For thirty years it has amazed us how insurance agencies treat claims within their organizations.
Over and over again we encounter agencies for whom claims is and entry-level position, one combined with other clerical functions or relegated to a secondary responsibility for people who have other priorities within an agency. But one of our unique views of agency operations is BECAUSE we are not directly involved in the agency and look at it from a consumer’s standpoint.
From the standpoint of your clients, claims are not just AN important reason for using an agent – it is THE MOST important reason for using an agent.
Frankly, my “civilian” friends could care less if they get a policy or an endorsement as long as they feel confident that by telling their agent what needs to be done, they can trust that it has been done and they no longer have to worry about it.
There are only two reasons that customers use an agent:
1. They HOPE that the agent is shopping for the best coverage at the lowest cost at every renewal (we have addressed that myth in other articles), and
2. They ASSUME that the agent will act on their behalf to make any claim process as easy as possible.
Most agencies process claims. That means that the CSR or Claim Representative is responsible for taking the first report, entering it into the system and making sure the carrier gets the ACORD form either in print form or electronically. Then the waiting game begins. The next intervention by agency staff is usually when a client calls in complaining that they haven’t been contacted or that there are problems with the claim. Then, in conscientious agencies, the staff member then actively works with the carrier to resolve the issue. However, assuming the issue is resolved, most agents do not get back to the client. They presume that the carrier has communicated whatever resolution was discussed with the client. The only other contact is if the client is still dissatisfied.
I can assure you that the second time the client calls the agency without having a claims problem resolved, the chances of that client staying with the agency past renewal is reduced by 50%. And, in those cases involving three or more contacts from the client due to unsatisfactory claim service, the chances of losing the client is about 90%.
We have recommended a change in claims handling from reactive to proactive claims management. We call the process, SHEPHERDING CLAIMS.
As a shepherd is constantly managing his flock, so does a claims shepherd constantly manage all of his/her open claims.
When a claim is opened, the shepherd both takes the information and informs the client of what to expect in terms of steps and timing. The shepherd then tells the client that (s)he (the Shepherd) will follow up in a couple of days to make sure the claims is being handled properly – then DOES EXACTLY THAT. The open claim is diaried for no more than a week to follow up, first with the carrier to determine status and then with the client. That client call is an important PR effort that wins loyalty whether a problem has been found or the call is just to reassure a client with a claim. If the claim is not yet closed, the shepherd re-diaries the claim for one week intervals and repeats the process, always following up with the carrier first to determine status, then touching base with the client confirming the client’s understanding of the claim progress. This is done until the claim is closed.
Claims Management dictates that the Shepherd also keeps agency management informed of claims activities on a constant basis. So reports are generated, either printed for management or on networks to permit managers and owners to see what’s happening at all times.
Claims Productivity Report: This report registers how many claims were open at the beginning of the week, how many new claims were opened that week (with a list attached by customer name), how many claims were closed during the week (this requires constant follow-up to understand when claims are closed) and how many claims remain open at the end of the week. Long-tail claims like third-party, liability and WC may have their own, separate, Productivity Report because they would water down the normal active claims production in an agency.
Large Loss Report (monthly): The agency must determine what constitutes a ‘Large Loss’ for the agency. Then, the job of the Shepherd is a) to list all losses with payments or reserves posted above the minimum level for a Large Loss, and b) to monitor the progress of all Large Losses monthly to determine if and when changes (large add’l reserves or take-downs) may occur. It is a fact that Large Losses that are paid attention to by the agencies are more likely to have corrective action taken by the carriers that those yielded to the carriers for control. The management of Large Losses is important (especially toward the end of the year) in controlling or identifying Loss Ratio problems or opportunities for the agency.
Agencies who do not generate enough claims daily to occupy a full-time claim representative usually have claims handled by the CSR or Account Exec who handles all other aspects of the account management. This is fine. But, whether you have dedicated claims ‘Shepherds’ or disperse the management of claims, the process and procedure of shepherding claims should still rank as the top-most priority and job of whoever is managing your claims. The clients expect it and use the lack of claims management as the ‘straw-that-broke-the-camel’s-back’ to leave an agency when other things go wrong (like rate increases).