What is Happening in the Insurance Claims Industry?

The hub of action within the insurance industry is undergoing a cultural and technological revolution. As insurance companies migrate their claims forces towards completely centralized operations, one has to wonder if the culture of claims will survive the tides. As companies struggle to retain market share, even the largest players on the block are not immune to playing catch-up to the change which has rocked a one-time staple of the industry.

The best insurance companies have always touted their massive claims forces as part of their service-orientated customer focus. Many out there are still very focused on providing the type of service so many customers demand even at the high cost of retaining qualified and talented personnel. Those companies continue to be successful in garnering their share of a tightly competitive market. Those companies have the best trained and most effective marketing weapon working for them and it’s because they have taken the time to invest in making their claims force true craftsman at their trade. It is evident those companies are invested in creating a culture of loyalty and dedication among their employees. This investment translates into customers who see and feel a “special aura” from employees anytime they have an interaction with the company. Every touch a customer has with these professionals leaves them feeling more confident in their choice of insurance company.

Unfortunately, countless others are liquidating these departments and trading the skills, talent and powerful experience for scripted phone call centers designed for expediency only. Apparently, its prevalent thought today’s customer only wants fast and cheap, McDonalds style service. Now, for the average run of the mill glass breakage auto claim, this type of quick and easy, self-serve process is the right fit. We should not discount the customer’s thoughts about having a simplified process when it comes to the right claim circumstance. And we cannot discount the ever-increasing trend of companies like Lemonade? who are focusing their efforts on a targeted segment of the market- those who want a completely online experience from purchase to claim. However, we must thoroughly examine the effects of expediency over true and caring customer service before we decide EVERY claim must be handled in this microwave manner. In the name of salvaging the customers insurance companies want to retain, I would caution the industry to truly scrutinize what massive downsizing of THE crucial customer touchpoint operation could do to the future of their balance sheets. While technology in the industry is revolutionizing the way claims personnel do what they do every day, losing the all-important ability to reach people in moments where they desperately need a human connection could spell disaster for even the largest carriers out there.

So let’s look at a few of the reasons why the claims industry is tottering on the precipice of a cliff and maybe a few solutions with a balanced approach towards serving each customer. We are at a crux moment. Carriers can choose to build a bridge with personal connections, or in my opinion, they will fall into the abyss from which no company returns as their market share crumbles underneath their feet.

1). When the claims revolution began, many in the industry targeted the wrong customer base with completely antiquated systems to support customer needs.

 Many carriers are guilty of trying to re-design and re-train their entire operations and sales force to go after today’s savvy internet shopper. And while that internet shopper is an attractive pursuit because there are so many of them out there surfing companies like videos on YouTube, many times companies go after this customer and do a atrocious job retaining them because even their first shopping experience online results in absolute frustration. They are often confronted by an antiquated system which cannot generate the information needed to satisfy their shopping need. They are pointed to an apology on the webpage which states, sorry, we can’t quote your home online today, please wait to hear from one of our associates. And then, the phone call following up that online shopping experience is a scripted, pained conversation with a telemarketer who is struggling to read the words on the screen.

No! This is this type of customers first touch point with a company. And what happens with this customer if they actually struggle through the process of getting quoted with an associate? After the fact, many times, there is no personal touch to the service. The problem with this model is it leaves the customer who doesn’t fit into the mold of the quickie internet shop out in the cold, and it leaves the tech-loving shopper high and dry believing he/she has no other choice but to shop again. Internet shopping is becoming much more prevalent and todays customers are more likely to shop online as information is so readily available at their fingertips. But the shop doesn’t always mean the purchase. Statistics from the 2016 JD Powers report indicate that “consumers shopping for insurance providers often look for them online: the study shows that 74% of shoppers use insurer websites or aggregators for obtaining quotes and researching information. While nearly half of shoppers obtain a quote via insurer websites, only 25% actually purchase their policy online; 50% close the purchase through direct contact with an agent, and 22% through contact with a call center.”

Companies which have tried to build the environments ripe for grabbing the internet customer unfortunately went about it backwards many times. They relied on legacy based antiquated systems to build the framework for a customer they had never really sought before. And their lapse-cancellation ratios skyrocketed in the wake of poor customer service experiences and the frustration of both camps of customers as they struggled to figure out why they chose Insurance Company A. And I haven’t even gotten to how disconnected their claims experience might be with Insurance Company A yet.

2). Insurance companies are losing their ability to connect with people.

 Let’s face it. We are becoming a culture of the most technologically connected people ever, but we are truly suffering as human beings because we cannot seem to strike a balance in between interpersonal relationships and our need for screen time and the instant gratification we get by likes, shares and comments on our social media accounts. A recent study by the University of Pittsburg brought about some surprising results. “It turns out that the people who reported spending the most time on social media — more than two hours a day — had twice the odds of perceived social isolation than those who said they spent a half hour per day or less on those sites. And people who visited social media platforms most frequently, 58 visits per week or more, had more than three times the odds of perceived social isolation than those who visited fewer than nine times per week. The study appeared...in the American Journal of Preventive Medicine.”

Insurance companies are still struggling to figure out their place in all of this “disconnected connectedness.” And how do we as an industry strike that ever important balance in between our electronic capabilities (which save us countless number of dollars) and the ability to truly make a connection with a customer (which results in customer loyalty and better retention)? Bottom line is, the human connection within insurance companies appears to be moving out the door as fast as we can all spell chatbots, blockchain, insurtech and analytics. And while all of those words mean great things for every facet of the industry, and they are absolutely essential to the future of servicing every type of customer we have, we must take a long, hard look at what seems to be missing in the puzzle of amassing Insurance Company A’s corner of the market. We cannot let the personalized culture of an industry dedicated to helping people through some of the darkest and difficult times in their lives die. We have to be a good neighbor. We have to help our customers know they are in good hands. We have to be there to help life go right. We have to be committed to a culture of service. And we can’t forget to give people more than 15 minutes of service (if that’s what their claim demands) when we are trying to save them 15% on their auto insurance. And this means more than just a few company slogans thrown out casually.

Studies show a workforce who feels an interconnectedness within their work will remain more loyal to a company. This rings true even of millennials who are much more likely to leave a job than their predecessors in the industry. Forbes has this great article about the new reality of employee loyalty. “Millennials were three times more likely than non-millennials to change jobs in the last year, and 91% don’t expect to stay with their current organizations longer than three years.” And we build our brand in the claims industry on the backs of people we don’t expect to stay in the job! Loyalty is a key factor and maybe it has to look very different for today’s worker, but we can do better than we have in building a culture where employees feel connected to the work they do helping others.

“But why are loyal employees so important--even critical--to the success of your business? Loyal staffers help create a history and a culture of stability; people who've been around awhile know the road, the rules and the "how it's done around here." Loyalty reduces costly turnover rates by eliminating the time needed to advertise for new hires, then interview, screen and train them, and wait till they get up to speed.”  Entrepreneur.com Loyal employees are usually also satisfied, productive and more likely to be brand marketing for your corporation as they serve your customer base. Are we working ourselves out of a time when loyal employees are not a necessity anymore? And what makes this more difficult for the insurance industry is the claims process itself is so very convoluted and complicated for the customer, having someone on the line or in their house to walk them through what it takes to get their claim handled is vitally important.

I would challenge all of the industry to realize their roots. And those roots lie outside of technology and systems, they lie in the people you hire to deliver on the promises you make to every customer who signs the insurance contract with you. They lie in the relationships you train your workforce to build with your customers, and within their own peer groups. They lie in what America and so many other countries are dying to feel and be a part of right now, connected, deep and meaningful personal relationships. And this is a tall order to fill as Insurance Company A navigates a very scary world of competition stacking against them and sees their market share slipping dramatically as their expense ratios continue to climb. So what’s the answer? It’s not going to be easy, but I would again challenge our entire industry to step up to the side of that terrifying cliff and start building the bridge back to their customers who desperately want and need—a moment of human connection. Because after that screen time of buying “something” from the big, scary insurance company what happens next? People need to see the value in what they purchased, and that moment comes when they experience a claim. The return on this type of investment in our people in the claims industry might just surprise us all.

 3). Call Center environments addicted to metrics and production are killing the claims culture and driving customers away.

 Countless articles have been written about the subject of call centers and the climate they have created in the claims industry. Needless to say the forecast, for many, is pretty daunting. Eager young millennials seeking to climb out of the mountain of debt they have amassed going to college flock to these positions with high hopes of finding meaningful work eventually. These millennials are prepared to job hop for a while until they find that job which inspires them. And I have to ask the question, why wouldn’t we want to keep these bright and talented individuals who are more educated than their parents, and can be motivated to join the culture of a workplace, with the right incentives and benefits packages? Why are we driving them away? Why aren’t call centers the place to be?

I would challenge every major carrier out there to start with making these call center environments “meaningful work.” How in the world do we as an industry expect these models to be successful if there is no legacy in the talent pool who chooses to take a job there? How do we expect to train, mentor and build the next generation of insurance professionals if their first taste with a job in the industry is something horrific and likened to an “Alcatrazian” world? A world where every moment of everyday is a scheduled drudgery of work which doesn’t seem to accomplish anything other than serving up numbers on a board somewhere? A world where there is no work-life balance and the most talented choose to leave because their efforts are never rewarded (except with more work?)

Again, when I started in the industry, it was in a call center styled claims environment, but we did it much differently than the rest. A culture of a family friendly environment was present and management led the way. Now management in these environments have no freedom or autonomy help their employees to achieve any semblance of balance. It’s a metrics-driven world with a points based absence system which doesn’t treat the professionals working there with respect. It’s an environment which demands everything out of its employee base, versus gaining their buy-in by pushing them to be masters of their craft.

Buy in from an employee workforce in the challenging world of claims takes something more, and it’s not something that’s tangible like money. It’s trust. Mountains and mountains of trust that goes both directions from employer to employee. Claims people are paid to make critical and crucial decisions. The decision about when they go to the bathroom in the day should be the least of their worries and should be their own. The claims environments of today need to remember this as they consider adopting these Draconian methods of productivity. “...As companies turn to technology to address call-center volumes, they allow customer experience to take a back seat to digital technology in their operations, creating dissonance in direct customer interaction, where the objective is harmony and efficiency. Second, by counting on technology to solve their call-center issues, executives lose focus on core operations and upset the balance between human interaction and automation in an era of evolved customer service.” Why Your Call Center is Only Getting Noisier

What we should be thinking about doing in our call center structures is to inspire our employees by gaining their trust and helping them to fully engage in the idea they are contributing to a cause which is greater than themselves. Trust in the employee is just one of those magic formulas which creates retention and enhances the customer experience. But giving that level of trust to an employee requires we invest heavily in their training and help them to understand how making the critical decisions they make every day are contributing to the company’s bottom line. By investing in our employees to make them masters at their craft, they in turn know we value their training, and we are invested in developing them to be the very best at what they do, no matter where they sit in the company. Novel idea right?

What if we created a world where the quality of what people do every day is respected and genuinely appreciated, in lieu of the quantity? What if it was a world where management reflected transformational leadership and inspired their workforce to step up and be leaders? What if we revolutionized our call centers like the companies who have gotten it right? —- see Zappos. This may sound all utopian and counter-intuitive to today’s claims environments, but guess what? You’re not going to believe this. Newsflash! The work gets done in the process. Happy, satisfied, motivated and dedicated claims forces tend to pave the way for success. And happy, satisfied, motivated and dedicated claims forces bleed positive energy to your customer base who experience claims. That’s free marketing you can’t buy anywhere. And it’s become the least valued asset at a lot of companies today.

So, P&C carriers, are we going to be conformers or warriors in this revolution of a talent war we face? I’d rather go down fighting like a Viking with blood all over my axe and shield than to conform to what is happening in our call center environments anymore. The question is, do we have the courage to be different and to spend the money to invest in our most valued resource? The bigger question is, can we afford not to?

4). The crisis of customer connection isn’t just a problem in the insurance industry. It’s a bigger, larger, more complex problem in all types of corporations.

I’ll share with you a recent experience I had with a major player in the transportation industry. I was flying into Dallas and my flight ended up delayed, for unknown reasons. It got into Dallas about 35 minutes late. I did have a short connection time for my next flight out of Dallas, so I tried rebooking before I left my hub city to go to Dallas, but there were no flights available or open to my final destination. I ended up racing through two terminals in DFW to try and make the flight only to watch them shut the doors and not let me on. This carrier knew two people on this flight (due to nothing under their control) were going to be delayed, but they chose to close the jet way and not let us on. They cited rules, regulations, schedules and left two passengers stranded in DFW airport. In front of me at the gate was a very upset million miler who had the jet way gate closed in his face and he was definitely making the gate agent know just exactly how upset and frustrated he was with her lack of compassion and service. I sat down because I was trying to recover from an asthma attack from running through DFW, and proceeded to try and weigh my options.

I then overheard the million miler yelling at a reservations agent about a potential flight to another town which he could get on that evening and then rent a car to drive back to our destination. I walked back over to the gate agent and inquired about said flight and was told I had already been rebooked onto that flight. With zero notification. I got no information sent to me via my phone app, nor did I get an email or anything resembling contact to advise me of my new flight path. I was rerouted with no notice, out of a major airport. Thank goodness I had a little bit of time before the flight was to depart, otherwise I would have been stranded in DFW for the evening. I also was told by the gate agent that she couldn’t tell me if I would be reimbursed for a rental car once I got to the rerouted destination which was over an hour from my home. She indicated I would have to call a number on the card she gave me to know if those expenses would be reimbursed.

I should not have made that phone call, but I did. Futile as it was. I was met by an individual on the reservations line who was very terse and said I had called the wrong number. I would have to get in touch with the customer relations department. I composed myself, and asked to be transferred to the customer relations department and was again rudely met with an abrupt answer of “you can’t talk to the customer relations department.” You have to go online and email them. I was flabbergasted at that moment. This particular airline doesn’t allow customers to talk to their customer relations department. Trying not to lose myself in this moment, I proceeded to ask said call center individual what if you have customers who aren’t actively online or with an email account? She paused and then explained they would have to go to the library or utilize someone else’s email account to receive service from the customer relations department. Is it a novel or old fashioned idea to have a CUSTOMER relations department your CUSTOMERS can speak to, verbally? Have we really sunk this far away from human relationships that we must always communicate electronically? But, there I went writing this particular airline an email because I am one of the fortunate 1% of the world who has access to electronic means of communication. (And by the way, this airline limits the character count on this email channel so I had no moment to “share my story” with them even via email). There’s much more to this story with more interactions with individuals who are forced to read from screens at their customers, but I’ll leave that story for another day.

So, consider thyself, all customer-facing industries. We in the insurance industry are one of the largest and most powerful customer facing industries out there. We are a service-orientated business dedicated to providing a vital necessity to society. With the airline industry, customers choose a particular airline because they have little to no choice many times when flying out of/into smaller regional airports. Shouldn’t customers be able to communicate with their chosen providers in the manner of their choice? Or are we so far removed from actually serving the public we have forgotten how to talk to people like they are human beings? I would just ask all of us within customer dedicated business operations to think long and hard regarding our fleeting and almost non-existent “customer relations departments” which many times have been transformed into some electronic digital response medium which provides no connection to us as big, bad, nameless and faceless companies. And let’s face the facts: that massive customer relations environment within the insurance industry is the claims department!

An emerging storm exists in our claim’s worlds today. It’s a quiet atmospheric rumble right now, but it’s brewing into a massive and cataclysmic typhoon the likes of which we have not seen before. Are most insurance carriers weatherproofed enough to withstand this event? Right now, I’m not sure we are. I do believe if we join hands in true people-building and reinvent our claims forces, we might be able to hold out until the storm breaks. Claims people are built for challenges like this!

Being relevant in the industry today is a powerful marketing tool. Providing the personalized service our customers pay for, expect and deserve is how we establish relevancy. That personalized service does not involve reading a series of scripted words off of a screen. It involves caring, interacting and being trained well enough to sense when a customer needs more than just a quick rundown of the experience they are preparing to embark upon. While technology can and should be utilized to enhance the customer experience, when it comes right down to where the rubber meets the road in a claim situation, people NEED people to guide them through a very complicated process. Are we as an industry willing to do what it takes to strike that perfect balance in between fast delivery and real human interaction? Are we willing to invest in the time it takes to make the step into the future of our claims environments? And are we going to pave the way by building the systems necessary to connect our past to our future?

The questions are ours to ponder, but it will require quick action by Insurance Company A to not lose this battle in the escalating war for customer and employee retention. The challenge is ours to accept.