Personal Lines Insurance Is Getting More Personal
Elise Farnham | January 1, 2012
The insurance industry has not been noted for its cutting-edge use of technology, for putting information in the hands of consumers, or for creatively dealing with the demands of regulations. Things seem to be changing and, like the Titanic, progress has been slow, until suddenly, a new path is revealed. Finally, the insurance industry is learning how to leverage technology to make the consumers' experience individualized and more personal, while at the same time reducing administrative tasks. The personal side of customer service is being better served by leveraging the emotionless logic of technology.
This change in direction has occurred slowly—not only because of the legacy systems hanging like millstones around the necks of personal lines insurers but also because of the industry's nature to be conservative and risk averse. Insurers have been watchful, however, and have learned from mainstream business that consumer empowerment translates to increased revenue, more rapid development of responsive products to meet changing consumer needs, and cost savings by allowing customers to make inquiries, post changes, and make purchases online. In the midst of a still soft and highly competitive market, these changes can translate to increased profitability despite the challenges.
Claim Reporting and Status Information
Some personal lines insurers have begun to allow insureds to create their own password-protected profiles in order to view their coverage and make changes as needed. This allows claim representatives to track transactions for investigation purposes and reduces the opportunity for alleged misunderstanding on the part of the insured as to the extent of coverage that was purchased.
Providing status information online puts a stop to endless phone tag and voicemail "conversations" trying to keep the insureds and claimants up to date on activities that have been undertaken, such as inspections, payments, etc. Some systems even allow "alerts" to insureds notifying them via smartphone when an activity has been logged so that progress can be seen without the need for logging in to an Internet site to check on what is happening.
Digital Payments
Insurers are moving toward funded cash cards and direct deposit for payment of losses. The claim representative must still review the merits of each case in order to release funds; however, the insured has more immediate use of the funds—particularly important when catastrophic events have occurred.
Fraud Prevention
Regulators and insurers are placing more and more emphasis on fraud prevention. Using predictive analytics can give insight to the adjuster when undertaking the investigation of a claim. Technology systems now allow the first report of loss to be analyzed for these "predictors" and, if exceptions are noted, suspicious claims are immediately reported to a special investigative team. This process saves the adjuster time, which can be used to complete the investigation of the civil aspects of the claim, while allowing the criminal investigation to begin more quickly and perhaps with more precision.
Disappearing Deductibles and Other Personal Touches
Some insurers have instituted programs to reduce the insured's deductible as a reward for not making claims. This conceivably will remove the need for any negotiation with the insured or repair contractor to "cover the deductible," allowing all parties to focus on the damages, not the insured's portion of the loss. Since most insureds don't have a fund created for the eventual payout of a deductible, frequently they don't have the funds available when needed.
Developing automatic arrangements for rental replacements, temporary housing, etc., also relieves the adjuster of these tasks while better serving the needs of the consumer.
The Future for Claim Representatives
Claim professionals often complain of being bogged down by meaningless administrative tasks. Making the claim process more personal for insureds and claimants should relieve the adjuster of many mundane tasks that can be more effectively handled by judicious use of technological advances. This will allow claim representatives to focus their time on the more critical aspects of their jobs, such as better and more complete investigations, more careful analysis of coverage issues, and more time spent in negotiation and resolution and less time in providing status updates.
This will challenge claim professionals to focus on the important aspects of their jobs, such as damage assessment, the legal environment, the intent of coverage, and the development of interpersonal skills to enhance the experience of the insured when a claim is made. With increased use of the "impersonal" Internet by insureds, each personal contact becomes more important in shaping the relationship between the insurer and the insured.
Who knows? Maybe improvements in delivering the promise of the insurance contract will lead to an improved reputation for the industry. Imagine that—from the claims department!
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