Faster Is Always Better
Speed isn’t the only thing that impact policyholder satisfaction. ValuePenguin found that 11% of closed insurance complaints were related to claim denials and 9.9% were related to unsatisfactory settlements. However, claim handling delays accounted for 22.8% of complaints – the largest share by far.
Policyholders want a claim payout that covers their losses as soon as possible. If you don’t provide them with that, they may file a formal complaint and even switch insurers. In fact, Accenture found that insurers could lose up to $170 billion in premiums due to insurance company switching after poor claims experiences. When providing reasons for poor claims experiences, 31% of dissatisfied claimants cited settlement speed issues.
Outside Forces Are Threatening Policyholder Experiences
If a claim takes a long time to settle, policyholders often blame their insurers, even though some factors are outside the insurer’s control.
For example, labor and parts shortages that contributed to backlogs in auto repair shops had a negative impact on claimant satisfaction. J.D. Power’s 2023 U.S. Auto Claims Satisfaction Study found that auto repair cycle times increased to 23.1 days – up 6.2 days compared to 2022 and up by more than 11 days compared to before the COVID-19 pandemic. As repair times dragged, satisfaction with rental car benefits dropped, due to the rental period being insufficient to cover the time when the owner’s car was being repaired.
Repair times also increase after widespread natural disasters. When a hurricane, wildfire, or other major catastrophe strikes, many homes in an area all need repairs at once. Demand for licensed contractors and building supplies may outpace supply, leading to long wait times and unhappy claimants.
There’s not much insurers can do about these issues. However, they can reduce any unnecessary friction in the claims process, including unnecessary payment delays caused by slow payment processes.
Prompt Payments Reduce Insurance Customer Complaints
Although J.D. Power’s study found that longer claims cycles were hurting satisfaction with rental car benefits, the study also revealed something surprising: overall claims satisfaction actually improved. The director of global insurance intelligence at J.D. Power attributed this to effective client management processes and improved digital communications.
In other words, insurers can boost policyholder satisfaction – even when conditions are not ideal – but they need to stay on top of things. If they keep policyholders in the loop through digital communication, it’s possible to overcome challenges like long repair times.
A strong finish is also key. Imagine you’re a policyholder whose car was badly damaged in a crash. You’re waiting for the repairs to be completed to get your car back to be able to commute to work, pick up groceries, and drive your kids to their activities. Everything seems to be going well, but now the auto shop says it can’t complete repairs until the insurance payment goes through. Days pass; your patience grows thin. You don’t understand what’s taking so long. Aren’t payments instant these days?
Consumer Expectations Have Evolved
In the past, insurance customers may have been fine with waiting a few days for a payment because that was the norm. Now, things have changed. New payment options have opened the door to near-instant transactions and consumers are starting to expect speed.
PYMNTS says 61% of Millennials want real-time payments in finance and insurance. However, 40% of insurers aren’t providing these fast payment options. In some cases, this oversight is costing insurers dearly – 25% of policyholders say they have switched providers to access faster payouts. When insurers do adopt fast payments, they solve other problems: 77% of organizations that have adopted real-time payments report improved customer experiences and 54% say real-time payments have alleviated issues surrounding urgent payments.
Do Your Claim Payment Options Support Policyholder Satisfaction?
Improving claim payment speed is one of the easiest ways to boost claimant satisfaction and encourage policyholder retention. Tranzpay’s insurance payment platform supports inbound and outbound payments via multiple channels, including instant deposits. Learn more.
