A woman is driving home after a late night at work down a remoteroad on a rainy night. She is traveling at a safe speedbecause the roads are wet and visibility is poor. Suddenly, shesees a large deer in the road; she naturally reacts to avoid thecollision. She swerves, loses control, and hits a tree. She is OK, but the car cannot be driven. Milesfrom help, she is dazed from what just happened. Her best option isto find her cell phone and call for assistance. This is the timethat her insurance company can step up to deliver on customerservice.

Carriers have been successfully trying to differentiatethemselves from their competitors for the past few years throughclaims. It has been well established that a claim is the deliveryof the promise for customer service and support, but that has notbeen a central theme of marketing campaigns until recently. Manycarriers of all sizes emphasize the lower-cost sales approach. Moreand more you hear about the importance of having proper coverage toprotect the insured with a lower premium to attract customers. Aprime example is the Allstate 'Mayhem' advertisements. Customer service is the key factor for customer retention. Inmost cases, a customer will accept a rate increase as long asservice has been good.

Faster Handling

How can we continue to improve claims service and lower costthrough faster handling? In the scenario above, an automatedresponse could be initiated through General Motors OnStar but thatis a subscription service available only on GM cars. Firstresponders can be notified, but it could be a few days before thecarrier knows of the accident. In the meantime, the vehicle isincurring storage fees at a random lot, and the insured orclaimants could be incurring medical bills before the loss isreported. Often it can be days before the carrier is notified of aclaim.

Carriers today deliver claims service through 24-hour callcenters, Internet portals, and smart-phone applets. Many companiesalso have mobile adjusters cruising the busy roads of urban areasin order to rapidly respond to an accident for their insured orother carrier. The goal is to give the insured the ability tosubmit the claims as quickly as possible to begin the process ofsettling the loss and making the claimants whole again. Thisapproach still relies on the presence of mind of the insured toreport the loss. The question to ask ourselves is: Can we dobetter?

We all know several data elements go into claim processing, but the simplest, mostelemental claim data comes down to the date of loss/occurrence.Beyond that, carriers need more information to begin the lossprocess. The key elements needed to process a claim arestraightforward: date, time, location, injured name, policyinformation, coverage information, type of claim, severity,injuries, etc. These are the elements that carriers capture throughcall centers, agents, portals, and apps. All are factors to movingthe claim into the investigation funnel and making the initialassignment to the appropriate staff. All this data can be capturedduring a loss report through the methods previously mentioned, buthow can carriers further expedite the process?

What's New

The latest innovation in rating is the pay-as-you-go programsoffered by some automobile writers. The programs vary slightly by carrier, butthe process is to track the usage through driving habits and reportback to the carrier. A device is connected to the car andperiodically beacons the driving information. Why can't thiscapability be expanded to include motion detection and impactsensing capabilities for accidents? Think about what that means toa carrier if a device can be in a car that is associated to aninsurance policy. Many of the key elements of a claim can bematched to signal from a vehicle for a loss report.

In the future for our accident scene the carrier could besignaled with the key loss information at the instant of impact:date, time, location, insured name, policy information, coverage,and other information that can be used to initiate the claim.Within seconds the loss could be recorded, policy and coverageverified, and an adjuster assigned. A towing service could bedispatched to the scene, rental notified, injury handlers notifiedif the accident was above a certain speed, and followup/acknowledgement initiated. The carrier could initiate the claimcontact rather than waiting for contact from the insured. The claimreporting device could be developed to save the last 60 seconds ofinformation for reporting an accident description (speed, GPSlocation, direction traveled, etc.). What a great way to usetechnology and the information you already have to be proactive inthe initiation of a claim.

How does this benefit you as a carrier? Your customer servicewill improvebecause you are coming to the aid of your customer. In ourscenario, the tow truck could arrive at the accident scene whilethe first responders are on site. You could also have your claimscall center initiate contact with the insured on a mobile phone tobe sure everything is OK. You can extend the contact to includecalling a home or work number to let the other members of thehousehold know that one of the other family members was in anaccident.

Loss expenses will decrease because you are working the claimfrom the instant the loss occurs. No longer will a vehicle sit in atowing yard—you can have it moved directly to one of your preferredrepair shops or taken to a salvage facility if the damage is atotal loss. Your adjusters are acting to engage with the insured tomake sure he or she is taken care of and medical treatment isunderway.

Your fraud exposure will decrease. You have the opportunity tovalidate the insured's statement against the information receivedfrom the electronic loss report. Insureds may not always have aclear memory of the events right before the accident. Some insuredsalso do not want to admit to culpability. What if the driver in ourscenario was speeding and does not admit to exceeding the postedspeed limit in bad weather? You may handle the investigationdifferently, but you will have the facts of the loss as theyactually occurred. Many vehicles have a black box under the hood tocollect data, but the ability to report the loss is notincluded.

With a GPS device attached to the car you can also track stolenvehicles better. Currently that is a service the insured mustpurchase, but as the carrier you have the most vested interest inknowing where the car is located, if stolen. Minutes matter in cartheft, and you can contact local police with a detailed descriptionof the vehicle as soon as it is reported stolen.

Regulatory Issues

Any new technology concept has new regulatory issues to workout. There will of course be privacy concerns, but those are nodifferent from the concerns attached to pay-as-you-go rating.Proper protections can be put in place not to disclose information,and the claim reporting device can only transmit when a loss isreported. Rating discounts are a way to encourage people to try outthe electronic loss reporting function. Also, many states are stillmired in the past and need to update laws to embrace thepossibility of improving insurance and loss settlement for their residents.Education about the service is expected.

Our driver above only had to wait a few minutes for the policeand an ambulance to arrive at the scene. As she was being treatedfor her minor injuries, her carrier contacted her to let her knowthat her claim was reported, the tow truck arrived to take her carin for repairs, and her husband arrived to pick her up because theinsurance company called her house. Off in the bushes is a deerwatching all the flashing lights. One day soon we hope this is arealistic scenario for our industry.