How insurers can halt customer churn

By Jamie Peers

Insurers understand the importance of first impressions. In the case of insurance customers, the First Notice of Loss is often their first engagement with an insurance provider, after signing up with the insurer, where a customer’s claim is captured. Accuracy and efficiency at this stage are paramount to ensuring that the customer’s claim is processed and settled in a timely manner.

However, errors and inaccuracies caused by slow and outdated manual FNOL processes are costing insurance companies dearly. A poor first engagement can cause customers to lose faith in the insurance company. The competition, meanwhile, is waiting to entice those disgruntled customers.

New age insurtech companies, large technology companies and major retailers are offering customers faster turnaround times and superior customer service, backed by greater automation. In fact, according to a 2020 PricewaterhouseCoopers Consumer Insurance and Retirement Pulse Survey, 41% of insurance consumers reported they are likely to switch insurance providers because of the provider’s lack of digital capabilities. Customer retention has always been a sore point for traditional insurers, which cannot afford to lose customers at the critical and foundational FNOL stage. Traditional insurance carriers must inevitably relinquish their slow-moving manual processes and adopt automation to ensure that claims are captured, processed and settled faster and that customers are happy from the start.

Why manual FNOL processes are a problem

In a digital-first world, there is almost no excuse for the first real interaction initiated by an insured party to be a manual one. Traditional manual FNOL processes are causing challenges that businesses cannot easily override. The first challenge is the haphazard creation of unstructured and variable data, collected through open-ended questions on phone calls, emails and other manual methods. Although every claim is likely to have unique elements, the absence of standardized documentation and the enforced need for human interpretation inevitably leads to significant errors.

The insurance industry is expected to provide support in difficult times when customers are often at their most vulnerable and in need. However, the industry itself is at the mercy of a volatile and unpredictable environment. Customers depend on insurance companies for a chance to restore their lives and livelihoods. The additional time that manual FNOL processes adds to the claims process means that customers suffer, waiting longer and longer for the support they might need immediately. Meanwhile, claims departments continue to be besieged by high volume, low-value claims and cannot pay attention to these large numbers. This is allowing fraudulent submissions and ensuing losses to go undetected.

Manual FNOL processes result in a high rate of inaccurate data at the first stage of the claims process. In turn, this impacts reporting, creates unnecessary back and forth between customer and insurer. It also slows down the resolution of claims, results in erroneous denials, and leaves customers frustrated and in search of alternatives.

Although the human touch is an important part of the insurance experience, it is best relegated to other areas of the business where it truly has a positive impact. Minimizing human input and automating the FNOL process can solve most of the problems currently faced by insurance businesses at this pivotal stage of the claims process.

Improving efficiency through FNOL automation

When insurance companies can automate the entry of unstructured data, including the capture and extraction of FNOL data, claims are more likely to pass through to processing without errors. Automation immediately reduces the time to review claims and manage them without adjuster involvement; this results in substantial efficiency improvements.

Even when all departments of the insurance ecosystem are not completely automated, ensuring automation of the FNOL process impacts and improves the efficiency of every department, allowing all processes to be performed faster. Automation also speeds up the various parts of the claims process – such as triage, assignment and coverage checks - which have proven to be bottlenecks in the past.

‍Customer retention and insurance automation

As stated before, the efficiency and ease that customers experience during the FNOL ‍process set the tone for their entire experience with the insurance business. Insurers are often chosen exclusively based on their commitment to settling claims rapidly and painlessly in the anticipated time of need. When the overall claims process is sped up through properly executed FNOL automation, customers immediately have a vastly improved experience, as accurate data is more likely to present favorable outcomes for the insured customer.

As a result of improved customer satisfaction, insurance carriers are more likely to retain their customers. Automation can directly remove all the major pain points in the claims process and provide a simplified, easy-to-use experience for claimants, proving the company’s commitment to engaged and empathetic customer service. When it comes to the claims process, every second counts, and ensuring rapid settlement of claims when customers are at their most vulnerable allows insurers to instantly improve customer retention and satisfaction scores.

Jamie Peers is the vice president of business development and alliances for Synatic. He may be contacted at [email protected].

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