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ShareThisOn May 23, 2011 in Claim Costs, Claims, Claims Adjusting, Customer Service, Direct Repair Programs, Homeowners insurance, Insurance, Management, News by GH
About a month ago I read an interesting post entitled “Sacrificing effectiveness in the name of efficiency” in which the author Mitchell Gooze makes the point that increasing efficiency may harm effectiveness.
The article has nothing to do with insurance and claims handling, but everything to do with outcomes and the unintended consequences of seemingly good decisions.
I have often written on these pages about the need for speed in claims handling, and the value it provides all of the stakeholders in the claims process. In order to reduce cycle-times as we have for our clients, we have had to become more efficient however we have not compromised service and effectiveness. In fact, we have improved both.
Streamlining Claims Handling
We have done this by streamlining the process by vertically integrating what were discreet functions and aligning interested. Pragmatically speaking, what this means is that instead of one person doing one function and then handing it off to another to do another function, and so on … we have our team members perform multiple functions (in-take, set up the file, schedule resources, update both the carrier and policyholder, check in to ensure that process is going according to the policyholder’s expectations). The reduces the hand-offs which all represent opportunities for fumble the ball, and allows one person to work with the insured from beginning to end.
So when we look at opportunities to reduce spending through increased efficiencies, we should ensure that we are not throwing the baby out with the bathwater and in the words of the author just “doing the wrong things well”.
On May 17, 2011 in Agency Marketing, Claims, Customer Service, Direct Repair Programs, Homeowners insurance, Innovation, Insurance, Service by GH
As an independent agent do you advise your policyholders to call you in the event of a loss or to call the carrier’s claim line?
If it is the latter, you need to ask yourself why?
The simple kneejerk reaction might be because that is what the carrier wants – why? Or that it is too much work – why? Or that the less you are involved the less likely you will be to be blamed in the event that something goes wrong – why?
Earlier this month I wrote about the Cost of Poor Claims handling. What I didn’t include in the article is that the relative cost of a bad experience to the agent is much higher than it is for the carrier.
On Friday I posted a Dateline segment that featured an investigation of some unethical plumbers outright lying to homeowners.
As an independent agent I would encourage you to consider forming a partnership with a company like ours that can serve as your Concierge Claims Service and provide your clients with an unparalleled experience while enhancing their perceived value of your agency in the event of a loss.
First, let’s look at the conventional wisdom versus reality.
Myth #1: I don’t have the resources to handle claims in house. My staff is overwhelmed as it stands.
Reality: If you partner with the right company they will provide this service to you and your policyholders, under your strict guidelines and jointly developed process to ensure that your agency can provide superior service without incurring additional costs or workload to your team.
Myth #2: If I get involved in the loss and make a referral and something goes wrong in the process, I will get the blame.
Reality: Hello – you are getting the blame anyway! What is among the most common complaint from policyholders? Response time. For the agent that is not involved with the loss, he/she doesn’t know that the ball has been fumbled until the other side has recovered and are marching down the field towards you end zone. This is when the policyholder churns.
More Reality: You have already recommended someone, your carrier. The carrier is going to assign an adjuster to the loss. This might be a staff adjuster or an independent adjuster but either way, what do they know about your agency and how you would like your policyholders treated?
More Reality Still: Most adjusters have their go to service partners that they will refer to a loss under the auspices of providing the adjuster expert advice. This might be a roofer, or a plumber, or a mitigation company, or a general contractor. Either way, guess who referred them – you!
One approach is to work with a company like Service247 . We work with agents to provide co-sourced Concierge Claims, Emergency Mitigation, and Direct Repair for homeowner’s property losses. It works like this:
You advise your policyholders that in an effort to continuously enhance the services your agency provides your clients, you have developed a relationship with Service247 as an additional option to serve them in the event of a loss.
The policyholder always retains the option to contact the carrier or your agency, but this is an additional option that if elected, will be available to guaranty a call back within 15 minutes, 24 hours a day, 7 days a week, 365 days a year.
Specially trained professionals (all of whom are independent insurance adjusters licensed by the Department of Insurance) will conduct initial triage and offer them the information they are seeking along with some new alternatives. You or a designated individual in your agency is immediately notified via e-mail that your policyholder has contacted us, it includes a brief description of what is going on, and the action that has been taken.
In the event that any emergency services are needed, they will dispatch a service partner along with their own personnel to meet them at the policyholder’s property within 4 hours.
In the event that emergency services are not necessary, Service247 will offer to provide a no-cost Courtesy Inspection by a licensed independent adjuster to help the policyholder assess and evaluate the damage.
Some times after a courtesy inspection the insured elects not to file a claim, in which case you will receive an e-mail describing this outcome.
If the policyholder wishes to proceed with a claim, we will either advise you or your policyholder (based on the process and preferences you outline for us during the start-up process) how to proceed with the claim.
If the loss is with a carrier we have a direct relationship with, they will accept our estimate for the loss and bar the need to have another independent adjuster come out.
Finally, at the policyholders sole discretion, they will offer to perform emergency mitigation, and following settlement with the carrier, offer to repair and restore the property to its pre-loss condition in accordance with the policy.
There are many ways to differentiate your agency to existing and perspective clients, and one of them is at the most critical time in a relationship – a loss. If you are an agent, please call or e-mail to discuss further. If you are a policyholder, ask your agent whether they provide this sort of service, and if not – why not?
On May 13, 2011 in Agency Marketing, Claim Costs, Claims, Claims Adjusting, Direct Repair Programs, Home Maintenance, Homeowners insurance, Insurance, News by GH
It doesn’t take Chris Hansen and Dateline NBC to know what every homeowner, agent and carrier should already know – caveat emptor – Let the buyer beware!
Companies like Service247 and our actively recruited, trained, managed and supported network of service partners protect carriers and agents from innocent policyholders from being victimized at the your cost.
Like my post earlier in the week about roofing scams, this video would be funny if it weren’t so pathetic.
Visit msnbc.com for breaking news, world news, and news about the economy
Unfortunately we see this every day and know without a doubt that the ultimate victim is the insurance carrier and agent, who in the end is paying for this more times than not.
With the recent spate of Texas spring weather, the roofers are out in full force. While there are many professional, experienced, knowledgeable, and ethical roofers, there seem to be many more that lack one or more of these characteristics.
Last week one of my colleagues brought to my attention a Web Site called Free Roof Scam.
The site tells you all you need to know about “free” roofs. More importantly, it tells all of your policyholders what they need to know about “free” roofs.
As many of you are aware, we provide policyholders with a carrier approved 20% discount to their deductible. The difference between what we do however and the examples highlighted on this site is that we absorb the discounted deductible. In other words the carrier applies the full deductible to the indemnity. In addition, we provided the carrier with reduced indemnity. Specifically, we take the amount allowed in accordance with the policy and reduce that be an agreed amount.
This results in a win-win-win. A win for the policyholder first and foremost. A win for the carrier. And a win for our service partners in the roofing business. We call this aligning the interests of all of the stakeholders in the claim process.
I am a much bigger fan of Free Roof Scam than I am of the Better Business Bureau which is a “pay to play” business with inconsistent and misleading rating practices and a nearly impossible work flow to actually submit complaints.
I encourage you to take a Free Roof Scam and more importantly, ensure that your policyholders are informed of the facts.
On May 5, 2011 in Claims, Claims Adjusting, Company Adjusters, Independent Adjusters, Insurance, News, Trends by GH
Earlier this week, I referenced The May 2011 issue of “Best’s Review” and specifically the series of articles addressing the issue of adjusting property and casualty losses.
In the same article I referenced in that post “Period of Adjustment”, responses to a survey of 114 adjusters conducted on-line in March 2011 were published.
The results affirm what we already know:
- The industry is mature (that’s a nice way of say old)
- The industry recycles the same people over and over again
- There is very little new blood (new thinking) coming into the business
When asked how independent adjusting firms are growing their business, 87% responded “by networking and growing organically”. Translation: Sending trinkets to claims professionals at carriers, trying to get carriers out to lunch, showing up at an industry trade show or event and commiserating with other independent adjusters.
When asked how do you staff your business, over 65% responded “by recruiting adjusters from other firms”. Translation: Recycling people, process, and price.
When asked how many years have you been in the business, over 50% responded “more than 30 years”.
The question I would have really liked to see asked is “how do you differentiate your value proposition”.
Most independent adjusters will say that they compete on price and service, but they virtually indistinguishable from one another. There is not better indicator of this than the fact that 2/3rds of the personnel just move from one firm to another.
In the articles there was no reference to training, process, metrics, or corporate culture – all factors that have the potential to differentiate the value proposition among competitors.
The problem exists within carriers as well. In the article Filling a Void the authors reference a Deloitte Consulting prediction that by 2014 there will be a shortage of 84,000 adjusters. The article also goes on to point out that over 70% of company adjusters are over 40 years old, with nearly 25% over 50. While this experience bodes well for the short term, it raises real questions for the future.
The challenge is that experience is a critical success factor to the profession of adjusting. The industry needs to develop the next generation, but under the watchful eye, guidance and training of existing proven professionals. As long as this isn’t the case, the challenges to independent adjusting firms and the carriers that depend on them will be real.
The May 2011 issue of “Best’s Review” has an excellent series of articles addressing the issue of adjusting property and casualty losses.
The first article in the series entitled Period of Adjustment identified a key trend of insurance companies reducing expenses by using in-house adjusters or by cutting out adjustments entirely.
Obviously the independent adjusters surveyed disagree with this approach and believe that ultimately this will cost carriers more in the long run.
We agree, but not for the same reasons they cite!
The current model is broken and whiplashing from guardrail to guardrail isn’t the answer.
A new approach is needed.
As we have written about time and again on these pages, a new process that aligns the interests of all of the stakeholders in the claims process holds the key to success. Reevaluating how different causes of loss are estimated is another key component – all losses need not be estimated through the same process. And finally, how indemnity is determined needs to be reassessed.
As in Monday’s post, I would encourage claims professionals to ask themselves three questions:
- How is your claim service different than anyone else’s?
- Do the people your policyholders touch in the claims process believe that they are in the service business?
- If your customer satisfaction ratings are high, are you lulling yourself into a false sense of security because you are the best of a very average group, or would your service stand out in any industry?
As Jim Collins stated in Good to Great, “Good is the enemy of great”. Is your claim handling good or great?
On May 2, 2011 in Claims, Customer Service, Homeowners insurance, Insurance, Leadership, Management, News, Underwriting by GH
Insurance is a service business.
If service is undifferentiated, price becomes the major point of differentiation between one company and another.
If service is substandard, even price may not matter; buyers may take their business elsewhere.
The challenge is that a policyholder doesn’t have an opportunity to appreciate the value of good service until a loss is incurred and a claim is filed. If claims service is subpar, the results impact the entire company.
Take my friend “Joe”.
Like so many people he didn’t think much about insurance. He had an excellent and trusted relationship with his agent and trusted him to serve as his “risk manager”. Last year on the advice of his agent, Joe switched carriers.
Then Joe had a claim. The claims experience was awful in Joe’s opinion.
Prior to this loss, Joe never had a homeowner’s property claim. Now with this first loss his claim will likely amount to 7 to 8 times his annual premium for all his personal lines policies. Ironically, this occurred in the first year of the policy with a new carrier.
As a result, if his premiums go up he will return to the market. If he can find a less expensive solution he will leave the carrier, denying them the opportunity to turn him into a profitable policyholder over the next 10 – 20 years.
Interestingly, when Joe told me about his experience I told him that it wasn’t especially bad. While it was below average in my opinion, I told him that most carriers claims handling process is the same as it was 20 years ago and that for the most part it is largely undifferentiated between carriers. In fact, most use the same service providers to deliver their services. Similar to the name brand and generic brand in a grocery store, or a retail store on Main Street and the same brand in an outlet mall, the difference is largely in the packaging, but the ingredients and product are mostly the same.
I would encourage carrier and claims executives and managers to ask themselves 3 simple questions.
- How is your claim service different than anyone else’s?
- Do the people your policyholders touch in the claims process believe that they are in the service business?
- If your customer satisfaction ratings are high, are you lulling yourself into a false sense of security because you are the best of a very average group, or would your service stand out in any industry?
This brings me right back to my point.
Insurance is a service industry, and rates and claims handling is all that the majority of policyholders see.
If claims handling is not differentiated, rates are the only factor a policyholder will consider in selecting a carrier.
Think this is dangerous? Just look at the major airlines! At least they have frequent flier programs to increase switching costs.
The Claims Journal has an article entitled “How to Reduce Delays in Claims Handling” based on the presentation my colleague and I at the PLRB Claims Conference earlier this month.
More importantly, at the end of the article is a link to another article referencing the recent Deloitte report entitled “Driving Operational Excellence in Claims Management”. The article suggests that Deloitte’s report is very closely aligned with our vision of “aligning the right claim with the resource at the right time”. Further, they point out the importance of supplier management and technology enablement along with leveraging analytics, legal cost management, and fraud detection.
If you read our blog you know that we have been beating this drum for the past year. It is great to see the industry move towards a broader understanding of the evolving approaches to claims handling, and the opportunities for improved underwriting results as a result.
Last year I posted about a preview of Michael Roche’s ACE keynote presentation titled, “The Customer and the Claims Process.”
Mr. Roche stated that “Providing the best possible customer experience while moving toward accurate claim resolution is the resounding mantra of claim departments everywhere.”
My question today whether these objectives are mutually exclusive of one another. Common sense suggests that the point of which you maximize both is a balance. This reminds me of the concept of a compromise or a tie in a sporting event (I remember one of my high school coaches telling me that a tie was like kissing your sister).
Most staff adjusters handle 60 – 80 open files (I have heard people quote me double this figure) and are doing the best job they can with the resources they have to treat every policyholder with the individual attention and respect they deserve. So if an adjuster can say “yes” instead of “no” and close a file, how likely are they to do just that?
But even more suspect is the actual approach used today for estimating. If the estimating software says a repair is $10,412. 53, then it is $10,412.53. Now if the insured’s contractor said it was a little more, say $11,500 – then the file gets re-opened, and a compromise is often reached. However if the repairs can be made for $9,500, then typically nothing happens.
Now we all know that this is why we typically pay ACV and hold back, however when the policyholder submits a receipt for recoverable depreciation, how do we know what was actually done? We typically don’t have the resources to re-inspect. If it is a large enough loss the lien holder may inspect, but they typically are looking at the macro level.
Recognizing that no approach is fool proof, the value of carriers and agents working with companies that can and are willing to offer estimates to do the work at a certain price can certainly increase both accuracy and efficiency, and interestingly we are seeing this model emerge more and more.
This is not to suggest that estimating software should be eliminated, in fact I believe there is no better way to baseline and compare costs, however if we are using this approach exclusively, then we are almost always over-paying by definition.