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Yet another survey has been published that comments on poor customer experience in the insurance industry, especially in the case of a property insurance claim. This one is published by Engine and says ”…on the rare occasions [the customers] do interact with their provider, it normally has negative connotations – either going through the sometimes onerous claims process or receiving a renewal notice, often accompanied by an increase in premium. …customers are unaware of the complexity of current …claims processes, so their expectations of a simple and speedy settlement are high.”
The pressure on insurers to offer a better service to their customers continues to mount:
> the Financial Services Consumer Panel (FSCP) is calling on the FCA to establish a rating system to help the public determine which financial services firms are likely to treat them well
> the new Insurance Act 2015 and the FCA thematic review TR15/6 focus on commercial insurance,
> increasing complaints to the Financial Ombudsman.
But in the world of property insurance, what does good service look like? The real test of an insurer’s service only takes place when the customer has a property insurance claim, so understanding the customer experience through the claims process is key to delivering customer satisfaction. Customer satisfaction delivers customer loyalty which delivers higher retention rates. We have carried out some research that suggests that an insurance customer has simple basic needs, and if a insurer and its agents can meet those needs during the claim process, then the customer is more likely to stay loyal.
Stop Trying To Delight Your Customers!
A well-known Harvard Business Review (HBR) article entitled “Stop Trying To Delight Your Customers” makes some interesting points relevant to the claims industry. After surveying 75,000 people the HBR concludes:
“Companies create loyal customers by helping them solve their problems quickly and easily. Customers resent having to contact the company repeatedly (or being transferred) to get an issue resolved, having to repeat information, and having to switch from one service channel to another …” .
The article says that their research shows that you don’t need to over-deliver to keep customers loyal – just get the basics right and make life easier for them. They suggest five tactics for successfully implementing low customer effort:
> Don’t just resolve the current issues, head off the next one. Where so many parties are involved in a property insurance claim this is very difficult to do, but follow up phone calls and emails can help predict what issues will arise next.
> Arm front line staff to address the emotional side of customer interactions. This is so important during a stressful and emotional process such as an insurance claim, and claim handlers need to be able to “read” a customer and provide the information, assurance or support that the customer needs.
> Minimise channel switching by increasing self-service channel “stickiness”. In other words, if you want customers to use a self-service channel like a website, make the website simple and easy to use with a great help section – build it for the customer not the IT department.
> Use feedback from struggling or disgruntled customers to reduce customer effort. Feedback detractor comments into the business and improve systems and training to stop repeating issues.
> Empower front line staff to deliver a low effort experience. Don’t focus on measuring performance through productivity numbers alone, use qualitative measures as well.
The article looks at customer satisfaction metrics and concludes that NPS is a good measure at the company level. But they also recommend using a Customer Effort Score (CES) to measure customer’s intentions to keep doing business with a company, i.e. their customer loyalty. By asking the customers how much effort they had to put into the handling of their claim an insurer can score how likely they are to renew; the predictive powers of CES are apparently very high.
These research findings are consistent with Bhaskar Banerjee’s article in in Post magazine (28th February 2013). He argued that only 30% of customers have a positive customer experience during a property insurance claim but 62% have registered positive satisfaction levels. And, as it is customer experience that drives customer retention, insurers should be focussing their attentions on that, rather than customer satisfaction.
Creating a positive customer experience whilst a policyholder is experiencing a loss of some sort is a real challenge. So insurers must understand what matters most to their policyholders and be able to meet their expectations accordingly. Customers probably don’t expect high levels of customer satisfaction during a property insurance claim, they understand that it is an unpleasant process to go through. But they do expect a minimum level of service that keeps inconvenience and stress levels down.
Customer Satisfaction Evolution (CSE)
Here at MA Assist we have carried out our own research to understand the customer experience throughout a property claim. We have tracked satisfaction levels and recorded and analysed detractor feedback over the life of a significant number of claims to see what happens to the customer and how they see the claims experience.
Many leading companies in all industries use Net Promoter Scores (NPS) to measure their performance. The theory is that if you want to measure customer satisfaction the most important question to ask is “What is the likelihood of you recommending us to a friend or colleague?”
The response is a score out of ten, and puts each customer into one of three categories: 0 – 6 = Detractor, 7 – 8 = Passive, 9 – 10 = Promoter.
Then to get the NPS score the percentage of detractors are deducted from the percentage of promoters.
As detractors are more vocal than promoters, and so will have a much bigger impact on the reputation of the business than a promoter, the promoters need to outweigh the detractors significantly. So an NPS score of over 50% is generally regarded as very good.
Here at MA Assist we have been measuring customer satisfaction at the end of a claim using NPS since June 2014. We publish our NPS on our website at the end of every month, for both our contractors and MA Assist, and we are very proud of the WORLD CLASS scores we get every month. The latest scores for August 2015 for contractors and MA Assist were 75% and 49% respectively.
We have always measured NPS at the end of the claim once the works are complete. But we soon realised that just measuring the NPS at the end of the claim doesn’t tell the whole story, so we started measuring customer satisfaction throughout the whole claim. So since April 2015 we have been asking customers how satisfied they are over the life of the claim, from the day we receive it at MA Assist to the day it is closed.
We introduced CSE for the following reasons:
> to improve customer satisfaction,
> to understand how customers perceive the service MA Assist provides throughout the claim lifecycle,
> to understand the customer experience and satisfaction prior to MA Assist’s involvement.
From April 2015 we started measuring CSE at the following stages of the property insurance claim, by speaking to the customer to determine whether the customer is a detractor, passive or promoter:
> Claim opening
> Start of works
> Work in progress
> End of the claim
We have also taken time to analyse the detractors to understand the root cause for their dis-satisfaction so we can feedback to our clients and deal with any issues that have arisen internally. By the end of July we had carried out almost 2,000 surveys, sufficient to draw our first conclusions from the process.
We have set out our findings below, including relevant comments from detractors. It’s clear that home insurance customers have a real rollercoaster ride through a property insurance claim, and many of them just want to get off!
The graph above shows the rollercoaster customer experience of a typical home insurance claim.
The trend shows that when we are passed a property insurance claim, the customer is generally very dis-satisfied. They become slightly more dis-satisfied whilst waiting for authorisation and then once the works start, but once our contractors start rebuilding their homes customer satisfaction improves dramatically.
As we have analysed the detractor data, we can explain the trend in detail at each stage.
The average score for claims when first passed to MA Assist is 23.21%. Only 38% of customers are promoters and 15% of customers are detractors. 75% of the detractors blame the insurance company.
Once a property insurance claim reaches MA Assist is has usually been ongoing for quite a while. Depending on the validation and restoration models used by the insurer, we often receive a property insurance claim weeks (sometimes months!) after the incident date. As a result the detractors arise as a result of delays in the progress of the claim.
Often these delays can’t be helped – for example if the property needs to be dried. But more often than not, the surveying and validation process has taken too long or the insurer has just not reacted quickly enough or dealt with the initial emergency claim well:
“…extremely slow. Initially reported the claim in January.”
“..unhappy with home emergency cover and service and feel that damage is worse due to their involvement, complaint raised against the insurer”
“…[insurer] has been really slow and I called them this morning to chase it up as nothing has happened since incident date..”
The score drops slightly to 21.52% at the approval stage, generally due to the amount of time it takes to get approval for works from the insurer or surveying company. The percentage of detractors increases slightly to 17% (from 15% at the start) but root causes are different: 49% of customers blame the insurance company now, and contractors (suppliers), drying companies and MA Assist start to become the cause of some dis-satisfaction.
It is not surprising that the level of dis-satisfaction increases further here. The detractor will have had a preliminary visit from the surveyor and/or contractor and then seen no apparent activity again. Depending on the model used by the insurer, the approval process can take up to a month.
“…long delay in progress but now happy that we have approval and can get this moved forward”
“..has taken 2 months and nothing has been done, too many people coming round taking photos. 3/10.”
Interestingly, where MA Assist has a delegated authority the score increases at this approval stage to 35%, rather than falling. This is because the approval process is much quicker with a delegated authority.
Once the reinstatement works start customer satisfaction drops slightly again to 18.03%. This is not surprising – at this stage the customer’s home seems to be getting worse rather than better as strip outs take place and the customer starts to experience the inconvenience of having contractors in the home. It is also at this stage that the builders can encounter issues as they start the job, particularly around unanticipated works. The percentage of detractors increases to 21%, and 54% of those detractors are unhappy with the contractor.
Often it is at this stage that the scope of works has to be adjusted as the contractors discover works that were missed off the scope or were simply not possible to predict at the survey stage. One comment from an unhappy customer demonstrates this:
“.. isn’t happy with claim so far – works were due to start previously but contractors then advised the chimney is not structurally sound. Then a structural engineer was assigned which caused delays. 3 /10.”
Work in progress – End of claim
As the works progress the customer satisfaction score improves dramatically to 54.35% – the customer can see real progress with the claim and an end is in sight. For the first time, promoters are a majority at 61% and detractors fall to just 6%.
At this stage the customer has usually built up a relationship with the contractor and has a named contact who can help and advise them. They are no longer dealing with “faceless” individuals in a call centre, but real people in their homes who can react quickly to the customer’s needs and can make the claim progress much more quickly.
Even though they are living in a “building site” or in alternative accommodation, the clear activity on their claim makes them feel so much better.
At the end of the claim, once the works are finished, the NPS is an amazing 62.5% for MA Assist and 80% for the contractors – a huge increase from the 23% starting position. 74% of the customers are promoters. But even at this stage, customers have negative experiences to feedback:
“Very good communication from builder’s office, staff there are friendly and approachable. Poor communication between different parties involved, very disjointed and inefficient.”
“Very happy with contractor and the works completed…unhappy with having to take time off work.”
“Unhappy with the amount of people involved on what seems to be a simple claim – [drying company], contractor, insurer, loss adjuster, MA Assist..”
Our research has identified some clear trends in customer satisfaction and experience over the life of a claim:
> For all clients, there are high levels of customer dis-satisfaction when the claim is passed to MA Assist as a result of delays.
> Customer satisfaction falls slightly as they wait for approvals and the works to start.
> There is a clear correlation between customer dis-satisfaction and the number of parties involved in a claim.
> Once customers see their claims progressing well their satisfaction levels increase dramatically.
> Detractors consistently complain of having to do too much effort – chasing the insurer or its agents, taking time off work and liaising with many different parties.
> There is often a lack of understanding of the process and the parties involved by the customer, and communication and explanations out to the customer can can be poor.
The results of this exercise vary greatly between clients, depending on the validation and restoration models used. The closing NPS scores vary widely between clients as well. If you would like the data relevant to your business, please get in touch and we will be happy to provide it.
It’s clear that MA Assist is presented with a real challenge when a claim finally reaches our Control Centre – the customer is often already dis-satisfied before we get started. They have already endured delays, inconvenience and a lot of effort to get the claim this far. But in most cases we manage to turn it around.
So how does the industry stop this rollercoaster ride and turn an property insurance claim into love boat ride? Customer satisfaction levels change and evolve over the life of the claim, and there is a clear link between low satisfaction scores and high levels of customer effort. The property claims system needs simplifying and making more efficient if the industry is to make any headway into improving the customer experience and retention.
Our research seems to support HBR’s view that you don’t need to delight the customer. Get the basics right, make it as easy as possible for the customer and make sure he or she understands the process and what is going on. There are some practical ways this can be done, all consistent with “not delighting your customer”:
> Reduce the number of parties involved in a claim. It may sound counter-intuitive to a cost-conscious insurer, but if control of the claim rests with one supplier throughout the process the customer experience is improved. MA Assist has demonstrated this repeatedly through its combined survey/approval and reinstatement services: customer satisfaction is higher and the claim durations and costs are reduced.
> Minimise the sequential nature of the claims process. If several suppliers are involved, each stage of the claim takes place sequentially. But there is no reason why they can’t run in parallel. For example, our MA Dry process has been proven to reduce claim durations and costs through effective and focussed drying with parallel reinstatement works.
> Manage customer expectations. If the process is explained to the customer from the start then expectations can be managed too. The insurer should send the customer a simple process map to help them understand who the various parties are and how the claim will progress.
> Minimise repetition. If the customer has to repeat the details of the claim to more than one party then frustration mounts quickly. Better sharing of information between parties is needed and any self-service option should be well-designed and communicated. MA Assist’s Home Insurance Repair Estimator (HIRE) is a great example of an easy to use self service that gives all parties involved the information they need to progress the claim.
> Empathise with the customer. All too often process over-rides empathy and customer needs. Empowering front line claims handlers to take decisions that will move a claim long quickly will improve the customer experience significantly.
Here at MA Assist we have the systems and the people to deliver a better customer experience. We can co-ordinate the property insurance claim from start to finish, manage stakeholders and ensure that a property is reinstated to a good standard. And we can save money for insurers.
We are much more than a Building Repair Network – we are experienced claims handlers with the technical knowledge to get properties repaired quickly and efficiently with minimum effort from the insurer and customers.
So get in touch and let us help you give your customers the claims experience they expect.