Insurance Claims Churn Conundrum: How to Change the Status Quo

Customer churn and claims: they go hand-in-hand. When customer attrition follows on the heels of a loss, it makes the entire claims process painful. Yet there is a way to avoid that scenario. When Accenture did a survey of 8,000 auto and home insurance customers across 14 countries, it found that 41 percent of policyholders who had submitted a claim were likely to switch insurers within the next 12 months.

One might expect a switch from customers who weren’t satisfied with the claims process. Indeed, 14 percent were not happy with the way their claims were handled, and the majority of these did choose to jump ship. Surprisingly, though, churn also took place among those who were relatively satisfied. Across the board, policyholders who submitted a claim were almost twice as likely to switch insurers as those who didn’t.

According to Michael Costonis from Accenture, the conclusion is clear. Insurers that want to break the link between claims and churn must set a higher bar. “The survey results clearly show that delivering average claims satisfaction levels is not enough,” he said. “The bar has been raised and in order to clear it, insurers need to provide a differentiated claims experience that not only delivers on service but maintains the appropriate financial discipline as well.”

Where glue is weak, benefits must be strong

Insurance is a tough industry for customer retention. Simply put, the glue is weak. Customers don’t typically interact with their insurer, except in two scenarios: to pay their bill (once every six to 18 months) or to file a claim. The first is a chore, and a rare one. The second is a crisis. Neither do much to delight.

It’s not surprising, then, that claims wreak havoc on retention. When communication happens only in the event of bad news, an unpleasant – or even mediocre – customer experience transforms bad to worse. The bond breaks. The customer comes across a deal from some other insurer, and they jump ship.

Clearly, in this environment, good isn’t good enough. The customer experience has to be superlative if it’s to outweigh the negative connotations of having to file a claim in the first place.

This is a core system challenge

What makes a good customer experience? It’s tempting to start with presentation. But smiling representatives aren’t enough. When a policyholder files a claim, it’s the results that matter most.

It comes down to shortening the interval between claim reporting and when they receive their payment, and above-average communication (through a variety of channels including mobile) to help them understand what the process entails and manage expectations accordingly.

In short, the insurer must demonstrate efficiency, speed and quality at every turn. That’s difficult (if not impossible) without the right functionality. It takes a strong P&C insurance system to deliver those benefits consistently and predictably.

The good news is that a P&C insurance software core system which measures up to that challenge can also minimize the costs and liabilities for the insurer at the same time, from shortening the interval after first notice of loss to minimizing the risk of fraud. Curious how it can do so? Learn more about Silvervine Software by downloading our Overview Brochure here.