Claims, Hogwarts and an interesting insurance story

Apr 16, 2010

“Harry was used to spiders, because the cupboard under the stairs was full of them, and that was where he slept.”

The Dursleys, afraid of Harry Potter’s magical powers, forced him to sleep under the stairs.  When at ‘11 years of age’, he broke free to attend Hogwarts he was amazed to discover his fame...and potential.

Like Harry Potter (but a bit older than 11 for the most part), commercial claims teams have, to a large extent, been kept hidden (sometimes literally), with insurers being fearful of showing too much of the ‘negative’ side of insurance.

Now, however, commercial claims is emerging from the shadows and, if the opportunity is seized, has the potential to change how insurers are viewed forever.  Hiscox has already used claims service to create a compelling and differentiated positioning around its high net worth segment product (“as good as our word”). 

Why have most commercial lines insurers kept claims under wraps?...

Perhaps part of the reason lies in the innate discretion and conservatism of the industry itself. In focus groups claims people often say that they see publicising claims payouts as unnecessary or even vulgar – ‘it’s just part of the job’. Claims is also not yet seen or fully understood as a strong selling point – a service that needs to be ‘managed’ rather than sold. And no doubt some of this is down to claims people themselves - who tend to be from ‘techie’ rather than sales backgrounds.

But this is set to change;  insurers are putting serious money into developing their brands (Hiscox £10m in 2009) – and no longer can the interesting stuff be hidden. Marketers have realised that, far from being a back-office process, claims is the essence of insurance; the promise and the story. There is a rich seam to be exploited - the speed at which insurers are able to wire vast amounts of money to the sites of devastation and disaster, the expertise and experience of those who know the intricacies of aircraft, marine hull and who understand the devastating impact and cost of catastrophes, wars and the more mundane, but no less distressing issues of business being flooded, burnt or robbed.

Lloyd’s too is investing heavily in improving its whole claims service offering - through ECF and now the Claims Transformation programme.

When we first started the Gracechurch Claims Performance Monitor  we understood why claims was really important;   

  • First, results showed that insurers who provide great claims service are rewarded with loyalty and new business.
  • Second, quality of claims service was pretty variable across business lines and insurers - indicating room for improvement and great potential for development. 
  • Finally,  we could see the possibility of using claims service as a differentiator, and even using claims to create added value for the client.

There is a risk however – and this is a concern expressed in our research – that the noise around technology may be obscuring the importance of the experienced claims professional -  just at the time when insurers want to build deeper and stronger relationships with brokers and clients.  The market must guard against the possibility of giving the impression that claims is no more than ‘pressing a button’. So here as elsewhere, the message needs to be managed. 

In the end process and technology can only go so far and great people will deliver great service (there’s even a good way to say ‘no’).  And claims teams will increasingly need to train, develop and attract high calibre people.

To pull all this off means getting creative and developing a really interesting story – perhaps not quite JK Rowling, but not far off...

Gracechurch has been monitoring claim service since 2005 and is now benchmarking performance trends through a continuous survey in London and overseas.  This study is forming a large and increasingly valued evidence base of how insurers deliver claims service.