How to Build a Great Claims Notification Operation

Every time I am asked to review an existing, or create a new First Notification of Loss (FNOL) operation I start with a simple question – what are we here for?

The answer is equally simple – we are definitely not trying to build a great FNOL operation!

In other words, if you regard the core functionality of this activity as being primarily a means of customers/claimants making contact in order to notify you of a potential loss then you have a problem. The motivation of a claimant is not about telling you what has happened (Road Traffic Accident, Theft, Escape of Water etc) but about finding solutions to their perceived or actual problems. The purpose of FNOL – as far as a customer is concerned – is a means to an end and not an end in itself.

Notification of the claim is a necessary evil to achieve the fundamental objective of securing the necessary logistics, legal, and restoration facilities to fix things. Nor is it just the direct results of the incident that needs fixing – perhaps a replacement lost ring, a vehicle repair, or the visit of an emergency plumber.

Equally, along with the direct consequences of the incident there are a whole host of additional indirect and related consequences – for example, inconvenience, worry, and concern for any unforeseen financial consequences.

So, in designing a new style Customer Solutions Centre (formerly known as the FNOL operation!) it is the responsibility of the insurer or their outsourcing agent to address these claimant issues at the earliest opportunity and to provide the necessary solutions. The core purpose of this Customer Solutions Centre is to provide solutions to claimant needs and thereby facilitate early settlement of the claim – taking information via a First Notification functionality is merely an administrative exercise that needs to be as swift and as painless as possible.

The implications of this new method of responding to incoming notifications are substantial. Customer Solutions Providers (otherwise known as Claims Handlers) must have the knowledge, skill and authority to act on behalf of their claimants.

They are likely to need new tools for sourcing and delivering what the client needs e.g. the ability to make an appointment for the customer with an approved supplier. They will need far more technical knowledge of the situations that customers will face and they will also need to have clearly delegated powers to make things happen in ways that might be unusual and fall outside the traditional parameters of a process driven FNOL operation. They might even have spending limits within which they can access new and different solutions that may be needed – all without reference to a host of senior managers and regulations.

It’s All About Saving Money

Yes it is – but not in the ways that you might think.

For example, what customer would ever want to use their own nominated accident repair centre (with the resulting higher costs for the insurer) if there was a real, genuine and ultra-competitive offer on the table from the approved repairer network?

There might be the occasional demand from owners of very high value or specialist vehicles but the secret of saving money is in building the right solutions for anticipated customer demands and then communicating those offers with relevant and powerful methods. Claimants will surely use the services available to them if they believe (and it can be proven) that these represent the best solutions available.

Primarily cost-driven procurement of supplier services and the creation of approved supplier networks can, paradoxically, lead to higher costs as claimants turn elsewhere for their supply in order to source services that they can trust. Too often, these networks are not perceived by customers as being the best solution for their needs but merely a way of saving costs for the benefit of the insurer - and the same can be said for the claims handlers who also lack belief in the recommended solutions and might even need to be ‘bribed’ by artificial incentives and bonus systems – which very rarely work in the longer term.

Failure Generates Costs

Of course, we all know that the overwhelming volume of demand in a traditional notifications centre is in any case generated by failure – a failure to capture the right information at the right time, failure to deliver on promises made, failure to plan ahead and manage the outcomes.

All of these failures cost money and almost all of them will be generated by a system that demands more of individual claims handlers than can be reasonably delivered. Investing in people, technology and training may require a short term increase in tactical costs but will inexorably lead to a medium/long term decline in strategic costs – it just needs a few brave leaders to look beyond the standard 12 month budgeting cycle to reap the rewards.

In a single year there are millions of claims notifications directed at FNOL centres. How many of those claimants encounter a service that is truly geared to meeting their needs and problems? One would have to hazard a guess that it’s not that many but those institutions that do achieve the task gain competitive advantage, reduced costs, and a solid foundation for building a better customer experience.

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For further information on the range of consultancy, workshop and training services available including those related to First Notification (FNOL) operations please visit the website www.jelconsulting.co.uk or you can email me directly via my LinkedIn profile.