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A Day in the Life of a Claim: Settlement and Closure

—November 12, 2014
A Day in the Life of a Claim: Settlement and Closure

By Vidya Dinamani, Vice President, Mitchell and Paul Rosenstein, Vice President, Mitchell 

In the last of our three-part series, we review the settlement process and its impact on customer satisfaction rating and overall claims management efficiency. 

As relationships go, the one between a policyholder and his car insurance company is not particularly high-touch. The average person only interacts with his carrier when purchasing or amending a policy or when there is a claim. In the past two articles, we have seen how adhering to an established set of best practices can expedite the claim initiation, review and processing phases, saving both policyholder and carrier time and money. But in the life of an insurance claim, the real moment of truth is the settlement phase. It is the opportunity for the carrier to shine or fail. Since research indicates that unsatisfactory customer service is one of the few things that will prompt a policyholder to change carriers, failure is not an option. 

 What Happens at this Stage and the Desirable Outcomes 

There are several possible scenarios depending on the nature of the claim: Is the vehicle repairable or a total loss? Was there any bodily injury involved? In every instance customer satisfaction is Job #1 and the goal for each must be a quick, hassle-free resolution with an emphasis on clear, responsive communication that sets and then satisfies expectations. 

  • If the vehicle was repaired, then you want the customer to be satisfied that it was restored to pre-accident condition in a timely manner. If damage was minimal, you might also offer a fast-track, direct-pay option. 
  •  If the vehicle was a total loss, then your goal is to ensure the customer believes he received a fair-market settlement. Offering access to a car-buying service can add value to this interaction and close the transaction loop. 
  •  If there was bodily injury, then your goal is to make sure the customer maximizes his coverage through the use of Voluntary Provider Networks (VPNs) that provide the most care for the policy dollar limit. 

What Can Go Wrong? 

Any delay, disappointment, miscommunication or unmet expectation during the settlement stage risks an unhappy customer, potential litigation and cost increase. 

Misunderstandings about Coverage

  • Is the customer aware that her policy carries a deductible and does she know how much out-of-pocket she will have to come up with? She may be operating on the assumption that the insurer will cover 100 percent of the repair. 
  • Does the customer understand the per diem rental car coverage limits in her policy? A customer who is used to driving a Lexus may be less than thrilled with a Honda Civic rental car. 
  • Will the repair take longer than originally estimated? A customer who is expecting her car back in three days will be very unhappy to learn it will take another week because nobody bothered to tell her a part had to be backordered. 
  • Was the customer less than satisfied with the quality or extent of the repair because it wasn’t clearly explained when she brought the car in? 

 

Dissatisfaction with a Total Loss Settlement

  • People feel a genuine sense of loss when their vehicles are totaled. They also have a sense that, after years of faithfully paying their premiums, they are at least entitled to empathetic treatment. Failure to show empathy can lead a customer to think you just don’t care.
  • Does your customer think her vehicle is worth much more than what she is being offered in settlement because you failed to provide credible third-party support for the settlement amount?

Litigation and Liability

  • Are your adjusters familiar with state medical billing regulations and do they follow them carefully and consistently across all bodily injury claims? If not, you could have completely different (and indefensible) settlement amounts for the same types of claims. That level of inaccuracy and inconsistency puts you at risk of litigation and liability.

Cost Increases

The more you have to negotiate, the longer a claim is open, the more costly it becomes. For example, when you have to negotiate a total loss settlement offer, the average settlement value increases by $843, according to J.D. Power and Associates (The Effort of One Touch, 2008).

Loss of a Policyholder

  • Contentious total loss claims have a negative impact on customer satisfaction scores. According to a 2011 J.D. Power and Associates study, total loss claimants average 811 on a 1,000-point satisfaction scale – 42 points lower than scores for customers whose vehicles were repaired.

Getting It Right 

The good news is that for every potential pitfall there is an opportunity to avoid it and delight your customers in the process. Often, it only requires setting realistic expectations upfront, establishing and adhering to a consistent standard of best practices and proactively communicating with policyholders. Advances in technology are making that easier than ever before.

Manage Expectations

  • Let your policyholders know from the start what will happen throughout the claim process, including potential delays such as backordered parts. Maintain communications during the process, expressing genuine empathy where appropriate. Ensure that there are proper, timely hand-offs between the members of your claims staff. 
  •  Track customer satisfaction early and often. Solutions such as Mitchell’s AutocheX service give you the tools to resolve small issues before they become big problems by capturing feedback from the start of the claim settlement process. You can establish your own set of touch points and receive alerts so you can respond promptly. 
  •  Follow up after settlement to make certain the customer was satisfied with claim handling and the repair. Surveying post-settlement customer satisfaction is also useful in tracking the performance of your direct repair partners.

Get Total Loss Right the First Time 

Customers are far happier when they believe their carrier has provided them with a fair market value offer. Solutions like Mitchell WorkCenter™ Total Loss, which are backed by a trusted third party, use data that consumer can find by conducting their own online research. That reassures the policyholder and builds credibility for the insurer.

Expedite salvage auctions and reduce cycle time with a solution such as Salvage Management. 

Collect and Analyze Data 

Holistic analysis and reporting is an invaluable tool that lets you understand performance by office and by region. Being able to look across themes and exposures and apply what you see to industry indices provides actionable intelligence to improve operations and procedures. For example, parts level auditing in WorkCenter can be used for subrogation opportunities by revealing which parts were actually available at the time of estimate. Close file review show you what opportunities exist to improve performance during the claim process. 

Improve Payment and Billing Processes 

  • Technology solutions such as Mitchell AutoExpress™ make billing more efficient, ensuring that repair shops, medical providers and claimants are paid fairly and in a timely manner. 

Accurately Assess Injuries

  • The ability to perform first-party medical bill review is an important component to facilitate extending customer benefits. With the help of solutions like Decision Point, adjusters are able to monitor the accuracy of medical bills and expenses so that customers do not reach their policy limits too quickly and are able to obtain needed medical care. 
  • It costs you money and you risk miscommunication when adjusters who are not trained negotiators handle this important process. It is far more efficient to use technology solutions that can provide negotiation guidelines, reduce expensive back-and-forth on the phone and provide supporting third-party backup data that demonstrates fairness. Mitchell ClaimIQ™, for example, enables adjusters to evaluate the various aspects of a claim with a standard framework that incorporates medical bills, general damages, wage loss and permanency. It also provides a negotiation chart for consistent, easy access.
  • Focusing on a systematic process that guides adjusters through the various steps of liability assessment lets them more accurately identify comparative negligence situations. The end result of more appropriate settlements can often mean lower premiums for policyholders. 

Leveraging an integrated set of technologies that work together helps to ensure that adjusters have the needed tools to enhance the claims settlement process for their customers. With the right combination of best practices, accurate proactive communications and technology you can facilitate claims settlement, save time and money and deliver the level of customer service that keeps policyholders satisfied. 

Published in Property Casualty 360, December 2013

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