ILC ARTICLE

Motor Claims Festival Consumer session – Survival of the fastest

3rd July 2020

Insurance claims in the future are going to evolve dramatically which is going to result in a ‘survival of the fastest’ according to Ian Hughes, CEO if Consumer Intelligence. 

Speaking during ‘The past, present and future of motor claims’ session as part of I Love Claims Digital Motor Claims Festival, Ian highlighted five key themes emerging within insurance which were contributing towards this change: consumer affordability squeeze; consumers in control; changing mobility; personalised everything; and increasingly assertive state. 

‘The pandemic will have long lasting consequences for claimants and the sector,’ said Ian, ‘If I was writing a 2021 claims plan – it would be very different to the one I wrote in 2020.’ 

Squeeze 

He suggested the squeeze on consumers will be on ‘steroids’ which will result in them looking for more flexible policies and products in the future. He also suggested it might be a contributory factor in an increase in insurance fraud. 

With consumers increasingly taking control of their service provider relationships, Ian suggested claims/insurance will see a shift from product to service to reinvent the end-to-end consumer experience. Ian used the analogy of the legalisation of e-scooters in the UK and how the ‘rental’ aspect was a key as it included insurance. ‘This is a clear shift towards insurance as a service (IAAS),’ said Ian. 

Another key theme outlined by Ian was the changing mobility landscape and how consumers will adopt new transport solutions to get from a to b. ‘The pandemic is going to heighten peoples’ awareness of how and when they travel,’ explained Ian, ‘these huge tectonic plates have shifted as a result of the pandemic.’ 

Personalisation 

With all that had gone before, it is little wonder that personalisation was the next key theme, something Ian suggested would see data and artificial intelligence combine in order to provide deep consumer personalisation. Underpinning this and its inevitable acceleration, Ian pointed at how ‘there is a wall of cash sat with investors ready to invest’ in this area. 

The fifth, and final, key theme Ian highlighted was ‘increasingly assertive state’ which although not directly influenced by consumers, he suggested was going to ultimately be a major contributing factor as regulators and governments take a more assertive approach to insurance. 

‘We’ve already seen, during the pandemic, how the Financial Conduct Authority (FCA) came into it promising to be agile – it’s a very different kind of state now potentially intervening in your industry,’ said Ian. ‘They have got the bit between their teeth and there’s little doubt we will see some interesting activity from them in the future, especially if or when we go into recession.’ 

Monitoring opinions 

Having monitored how consumers feel they have been served by the claims sector for almost a  decade, Ian revealed how its insights are based on the opinions of 24,000 direct purchasers of insurance per annum. Over this period, Consumer Intelligence has also collected consumer feedback on 34,000 ‘claims experiences’. 

In 2010, the overall motor claims sector satisfaction level was 8.05, peaking in 2014 at 8.44 and in 2019 indicating 8.31. ‘Well done,’ said Ian, ‘This is a really good performance.’ 

He continued, ‘What we really wanted to do however was to get under the skin of which company was performing the best and vice versa, and see if we could we come up with a five star rating mechanism and give it a value. To do so we had to come up with a model.’ 

Ian then unveiled who the top, five star insurance performers have been over the past nine years with SAGA taking top spot every year, More Than in second place for the past seven years and NFU Mutual third for the past six years. 

‘We know that an insurer that achieves a five star performance rating gets a 15.75% uplift in customer spend. Doing some ‘Hughes Maths’ that equates to £275m in gross written premium value,’ said Ian.  

‘Companies that do better with claims, do better with all customers.’ 

Observations 

Ian also described an interesting observation which seems to have emerged as a result of the pandemic – that of ‘vulnerable customers’. Citing the FCA definition on vulnerable, Ian said that in 2019 18% of the customers Consumer Intelligence interviewed were ‘vulnerable’, now in 2020 that figure has increased to 26%. In line with this he pointed at how important it was going to be to ensure clear, concise and easy to digest communication. 

Ian said, ‘Every aspect of communication needs to be made more simple – we still see so much claims communication written in ‘legal speak’. This is especially true in relation to vulnerable customers. Think about how you felt on 24 March 2020 (the day after it was announced the UK was in lockdown) – that’s how vulnerable customers can feel every day.’ 

Human behaviour 

Touching upon many aspects of human behaviour that have changed such as work patterns and driving habits Ian highlighted how 37% of people will work from home more whilst 40% will work flexible or non-standard hours. With a 20-25% uplift in productivity with people working from home, Ian also hinted that COVID-19 might even be the catalyst of a four day working week – ‘we have been on a trend towards this anyway’, he said. 

In specific relation to customers’ views of their insurer during the pandemic, Ian said the perception of support varies massively but pointed at how Admiral’s £25 reimbursement to customers could prove to be a winner. 

‘We have affectionately labelled this the Admiral Effect – it might just be the best £25 ever spent by an insurer but we will have to wait and see,’ said Ian. 

The ILC Digital Motor Claims Festival is supported by Headline Sponsor – Enterprise Rent-A-Car, along with Corporate Partners: AkzoNobel; Autoglass; Carpenters Group; Copart; e2e; Enterprise Rent-A-Car; GT Motive; The Green Parts Specialists; Innovation Group; Keoghs; SureTrak; S&G Response; and thingco.