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The claims experience is key to retention — but still not enough

To retain their customers, insurers must do more than provide a great claims experience – they must help their customers avoid the claim in the first place.

It’s no secret that price is the main reason why P&C insurance customers switch from one provider to another. It’s also often said – correctly – that the claims experience is an important trigger for switching. However, a new Accenture survey has shown there’s more to this than many people think.

The survey – of 7,785 auto and household insurance customers in 14 countries, fairly evenly split between those who have submitted a claim in the past two years and those who haven’t – found that most people are fairly satisfied with their insurance companies. Only 7 percent are generally dissatisfied, and 14 percent are unhappy with the way their last claim was handled and settled.

However, of the 14 percent who think their claim could have been handled better, 29 percent have switched providers and a further 54 percent plan to do so. This means that 83 percent of all customers who are disappointed at the so-called “moment of truth” find themselves a new insurer.

Can one conclude from this that it’s essential for customer retention that insurers provide a satisfactory claims experience? Unfortunately it’s not that simple. The survey found that 22 percent of customers who have not recently claimed are likely to switch in the next 12 months, compared with 41 percent of those who have claimed. In other words, irrespective of how well the insurer manages the claims experience, the mere fact that a customer submits a claim will almost double his or her likelihood of switching.

So what should insurers make of all this?

Clearly, it’s as important as ever that they improve their claims experience – with dissatisfied claimers defecting at a 62 percent higher rate than satisfied claimers, they have much to gain by keeping them happy.

But it’s also important that they do whatever they can to prevent the claim in the first place. In Accenture’s 2013 Consumer-Driven Innovation Survey, 92 percent of consumers said they would appreciate their insurers helping them to manage their risk rather than just insuring it.

A combined strategy of improving the claims experience, while at the same time helping to reduce the incidence of claims, is likely to be the most effective at minimizing loss costs while maximizing customer retention.