The best way to keep agency customers happy is to avoid claims in the first place but, of course, that’s easier said than done.
When claims do happen, independent agents can play a valuable role in determining whether the customer is still a happy customer after the claim is settled. At the same time they are trying to make the claim experience better for their customers, agents must avoid turning one claim situation into another: an errors and omissions (E&O) claim against themselves.
Claims handling is a magnet for E&O activity. About 10 percent of all E&O claims against agents are due to alleged mishandling of an underlying claim, according to Curtis Pearsall, president of Pearsall Associates Inc. and author of Insurance Journal’s E&O Insights column (see page N16).
While most agencies have limited authority over the logistics of claims processing, there are some ways in which an agency and its carrier partners can make the claims experience better for customers and keep the agency itself out of claims trouble.
Above all, successful claims handling requires that the insured, the carrier and the agency all be in the loop.
“The most important thing is timely communication between not only the insured and our agency, but also with anyone involved in the claims process,” says Angela Drook, legal counsel and claims manager at Rocky River, Ohio-based Dawson Insurance.
The claims process begins to get off track when an insured feels left out and uninformed about the status of a claim, she says.
“When people start calling up because they don’t know what’s going on, and they can’t get a hold of one of the adjusters, it can end up being an all day process trying to track things down,” Drooks explains. That makes it harder for everyone involved in the claims process, including the agency. “The longer it (the claim) drags out or the more an insured feels like they are being pushed aside by the carriers, the angrier they are,” she says.
Drook says most insureds, even commercial insureds, do not distinguish between their agency and insurance company. So when an insured gets angry, it’s usually the agency that feels the fury.
“The insured knows Dawson because Dawson is the one they talk to,” Drook says. “An adjuster’s actions — and any independent appraisers that they hire down the line — directly reflect on Dawson whether we like it or not. If they are doing a perceived bad job, people call back and say that they are not happy with Dawson even though it wasn’t necessarily us doing it.”
Communication alone isn’t enough. Carriers and agents must be proactive when it comes to handling any problems that might arise during the claims process, believes Lisa Banducci, executive consultant for Heffernan Claims Consulting based in Walnut Creek, Calif. This is particularly true in the highly sensitive area of workers’ compensation, she says.
“It is very important to have a workers’ compensation carrier that is very proactive in the handling of your claims,” she says. In order to be proactive, she thinks the loss control services offered by carriers are extremely important, as is having a dedicated claims unit in the agency.
Beyond communication and proactivity, the relationships an agency forms are imperative when it comes to claims. In other words, it’s not wise to do business with strangers.
“It’s very important that you know who your claims examiner is as well as the claims supervisor so in the event that a claim is questionable, or you are experiencing problems, you know who to go to,” Banducci says.
For highly sensitive workers’ comp claims, Banducci suggests checking in with the claims examiner weekly or at least every other week so there are no surprises. In claims, surprises can lead to unhappy insureds, claimants and agents.
“As an example, if the claim is going to be reserved at over $10,000 in cost then the adjuster should immediately notify the employer and actually the broker and broker’s consultant so the employer is aware that this claim is escalating and the brokerage team can intervene,” she says. If notified early enough, the employer and broker can work proactively with the claims examiner to make sure whatever is happening is fixed and that cost doesn’t escalate any further.
Agents should take the time to find the right partners, including attorneys, with whom to build relationships.
“At the time the business is placed with the carrier the broker should be specifying who they want their clients’ attorney to be should a claim become litigated,” Banducci says. “If your agency partners with a good one [defense firm], then you are going to get really good results for your clients should the claim become litigated.”
In California, property/casualty claims tend to be less sensitive than highly-litigated workers’ compensation claims. Even so, Banducci says just as in workers’ comp claims, staying in contact with claims examiners is critical. “It’s still important to know your claims examiner. It’s still important to make sure you partner with the right partners.”
While overall communication and keeping the insured informed are important, the timing of communication can also be an issue. A carrier’s claims department and the agency should be on the same page and discuss any disagreements together before involving the insured, says Oscar Marroquin, a manager at Farmers.
“Claims people need to make sure they communicate any problems with coverage or damages to the agent first… don’t allow the client to blind side the agent,” Marroquin wrote to Insurance Journal. “The key is communication. There may be disagreements… just don’t get the client in the middle.”
Charles Sanford, an independent claims adjuster from the Houston, Texas, area advises agents to be proactive in maintaining contact with the claims adjuster and empathize with what the adjuster may be going through.
“The insured does not need any shocking news on coverage or claim payment. Neither should the agent,” he says.
Sanford says many of the adjusters that agents come in contact with today are simply overloaded with little time to handle claims properly. “It is not their fault,” he says, as market conditions and economic pressures continue to push more work on fewer people. “Therefore in the present climate, the agent must take more time to stay on top of claims within their book of business and any changing situations that may impact their respective clients.”
Variation in Claims Service
Superior claims service is not just about keeping customers happy. For carriers, it can also mean keeping their agencies happy.
Since customers value smooth claims service, agents should consider claims service when selecting carrier partners. According to a 2008 survey, “How Independent Agents View Carriers,” agents do just that. In the survey, conducted by Channel Harvest Research and sponsored by Insurance Journal, agents cited claims experience as one of the top factors they weigh in judging carriers and deciding where to place their business.
Drook and Banducci say not all carriers provide what agents want when it comes to claims.
For Drook, carriers where Dawson has direct contracts tend to perform better on claims than those carriers accessed through brokered relationships.
“Direct write carriers [with which Dawson has contracts] are a lot easier to deal with for us than somebody we have brokered,” Drook says. That’s because there are more degrees of separation between the agency and claims professionals on a brokered account, she explains.
“They don’t have a contract with us. They don’t have a relationship with us and we don’t have a lot of pull if we brokered it through someone,” she says. Of course, there are some markets in the excess and surplus lines sector where claims handling is top-notch. But in general, contracted carriers outperform on claims, she says.
Banducci says that claims experience definitely impacts Heffernan’s client retention ratio. If an insured has a “less than graceful experience” on a claim, the agent will hear about it, she says, which is why her agency employs its own claims consulting division — to help mitigate claims as soon as the cost starts escalating.
Some carriers perform well in claims while others do not.
“Some don’t always understand the importance of customer service,” Banducci says. “But there are others that do and customer service is their top priority, both in working with customers and working with brokers to make sure all parties are happy. Those are the types of carriers and claims administrators that we want to bring our clients to.”
Tips for Agents Handling Claims
ClaimsJournal.com Editor Denise Johnson understands the claims business. She spent the last 14 years examining property/casualty claims for prominent insurance carriers nationwide.
Johnson offered some advice for agents when it comes to claims handling. From her perspective, there are three factors that are important to the claims process, including:
1) The initial ACORD form submitted to the insurer by the agent. A common problem for adjusters is that the form was not filled out completely, causing issues to develop as the adjuster tried to make contact with an insured or claimant. The agent and adjuster can benefit from open communication between one another. Obviously, the greatest benefit is to the insured. If an agent has information that is vital to a claim, he/she should share it early on with the adjuster assigned to the claim. Sometimes an agent will refer the adjuster to the insured, who is angry that he/she must retell the facts or provide additional copies of records that he/she had already provided to the agent. That communication goes both ways. Whether the adjuster plans to pay a claim or deny a portion or all of a claim, it’s important to provide a heads up to the agent.
2) Coverage knowledge. It’s also important for an agent to understand the coverage to some degree. If an insured thought he purchased a type of coverage he doesn’t actually have, this will reflect badly on both the agent and the insurer.
3) Certificates of insurance (COI). For COIs to be valid the documents must be issued by the insurer. This problem continues to come up time and time again, and is a big issue since it could mean lost business relationships for an insured if COIs are found to be invalid.
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