Car Insurance Outlook 2021: Digital Claims Handling Accelerates
You might think of your car insurance as something that you can set and forget. You find a policy that fits your needs for a reasonable price, then pay your bill and go about your daily routine.
It’s not until you actually need to file a car insurance claim that you really get a feel for how car insurance works and if your company meets your expectations.
For example, if you get into a parking lot fender bender or find that a fallen tree branch has smashed your windshield, you have an expectation that the claims process will go smoothly and efficiently to get back on the road as soon as possible.
Consumer Use of Digital Claims Tools Has Been on the Rise
One of the ways car insurance companies are trying to meet their customers’ needs is by offering digital products that customers can use throughout the claims process. There has been a nearly 20% increase in customers who have used digital claims tools over the past three years, according to a 2020 J.D. Power Claims Digital Experience study.
J.D. Power’s study shows that customer satisfaction is highest among companies that use digital tools.
“Digital has never been more important to modern claims operations,” says Tom Super, head of property and casualty insurance intelligence at J.D. Power. He adds that 84% of customers who filed claims have used digital tools at some point during their claim, putting the industry on notice of the customers’ evolving expectations.
Consumers Embrace Digital Insurance Technology
A car insurance claim is a disruption of your daily life. In a typical claim, you’re going to need to contact your insurance company, get a repair estimate, then take your car to an auto body shop, which means you might need to find alternative transportation while your car is being repaired.
Traditionally, this is done over the phone with a claims handler who can walk you step-by-step through the claims process from start to finish.
As technology advances, auto insurance companies have been implementing more and more digital tools to help streamline this process. For example, you might be able to file a claim, schedule an appraisal, find a shop and get status updates from your insurance company’s mobile app. Customers have embraced the technology. Since 2017, there has been an 18% increase of customers who have used digital tools during the claims process, according to J.D. Power.
Digital communication in the claims process has had a positive impact on customer experience, according to CCC Information Services, a provider of data and technologies to the automotive, collision repair and insurance industries. CCC supports more than 50 million digital interactions between customers and repair shops and says their data shows that collision repairers who use digital capabilities to communicate with customers have had an increase in customer satisfaction scores.
CCC has recently expanded their digital communication tools with the addition of Quick Chat, a real-time two-way texting tool that customers and insurers can use to communicate through each phase of the claims process. CCC sees it as a way to cut down on communication methods that can bog down the claims process, like waiting on email responses or playing phone tag.
“Texting is ubiquitous in our personal and business lives,” says Jason Verlen, senior vice president of CCC. He adds that the ability to communicate digitally in real-time has become more essential.
COVID-19 Accelerated Customer Expectations
The COVID-19 pandemic and the need for social distancing has fundamentally changed the way we interact with others. Many insurance companies quickly adjusted and put more emphasis on virtual car insurance claims, which has allowed for contactless claims handling.
Paradoxically, the pandemic may have given car insurance companies some time to adapt and innovate on their claims handling experience. There was a 22% decrease in auto insurance claims since the pandemic, according to the J.D. Power 2020 Auto Claims Satisfaction study. With fewer claims, some insurers were able to refine their customer experience.
It seems to have paid off, at least for now. The study saw a boost in customers who said they “definitely will” renew with their current insurer: 76% during the pandemic versus 72% before.
Now that more customers have adopted digital practices out of necessity, they might expect that same level of quality virtual customer service post-COVID. In fact, more than
65% of consumers who adopted digital claims handling practices intend to continue those habits, according to a recent survey by McKinsey & Co.
The rapid growth of digital insurance claims and customer expectations could result in three major shifts in the insurance industry’s claims handling practices, according to analysts at McKinsey:
- Increased use of digital and artificial intelligence (AI). McKinsey believes simple claims could see more automated processes, with human customer service to fill in AI “blind spots.” Complex claims will still have claims handlers playing a central role while AI-driven support tools will help them improve decision making and streamline manual tasks.
- More multichannel communication with customers. Insurers will need to meet each individual customer’s specific communication preferences, such as mobile apps that let customers upload images of damage. Analytics and algorithms will anticipate a customer’s question and send updates before the information is actually requested.
- A bigger focus on preventing claims. Insurers will take a data-driven approach to make suggestions to their customers on actions they can take to avoid a claim. For example, severe weather warnings could trigger push notifications to encourage customers to move their cars to a garage to avoid hail damage.
Claims Handling Still Needs a Personal Touch
While your entire claims experience could be done virtually through an app on your smartphone, there are times when you will still want or need to speak with an actual person. A complex claim may need the guidance of a skilled claims adjuster, and even a simple claim may need someone on the other end of the phone to help you understand how your deductible applies or how to find an auto body shop with guaranteed repairs.
While digital claims are becoming more of a norm, we shouldn’t discount the benefit of quality customer service for both customers who do not wish to adopt digital tools and those who want to supplement digital tools with personal interaction. The J.D. Power 2020 U.S. Claims Digital Experience study shows that customers who did not use digital claims tools also experienced a similar level of customer satisfaction.
When it comes to car insurance claims and customer expectations in 2021, it seems there is a healthy appetite for both digital tools with artificial intelligence and good old fashioned guidance from a real person. It’s not a binary choice—rather, auto insurance customers want options in how they communicate with their insurers.