As the insurance industry looks back on a difficult year for customers and for claims – and especially claims originating from the pandemic, from such an unexpected source – it’s important to come together as a community and respond with products and solutions in the industry that really help to recover from this situation.
The COVID-19 pandemic reminded us about the importance of transparency of the ‘insurance promise’ and the insurance contract between the insurance provider and the insured. Thinking about the insurance life cycle as a journey, the claims stop on that journey is really the most emotional and the most impactful point of contact with the customer.
Recent months have forced us to think differently and to be more flexible in the face of shifting customer needs and macro trends. The industry momentum is now to deliver improvements in a more agile fashion and in a way that will allow us to test and then gather feedback, tweaking solutions and ensuring they’re designed with the end customer in mind. At LexisNexis Risk Solutions we believe that more enriched data is the key to balancing this approach of risk management – preparing for the unexpected – versus innovation.
The range of emotions that are associated with an insurance claim – those critical moments in people’s lives such as home flooding or a business fire or cyber-attack – are really intense. It’s our job as insurance professionals to help people in those times of need and streamline those claims interactions, working with empathy and knowledge of the customer as much as possible. That’s one pivotal reason why we believe our work in developing the LexisNexis® Precision Claims for Home service is more important than ever before.
The second reason is that, the pandemic has really emphasised the need to implement quick technology enhancements to provide real time help to policyholders. In this context it’s helpful to have in mind the perfect digitised claims experience of the future, but also what can be implemented now, what are the actions the industry can take to bring about immediate improvements?
Two in three home insurance customers think it’s acceptable to manipulate information
Our LexisNexis Risk Solutions survey of over 3,000 UK residential homeowners and renters* investigated the level of consumer satisfaction with claims processes and with home insurance overall. Whilst the typical policyholder is much less likely to have experience of a home insurance claim compared to a motor insurance claim, in our study they expressed a similar level of cynicism when asked about fraud or manipulating information to get a better quote.
- Two in three home insurance customers think it is acceptable to manipulate the information they provide when using price-comparison websites in order to get a lower quote.
- About half of consumers who have recently filed a claim are more likely to consider adjusting or exaggerating a future claim in order to get a larger pay out.
- Nearly nine in ten consumers who have filed claims recently think home insurance providers seek to avoid paying out on claims ‘at least some of the time’.
These views might not come as a surprise to most people. There are two sides to this relationship of course: the policyholder may feel motivated to exaggerate or over-state a claim (and in our survey we collected some data about these behaviours). The claims handler on the other hand may not have the right information to pay out on a claim immediately – within certain defined circumstances defined by the insurer – or to decline, or to refer for fraud assessment or other reasons. In these cases it’s the factor of time or delay that adds cost and which is the killer to building a better insurance relationship with your customer.
We collected some data about the impact of the claims experience on the insurance brand, and the over-riding desire of the consumer for empathy, speed of settlement and understanding.
In our survey* 18% of home owners and 15% of renters said that a good prior claims experience was the reason for renewing with their home insurance provider. Overall, 71% of home owners with prior claims, and 69% of renters with prior claims said they renewed their home policy with the same provider. There’s a lot at stake and there are many considerations for a consumer when considering to renew with a particular brand.
- 22% of home owners renew with the same home insurance provider because of good policy coverage offered
- 16% of renters renew with the same home insurance provider because of good policy coverage offered
- 21% of home owners renew with the same home insurance provider because of competitive price
- 18% of renters renew with the same home insurance provider because of competitive price
- 18% of home owners renew with the same home insurance provider because of good customer service experience in the past
- 20% of renters renew with the same home insurance provider because of good customer service experience in the past
- 18% of home owners renew with the same home insurance provider because of good claims experience in the past
- 15% of renters renew with the same home insurance provider because of good claims experience in the past.
Competition, some cynical attitudes related to insurance claims and a search for value are right now driving consumers to shop around. But in our survey home insurance customers expressed that they value good service and a good claims experience. Overall more than 34% of home insurance customers believe insurance providers try to avoid paying out ‘all the time’. Another 52% believe that insurers ‘sometimes’ try to avoid paying out, depending on value of the claim.
Our findings show that consumers who have filed a claim recently are more likely to consider adjusting or exaggerating a claim in an attempt to get a larger settlement. Only about 5% of those who have never filed a claim (or not done so recently) say they would definitely consider fraudulently adjusting or exaggerating a claim. But almost half of homeowners and a majority of renters who have filed a claim recently say they might consider doing this.
So with the current year being very much a year of change, our goal at LexisNexis Risk Solutions is to help our insurance clients make some immediate improvements to claims processes, not just building solutions for the future. The evolution of the LexisNexis® Precision Claims solution is about helping to make the most of existing technology.
When we think about legacy technology, it’s common to hear statements like, ‘we have to replace our legacy technology in order to capitalise on these emerging technologies, the new data sources and the capabilities that are out there’. But that’s not the case working with LexisNexis Risk Solutions and it’s a conversation that needs to be a lot more sophisticated nowadays. Thinking about understanding the processes and the products that the technology supports, the claims process for a Home policy for example might be a lot more transparent than a claim on a Directors & Officers policy for example.
The important concept is that insurance providers have to make process decisions and technology decisions that are appropriate to the customers’ needs in each case. The ability to automate specific, friction-heavy tasks, not only benefits the insurance provider, but benefits the consumer, by reducing time. There’s a lot of value to be unlocked for both parties by automating those processes.
The pandemic has provided a prime example of how quickly and unexpectedly challenges can arise for customers and for all of us, how quickly circumstances can change. The market is telling us that this has added a new urgency to making gains with technology and analytics. Collaborative claims data sharing is going to be a major weapon in the fight against opportunistic and organised crime. We believe it’s going to be a win-win for insurance providers and for policyholders.
For more information on this research download the free white paper ‘A Clearer View of Claims to Help Fight Fraud’.
* LexisNexis Risk Solutions was not identified as the sponsor of this research, which was based on an online survey of 3,083 residential homeowners and renters (including 1,576 homeowners and 1,507 renters). The research was completed during 2019.