Study: Service Key To RMs' Buys

By Caroline McDonald

NU Online News Service, April 16, 11:40 a.m. EST, New Orleans?When risk managers decide to make insurance buys, good claim service by a carrier can count more than price, a study released here revealed.

And risk managers who were polled said a superior financial stability rating for an insurer is no guarantee they will provide high quality claims service.

The findings from a survey of 400 risk managers were announced yesterday by the Chubb Group of Insurance Companies at the Risk & Insurance Management Society's annual meeting.

Risk managers responding defined the top three issues of claims service as fairness of claim resolution, speed of response and speed of claim payment. And the risk managers said claims services are a significant factor when they make purchase decisions on property-casualty insurance.

Mark Korsgaard, senior vice president and worldwide casualty claim manager, Chubb & Son, Warren, N.J., told National Underwriter he was not surprised by the findings. The study, he said, reiterated how important "fairness?inherent in intent, expertise and speed of initial response?is to risk managers."

He continued that Risk managers don't want to be "bogged down with a claim problem. The sooner they can get through it, obviously the better. They can get back to what they do."

He said that "this is what an insured expects from a carrier."

Mr. Korsgaard explained that while "everyone wants to pay less for coverage," the survey demonstrates that "price is not the driving factor in selecting an insurance carrier."

The events of Sept. 11, he said, have proven the value of working with a financially strong carrier "that delivers on its promise" to pay claims fairly and expediently.

"Even those risk managers who did not report a loss as a result of Sept. 11 indicated a high level of ongoing evaluation of their insurers' claim service," he said.

Of survey respondents 76 percent said claims services were the major, or a significant factor, in selecting a new property-casualty insurer.

Seventy percent reported that claims service is highly important in evaluating their current property-casualty insurer. Some 36 percent reported that they have terminated a relationship with a property-casualty insurer because of poor claims service.

Also noted by respondents with claim-related communications issues were timely updates and ease of claim reporting.

Service "convenience factors" such as claim office locations and multilingual claims professionals were of lesser importance, the study found.

Those who reported having filed a claim related to Sept. 11 demonstrated a heightened awareness of the importance of claim service, the study found.

This group noted that, post-Sept. 11, the quality of an insurer's claim service has become "more important." They also "very often" have met with an insurer's claim professional before placing business with an insurer.

Finally, Chubb's survey revealed that there is no clear correlation between an insurer's financial strength and the quality of its claims services. Respondents rating the claims service reputations of 17 major property-casualty insurance companies collectively gave the highest and lowest scores (3.74 and 2.49, respectively) to companies rated A++ by A.M. Best.

"Since Sept. 11, many risk managers are placing greater importance on the financial strength of their insurance carrier," Mr. Korsgaard said.

Although an insurer's ability to pay is clearly linked to its financial strength, he said, "the quality of its claim service has much more to do with issues such as fairness and speed of payment.

"Those insurance companies that are financially strong and demonstrate the claim service attributes risk management professionals value most have the competitive edge."

"Chubb's Claim Service Survey: Influencing the Insurance Purchase" was conducted over the Internet and received responses from 400 risk management professionals almost entirely from the United States and Canada, according to Chubb.

The respondents answered 25 questions, several with multiple parts and rankings, the company said. Respondents represented both publicly and privately held companies in all types of industries. Fifty-seven percent had annual revenues of $1 billion or more.

Copies of the survey are available on the Internet at www.chubb.com/rims/2002survey.pdf.

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Study: Service Key To RMs' Buys

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