By Paul Morrissette, president, Chubb InsuranceSolutions Agency Inc.

Unlike people in many other professions, those of us in theinsurance business are also consumers of the products wedistribute. On occasion, we experience a loss of some kind and haveto file a claim. Of course, this is why we bought insurance in thefirst place—to transfer the risk of financial losses we otherwisedo not want to absorb ourselves.

A claim on a policy is effectively the whole point of theinsurance product—the raison d'etre from the buyer's pointof view. When filing a claim is a painful process and awaiting theclaims payment is unnecessarily long and protracted, it not onlyresults in a dissatisfied insurance consumer, it tarnishes theindustry's reputation.

Agents and brokers make choices that will ultimately determinewhat type of claim service their clients will receive during adisaster, and this choice becomes an important part of an agency'sstrategic plan. As independent agents make decisions about whichcarriers they wish to represent, it is important to contemplate theclaim servicing capabilities of their insurers.

In the aftermath of widespread catastrophes like SuperstormSandy or the tornadoes in Oklahoma, the claims infrastructure atsome insurance companies can buckle under tremendous pressure. In acatastrophe, an extraordinary number of claims are being filedsimultaneously by individuals and businesses that have sufferedfinancial losses and endured emotional upheaval. Putting suchaggrieved people on a long queue to make a claim, speak to anadjuster or receive payment is no way to treat these customers, butthe carriers' resources are strained to the limit. Does it have tobe this way?

Keith McCombs, director of personal insurance at INSURICA Insurance ManagementNetwork, lives and works in Oklahoma City, so he knows a thing ortwo about tornadoes and catastrophe claims, particularly thosefiled by the agency's affluent clientele. “When disasters happen,many insurers simply say 'pick a number and get in line,'” he says.“That's the last thing anyone wants to hear at a time of greatstress and need.”

He's right, of course, and yet the problem persists,accumulating into negative publicity that tars the entire industry.Asked why this is often the case, McCombs agrees that manycarriers, particularly newer ones without adequate resources, areto blame. “They have to rely on the external, independent adjusterswhen a disaster hits,” he says. “Sometimes these adjusters lackempathy—it's simply a business to them. They set up these commandposts in the affected area and it's like a zoo—pandemoniumeverywhere you look. It's all very confusing to policyholders, whoare in an emotional bind and need help and money.”

Command posts and mobile claim operations may sound responsive,but insurers that take this approach are asking customers to cometo them—usually in a shopping mall parking lot—instead of sendingresources to see the customers.

“This is just the beginning of the nightmare,” McCombs says.“Due to the deluge of claims, some claims take over a year toadjust. You can't imagine the anxiety it all produces.”

Required Re-Assessment

Let's be clear. Many independent claims adjusters are highlycompetent, professional and caring people. And the task before themis not for the fainthearted. They typically serve many differentcarriers, forcing them to adjust claims based on multiple claimsphilosophies and varied processes. In the aftermath of acatastrophe, independent adjusters besieged by an onslaught ofmyriad claims can find it difficult to discern which carrier'sclaims philosophy applies to which policyholders.

Obviously, an insurer's resources are critical during such timesof great duress. A carrier with definitive catastrophe responseplans and the ability to “scale up” to meet the demands ofcustomers during a significant event is critical.

Unfortunately, not all carriers have the capacity to provide aswift claims response. Those who can, however, employ creativesolutions. For instance, some insurers deploy company claimsprofessionals from across the country or around the globe to pitchin outside their regions when a catastrophe demands theirinvolvement. Such people are cognizant of the company's claimsphilosophy and trained in the handling of catastrophe claims—beforea catastrophe strikes.

Even in the event that independent adjusters are needed toassist with the post-disaster customer response, these carriersmake sure that their internal staff adjusters oversee the workperformed by the independent adjuster, thereby ensuring that allclaims are appropriately investigated, processed and expeditiouslypaid. In such situations, it's the company's claims staff thatmakes the decisions—not the external adjuster. These internalresources come at a cost to the carrier, but without theseprofessionals on staff the claims process suffers—to the detrimentof the policyholder and his or her opinion of the industry.

There is a strong connection between the claims process andcustomer satisfaction. “Survey after survey shows that apolicyholder's claims experience is paramount when it comes totheir opinions of the insurance company,” McCombs says. “If someonehas a bad experience, it no longer matters to them that theinsurance policy they purchased was cheaper than competitors'policies.”

He makes an excellent point. Bad experiences have a way oflingering and can deeply and profoundly affect customer loyalty.Our customers surely deserve empathy, promptness, fairness andtechnical expertise when they are in a tough spot and need to filea claim. Providing such service should be as fundamental asanswering the phone when a prospective customer calls.

Policyholders see advertisements touting “24/7 Claims Service,”assuming this means that if they need assistance, they can get itat any time. This is not always the case. “24/7” may simply meanthat call center personnel will take down the claims informationover the phone, offering little guidance or assistance until thenext business day. This lack of true “24/7” service only slows downthe claims process and potentially worsens the extent of theloss.

Alternatively, perhaps the call center's personnel are capableof recognizing the nature of the situation and, when a policyholdercalls, not only is he or she is treated with empathy and respectbut the call center personnel are able to provide access to anexperienced adjuster who can begin answering questions, offeringloss mitigation advise and other services, when they need it most,at the time of the loss instead of the next business day. Thatclaimant is a customer for life.

Since agents and brokers are the front line faces topolicyholders, obviously they want to rest assured that their vitalaccounts are being fairly treated and protected. It's what we wouldexpect were we to file a claim. As McCombs puts it, “You only knowthe value of insurance when you have a claim.”