effective supply chain management.

Marketing involves the exchanges of goods, services and currency between parties. Companies strive with their business partners to understand how these exchanges occur, and how can they more frequently benefit all parties involved. Strategic alliances with a common customer focused vision will benefit all parties involved. It is essential to understand the specific needs of each of the stakeholders. Leaving out a stakeholder ensures that the transaction will be less than fully advantageous for at least one of the parties involved — and usually for all the parties.

The insurance company

The arrows going out from the insurance company represent the value being created by the insurer to the stakeholders. The arrows coming into the insurer represent the value being created for the insurance company by the stakeholders. According to the claims service model, it is the frontline claims adjuster and the entire claims department who are responsible for building the insurer’s brand.

A loyal brand will be built when a policyholder experiences excellent claims service. Exceeding customer’s expectations as they relate to claims service will pay dividends through a significant increase in policyholder retention. The insurer will incur lower customer acquisition costs due to less turnover, and higher profits on their existing book of business due to longer average policy duration.

The selection of your business partners within the claims service model will add to or detract from development of the brand. Pick business partners that are very clear about what they stand for. Ensure that you share a common business philosophy that integrates well with your specific business strategy. As the model evolves, opportunities will emerge in brand positioning with business partners and potentially cooperative marketing efforts that will in turn intensify brand recognition and brand loyalty.

The business partner

The business partner within the claims service model represents the insurance broker, insurance agents, and vendor networks like collision repair centres, independent adjusters, independent appraisers, car rental companies, restoration companies, lawyers, rehab institutions, etc. The business partner plays an extremely important role in the execution of excellent claims service. The potential economic and customer service benefits of the claims service model are maximized when the business partners objectives are integrated with those of the insurance company. Insurers and business partners will work closer together in the future to align objectives so that all stakeholders receive benefits.

The Customer

The customer needs help at the time of the claim and they look to business partners and the insurer to provide help. The average consumer does not understand the dynamics of insurance, not to mention what to do in the event of a claim. For example, most consumers believe that their insurance broker is their insurance company, and when they find out it is not, their confusion adds to the stress already created by the claim.

Customer satisfaction during the claims process is not enough to earn their loyalty, they must be enthused with your claims service. Consumers only remember “super fantastic service” and really “poor service”, so anything in between is indifference. This means that the policyholder experiencing “just good claims service”, will ultimately probably leave that particular distribution channel. The reason is because they are being aggressively solicited for their business now, and if you give them no good reason to stay, they will not — but remember, your existing customer is your best customer.

Those companies that focus their efforts on the flawless execution of the claims service model will lead the industry in the new millennium. They will enhance growth through development of “branding” by saying what they do, doing what they say, and improving it continually.