Claims Handling is Always King

Every other year, the PIA affiliates managed from Glenmont (PIA of Connecticut, New Hampshire, New Jersey and New York) conduct the oldest and largest survey measuring agents’ opinions of their carriers’ performance. As they say in sports, this is a “bi-year” for PIA’s Company Performance Survey. So, the associations conducted the Benchmark Survey to make sure that next year’s Company Performance Survey will measure the items that are most important to agents.

More than 300 agents participated in the survey earlier this fall. When asked what the attributes are that agents want most in their carriers, the agents’ top-10 responses included: 1. “Adjusts claims fairly”; 2. “Pays claims promptly”; 3. “Communicates clearly, honestly”; 4. “Resolves issues quickly” ; 5. “Products and pricing”; 6. “Listens, responds to agents”; 7. “Claims handling”; 8. “Underwriter knowledge, experience”; 9. “Easy, intuitive functionality”; and 10. “Consistent underwriting.”

Compared to the findings of the 2009 PIA Benchmark Survey, most of the attributes have not changed this year, nor has their importance. While there were small deviations—the rise of two new performance items to the top 10 (eight of the top-10 performance items have remained the same). “Products and pricing” and “claims handling” are new categories to this year’s top-10 list, replacing “stable market” and “flexibility when warranted,” which fell to Nos. 12 and 11, respectively, from 2009.

This shouldn’t be a surprise. The degree to which it’s happening may be debatable, but our economy has stabilized since 2009. However, the importance of how carriers deal with customers and agents in the claims process would, and does, remain paramount to agents, regardless of the economy. No matter how the market fluctuates, or how new technologies affect the industry, the issues that mattered most to professional, independent insurance agents six years ago still matter the most to them today: How carriers handle claims.

Many carriers seem to forget what they are in business for: They are in business to pay claims—that’s why people buy insurance! It’s the only reason they buy insurance. Anyone who has taken a Chartered Property Casualty Underwriter (CPCU) or any other advanced insurance course knows that there will be some number of claims each year. The carriers bet on actuarial assumptions to build their business models. We don’t know who is going to have a claim, but we know pretty well how many of our insureds will have one. People buy coverage because they want to be protected in the event of a claim. They buy insurance because they don’t know whether they will have a claim or not, but if they do have a claim, they want to know that their insurer will back them.

As for agents, if their client has a bad claim experience, we know this will affect our account. Too often, a long-standing account suddenly has a claim and an underwriter says, “We don’t want this account anymore—we need to get off this line.” Meanwhile, nothing has changed with the account. And all the good things the underwriter saw when they wrote the line suddenly don’t matter—all that matters is that the insured had a claim. Unfortunately, many underwriters succumb to home office influence or they are reacting reflexively to a claim. They don’t have the local knowledge about the area or people they are insuring, nor do they have to look their customers in the face when they deny a claim.

Nowadays, it seems like the carriers are all about cutting costs. How many carriers even send out inspectors to review the lines before underwriting it anymore? We may be investing in grand technologies, but I worry that we are forgetting the people we insure. I was watching television coverage about flood damage in North Carolina this month and I saw that insurance carriers are using drones to check roof and other property damage. That’s impressive. But, when a client calls the company to discuss a claim, will they even speak with a real person? I can guarantee it makes all the difference.

Smart companies get that, though sometimes it’s too late. As PIA Director of Industry Affairs Jim Pittz said, “Agents have told PIA that one of the most crucial times in their relationship with a client is during a difficult claims process…. Look at the carriers that dropped out of the Write-Your-Own flood market after Superstorm Sandy: Even though WYO is a federal program, the carrier’s name is on the insureds’ insurance policy. When claims trouble occurred, the carriers received the brunt of the blame. Now, some carriers have stopped writing flood insurance through the federal program.”

So, if PIA’s Benchmark Survey demonstrates anything, it’s this: The economy won’t be the primary reason customers are driven to (or away) from a company; the way a company handles the claims process will.