Remember shopping for your first car? Or maybe you were looking to trade up. More than likely you asked friends, neighbors, or associates for advice. They may have related stories such as these:
Jack down the road loves his truck, but it lacks speed and, the faster he goes, the more gas it guzzles. At six miles per gallon, that is not the vehicle for me.
Bob, around the corner, bought his car from a small private dealer, but now the suspension squeaks, the windows leak, and the engine rattles.
Then there is Mary, who bought her car and was promised the world. When she calls the service department, however, they just cannot seem to fit her in.
Sound familiar? I am sure that every adjuster in the insurance industry can relate to these issues when working with their investigation vendors. Yet, few really are addressing the underlying issue: what value proposition did the investigation company provide before they were hired? A value proposition is a clear statement of the tangible results that customers can expect from using a particular vendor's products or services. If they did not provide one, ask yourself, "Why I am using them?"
Adjusters must examine every proposal and service offering that is put before them and ask the question, "What is the value proposition?" We know that Jack and Bob did not receive value propositions, because no sales staff was involved in the transactions. Mary, on the other hand, was told that service would be available whenever she needed it. Unfortunately, she never had that in writing. The only reason the three bought their vehicles was because they had a need, similar to the need that adjusters have for investigators.
Times are changing rapidly, however, as insurers recognize the importance of long-term relationships and the need for better service from their vendors. The insurance industry now is a very competitive business, one of continued growth and aggressive client marketing and retention programs. The combination of speed and efficiency, along with quality and service, consistently reduces costs. It also reduces indemnity dollars and the risk of bad faith, while contributing to improved customer service.
Promises, Promises
How does a provider of investigation services fulfill a value proposition to an insurer?
Technology is the key ingredient of any vendor relationship or outsourced program. Vendors also must be able to show clients how they effect savings across unallocated costs. Managing vendors, training staff, and controlling the quality and timeliness of reports, invoices, and service levels, while complying with regulatory mandates, are just some of the costs that contribute to the overhead of claim departments.
Vendors need to deliver value propositions before they are delivered the work. Insurers and TPAs must continue to raise the issue of the value proposition among all their service providers. After all, their customers are demanding those very same values from them.
Jack, Bob, and Mary all lacked avenues of recourse after their purchases. They did not have comprehensive service agreements that would have enabled them to hold the sellers accountable.
Are your sellers accountable?
Phil Peart is the former editor-in-chief of Fraud International. Fraud International has been integrated into Claims.
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