“Oh I’ve, been smiling lately, dreaming about the world as one. And I believe it could be, someday it’s going to come.” – Cat Stevens
I’m aware that there are plenty of articles about good claims practices in the claims world. I would like to take a different approach to all of the studies and the data that has been compiled, and provide a different approach based on my observations of the truly outstanding claims organizations that I’ve had the opportunity to work with.
In all of the training courses that I have conducted for companies, all of the work I have flowcharted, all of the interviews I have conducted with employees, all of the monitoring I’ve done of claims telephone conversations and reviewing of work claims productivity, I have found that the truly exceptional claims organizations are the ones with employees that have five things in common, which I’ve compiled into a list called the “Carl Van's Five Standards of Great Claims Organizations” model.
- They know why they’re great.
- They know where they stand.
- They know where they’re going.
- They can accurately describe their jobs.
- They know what customer service is.
They Know Why They Are Great
I believe that this trait is most apparent when I am facilitating training classes for a company. During the training classes, I will ask the students, “So, are you a great claims organization?” Invariably, they will all reply with an enthusiastic, “Yes!”
Then I ask them a very important question, “How do you know?” Consequently, I get 15 to 20 different answers. People will come up with all sorts of reasons, like they get good survey results, their customers tell them, they get new business, they’re growing fast, etc.
At that time, I point out to the group that if everyone has different answers as to why they’re great, how could they possibly be certain which is correct? The very best claims organizations I have ever worked with are the ones in which all of the employees had the same answer, no matter what that answer may be. If everyone claims to be the best because they hold onto their customers, or because they’re growing, or even because they make the most profit, all of those answers are fine as long as they’re consistent. Whatever the answer may be, the point is that the very best claims organizations are the ones where all of the employees know why they’re great.
Questioning An Answer
Almost every time I ask why the company is great, someone will eventually yell out, “Retention rate!” I have to agree with that one. Retention rate is very important for the insurance industry. I don’t care what your surveys say, if an organization does not do a good job of holding onto its customers, then it is not a great claims organization.
I once got into a bit of an argument about that answer with a claims executive who was very proud of his company’s survey results. Their retention rate was not that great, but their customer service scores were really terrific. Here is a summary of the disagreement:
Executive: “Our survey scores tell us we have great customer service, so that is really all I need to know.”
Carl: “Yes, but the Harvard Business review had an article a number of years ago that showed something like 68 percent of people who leave a company will say that they were satisfied. You need to find the connection between customer service and loyalty. Your retention rate isn’t good, so you can’t be great at customer service.”
Executive: “But they’re satisfied.”
Carl: “Yes, but they are leaving you.”
Executive: “But they’re satisfied.”
Carl: “Yes. But they are leaving you!”
After a few minutes, he finally figured it out. It just doesn’t matter what your survey results say, if they don’t translate into customer loyalty. That is when the students usually all agree that their high retention rate is how they know they are great, which leads me to the next standard.
They Know Where They Stand
So, at this point in the session I will say, “Okay, let’s say that you know you’re a great claims organization because you have a high retention rate. Well, then let me ask you a question—what is your retention rate?” Dead silence. Even if I ask again, no one knows.
It becomes obvious very quickly is that no one really knows, and I have to ask them, “Do you see the paradox? You are saying you are a great claims organization because you have a high retention rate, but you don’t know what that retention rate is, so how strong an argument is that?”
The best claims organizations I have ever encountered are the ones at which everyone in the organization knows why they are great, and everyone knows where they stand. It’s not just the top management group, but everyone down to the file clerk that is aware of these factors, which of course, leads us to the next standard.
The next question I ask is, “Well, what is your goal for retention rate? Do you know what that is?” Not surprisingly I get a number of different guesses, but that is all they are—guesses. Of the companies that I deal with, the very best claims organizations have employees that know why they’re great, and they all have the same reasoning. They also know where they stand, and where they are going. Employees have some stated goals for what they are trying to achieve, and everyone knows them. The goals aren’t kept a secret, because after all, how would it be possible to motivate people with a goal if they don’t even know what that goal is?
There are more standards I’ve found in common among the most successful organizations, which I’ll discuss in upcoming issues.
Influences on Retention Rate
A 2009 J.D. Power and Associates survey of 30 auto insurance carriers across the industry provided some feedback about how the 275,000 customers surveyed evaluated their service.
- The survey found that income may be a factor in whether or not the customer will switch companies. Of households with annual incomes below $50,000, 30 percent of those customers would shop for a new carrier, with 45 percent eventually moving to a new insurer. Only 26 percent of households making $100,000 or more shopped for a new carrier, and about 31 percent of that number switched insurers.
- Gender does not seem to play much of a role, with about 90 percent of males retaining their insurer, while about 89 percent of females do.
- The results also suggest that those who bundle insurance plans are more likely to retain their insurer, with retention rates of 92 to 95 percent among those who bundled as opposed to 83 to 85 percent rates of those who don’t.
Source: J.D. Power and Associates