“Oh I’ve, been smiling lately, dreaming about the world asone. And I believe it could be, someday it’s going tocome.” – Cat Stevens

I’m aware that there are plenty of articles about good claims practices in the claims world. Iwould like to take a different approach to all of the studies andthe data that has been compiled, and provide a different approachbased on my observations of the truly outstanding claims organizations that I’ve hadthe opportunity to work with.

In all of the training courses that I have conducted forcompanies, all of the work I have flowcharted, all of theinterviews I have conducted with employees, all of the monitoringI’ve done of claims telephone conversations and reviewing of workclaims productivity, I have found that the truly exceptional claimsorganizations are the ones with employees that have five things incommon, which I’ve compiled into a list called the “Carl Van's FiveStandards of Great Claims Organizations”model.

1. They know why they’re great.
2. They know where they stand.
3. They know where they’re going.
4. They can accurately describe their jobs.
5. They know what customer service is.

They Know Why They Are Great

I believe that this trait is most apparent when I amfacilitating training classes for a company. During the trainingclasses, I will ask the students, “So, are you a great claimsorganization?” Invariably, they will all reply with anenthusiastic, “Yes!”

Then I ask them a very important question, “How do you know?”Consequently, I get 15 to 20 different answers. People will come upwith all sorts of reasons, like they get good survey results, theircustomers tell them, they get new business, they’re growing fast,etc.

At that time, I point out to the group that if everyone hasdifferent answers as to why they’re great, how could they possiblybe certain which is correct? The very best claims organizations Ihave ever worked with are the ones in which all of the employeeshad the same answer, no matter what that answer may be. If everyoneclaims to be the best because they hold onto their customers, or because they’regrowing, or even because they make the most profit, all of thoseanswers are fine as long as they’re consistent. Whatever the answermay be, the point is that the very best claims organizations arethe ones where all of the employees know why they’regreat.

Questioning An Answer

Almost every time I ask why the company is great, someone willeventually yell out, “Retention rate!” I have to agree with thatone. Retention rate is very important for theinsurance industry. I don’t care what your surveys say, if anorganization 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 aboutthat answer with a claims executive who was very proud of hiscompany’s survey results. Their retention rate was not that great,but their customer service scores were really terrific. Here is asummary of the disagreement:

Executive: “Our survey scores tell us we have greatcustomer service, so that is really all I need to know.”

Carl: “Yes, but the Harvard Business review had anarticle a number of years ago that showed something like 68 percentof people who leave a company will say that they were satisfied. You need to find theconnection between customer service and loyalty. Your retentionrate 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 leavingyou!”

After a few minutes, he finally figured it out. It just doesn’tmatter what your survey results say, if they don’t translate intocustomer loyalty. That is when the studentsusually all agree that their high retention rate is how they knowthey 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 saythat you know you’re a great claims organization because you have ahigh retention rate. Well, then let me ask you a question—what isyour retention rate?” Dead silence. Even if I ask again, no oneknows.

It becomes obvious very quickly is that no one really knows, andI have to ask them, “Do you see the paradox? You are saying you area great claims organization because you have a high retention rate,but you don’t know what that retention rate is, so how strong anargument is that?”

The best claims organizations I have ever encountered are theones at which everyone in the organization knows why theyare great, and everyone knows where they stand. It’s notjust the top management group, but everyone down to the file clerkthat is aware of these factors, which of course, leads us to thenext standard.

They Know Where They AreGoing

The next question I ask is, “Well, what is your goal forretention rate? Do you know what that is?” Not surprisingly I get anumber of different guesses, but that is all they are—guesses. Ofthe companies that I deal with, the very best claims organizationshave employees that know why they’re great, and they all have thesame reasoning. They also know where they stand, and wherethey are going. Employees have some stated goals for what they aretrying to achieve, and everyone knows them. The goals aren’t kept asecret, because after all, how would it be possible to motivatepeople with a goal if they don’t even know what that goal is?

There are more standards I’ve found in common among the mostsuccessful organizations, which I’ll discuss in upcoming issues.

Influences on Retention Rate

A 2009 J.D. Power and Associates survey of 30 auto insurancecarriers across the industry provided some feedback about how the275,000 customers surveyed evaluated their service.

• The survey found that income may be a factor in whether or notthe customer will switch companies. Of households with annualincomes below $50,000, 30 percent of those customers would shop fora new carrier, with 45 percent eventually moving to a new insurer.Only 26 percent of households making $100,000 or more shopped for anew carrier, and about 31 percent of that number switchedinsurers.
• Gender does not seem to play much of a role, with about 90percent of males retaining their insurer, while about 89 percent offemales do.
• The results also suggest that those who bundle insurance plansare more likely to retain their insurer, with retention rates of 92to 95 percent among those who bundled as opposed to 83 to 85percent rates of those who don’t.

Source: J.D. Power and Associates