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We know that insurers have a whole new host of things to think about, plan for, and implement. But the perception that suppliers have escaped the ‘burden’ of these new regulations is simply incorrect. Any supplier’s key role is to help meet the needs and desires of their clients (at a profit to themselves), and so logic dictates that if a client has Consumer Duty obligations to meet, then the supplier must also be a part of that solution. Nor am I referring just to those suppliers that may have some formal delegation of claims management authority. Every supplier of any element of the claims journey must understand these new requirements fully, and leap to over new solutions that will help their clients.
Surely those suppliers that are first in the queue to over their support and services will be looked upon most favourably when the next batch of tender documents arrive? The question around ‘added value’ that a supplier could proffer as part of the tender response is invariably filled with corporate
waffle or, even worse, financial inducements that have never been asked for.
Instead, it would be a refreshing change for a supplier to position themselves as a firm with a genuine understanding of the\new needs of their clients, and respond accordingly – not that you should wait
until the next tender comes along to gain advantage! I wonder how many suppliers have proactively started a conversation with their Supply Chain Manager or Claims Director in order to throw their hat into the ring as being part of potential Consumer Duty solutions…
In a great many instances, it is the supplier that has direct interface with the policyholder, and will be the ‘face’ of the claims department. But even where this is not the case (IT companies, for example), there is still a continuous obligation on suppliers to build system, process, and people skills/knowledge around helping the insurer to work within the new regime.
Of course, I am aware that suppliers already provide a great many supportive services above and beyond their core products. But
that is the name of the game. Tesco does not supply ‘free’ parking in addition to their core food and associated products because they really want to – it’s because that is a support service that their customers
demand and expect. It’s part of the total
package.
The same goes for suppliers who expect to win business from the insurer and claims management communities. If your clients have a need to fulfil l Consumer Duty regulations, then it is the responsibility of suppliers to be at the forefront of providing some of the answers.
Of course, it may cost money. It will certainly take up management time. There will be a need to change operational processes, and perhaps new IT solutions will be required as well. But if that is what’s needed – and you want to stay or become a premier supplier to your clients – then you need to make a start right now. The new regime is still in its early days, and this provides a tremendous opportunity for suppliers with foresight and commitment to get in at the ground level, embedding themselves into any new elements that the claims department needs in order to comply with their Consumer Duty obligations.
Get on with it!
I am quite sure that ‘putting the customer at the heart of everything we do’ is rapidly becoming nothing more than a poor cliché of a sentiment, one that even the C-Suite no longer believes in – if indeed they ever did.
Allow me to ask a few simple questions to test my premise.
When did piped music over loudspeakers ever help to sell new cars? Or, more importantly to me, provide a calm, peaceful, and relatively quiet environment for customers to wait for their car repairs to be completed? How ‘customer centric’ can it be to demand only to be told that the original repair was not what had been needed… but never fear. This time they had got it right!
Worse is to come.
Is it really ‘putting the customer at the heart of everything we do’ to promise a courtesy car in the event of a mechanical repair being needed, only then to explain that the same customer would need to wait 3 weeks for said courtesy car to become available?
Worse is to come.
When the original repair fails (through no fault of my own) and it is now a matter of extreme urgency to get the re-work done, how can it possibly be customer-centric for the service department to explain that there is no capacity for quickly fixing the stuff that they got wrong? Instead, I would have to wait 4 days before they could even look at the problem they have caused.
Worse is to come.
After 6 hours of waiting on site, listening to the aforementioned muzak and missing several important Zoom calls (because who would want to inflict miserable muzak onto their clients and, in any case, there is no privacy), only to be told that the original repair was not what had been
needed… but never fear. This time they had got it right!
Worse is to come.
A few days later, I received a call from the dealership to explain that the motor manufacturer would be contacting me to canvass my views on the quality of the service I had received. The good news (as the young lady on the phone kindly informed me) is that if I score them a 4 or a 5, the dealership is more likely to meet their bonus targets. This filled my heart
with love and unbridled gratitude for their never-ending commitment to customer centricity, and I awaited a call from the motor manufacturer with keen anticipation.
Worse is to come.
Rather predictably, the call from the motor manufacturer never arrived, and my one and only chance to express my real thoughts on the lies, deceit, and sheer hutzpah of the dealer outlet passed me by.
This story is not unique. It is certainly not specific to motor manufacturers, and in the claims departments where I spend most of my time, I see this kind of experience being repeated time and time again. If we are truly customer centric, then the structural design of how we work with our policyholders, claimants, and even our suppliers, requires some radical rethinking.
Will it ever happen? I’ll let you know when I next experience a claim with my insurer, or, heaven forbid, when I need to take my car back to the same dealership for future service work!
Our customers must believe that monies will be available to meet their costs and settlement will be on a fair and equitable basis in the event of a valid claim. Without that trust, the whole ecosystem of insurance comes under threat. Customers will feel short-changed, deceived, and even mutinous – perhaps to the point where fraudulent behaviours are seen as somehow acceptable.
Therefore, it seems obvious that claims settlement systems must reflect that core principle in both design and application. Be it a human-centred, technology driven, or hybrid decision-making modus operandi, there is a requirement upon us to deliver a service that is transparent, accountable, and beyond reproach.
It seems to me that one way is for those involved in the Al world – in whatever guise that may take – to agree on a voluntary Code of Conduct that will guide their thoughts, deeds, and activities. An Al ‘Ten Commandments’ perhaps, that drives us to ever higher standards of ethical behaviours, helping to ensure that the amazing Al-driven developments of the coming years are not ‘the tail wagging the dog’. However, as much as we can marvel at Al’s extraordinary feats of analysis, insight, and automated decision-making, we must always have a set of guiding principles as our reference points, that help to avoid poor practices or simply the mistaken application of the power of Al.
We all know the Little Britain catchphrase of ‘computer says no’, and we’ve all met this barrier to trust and mutual comprehension in our daily interactions with financial institutions and other service suppliers. Imagine that frustration and breakdown in relationships when writ large on the Al platforms of the future. Like any technology, we must have regard not only for what we can do with it, but also what we should do with it.
That old dictum of being comfortable with headlines on the front page of the Daily Mirror if anything were to go wrong might well be the best advice that we could give ourselves as we contemplate a future world of claims, in which technology will eclipse human beings as the primary decision makers.
Of course, we must also grasp opportunities offered by ethical Al applications with both hands. No Code of Conduct should ever act as a brake on the rapid development of this amazing technology. Instead, it should serve as a great catalyst for all stakeholders to mutually agree the ‘stake in the ground’ that we will need if we are to retain public trust in our industry.
Because, and I repeat, without that trust there is no solid foundation on which we can build. Technology is not the driver of our industry but the enabler. It is not Al that ultimately determines who is right and who is wrong, whether a claim should be paid or not, if a claim is fraudulent or valid.
Instead, it is the human beings behind this technology on which our future depends, and a voluntary Code of Conduct can only serve to improve the chances of us getting it right- to the benefit of all the players and policyholders for generations to come.
Every vendor will tell you that they are the best at what they do, whilst the claims department will demand a range of competitive propositions from their suppliers which are intended to convey some sort of advantage over other insurers.
Occasionally, you do see a stunning proposition in the supplier marketplace that is a clear winner. The recent wave of independent insurtech developments has seen a very welcome growth in new ideas and applications. However, rare is the claims department with a firm grip on how they want to position themselves – other than, of course, the all-pervading demand to reduce indemnity and operational expenses.
But, despite some of the great innovations that have been happening on the tech front, vendors still find it especially hard to differentiate themselves from their immediate competitors.
Claims departments are also not that great at finding the golden nuggets that they’re looking for. In the former case, it is often a failure to invest time, money and research into designing and implementing the compelling proposition needed, whilst insurers and their claims departments are too often bound by corporate culture, process and internal politics to have the freedom necessary to experiment and challenge the norms.
For vendors, having a great product or service (if you have one) is rarely enough to stand out from the crowd. It seems to me that part of the secret involves the ability to tell a convincing story; not just the operational stuff in terms of who you are and what you do, but also the skills to draw the buyer in on what you are trying to achieve.
Strong examples of this in the motor market might be the progress made by companies such as Tractable and RightIndem, who have taken us on a journey around how the claims market could change for the better. They have been ultra-consistent in their messaging and positioning about this over many years.
For insurers and their claims departments, the task is made a little more difficult in that their customers have little option but to work with them. There are very limited options for reporting your claim to anyone other than your insurer (or their agent), and so there is a captive market mentality. The key driver is cost management with a nod towards customer service and, in truth, there is very little else to differentiate the positioning of a typical insurer.
Even when there’s real competition to manage a claim (a potential credit hire/personal injury situation, for example), insurers are very focused on the speed with which they can find the customer, rather than the offer being made. In other words, everyone looks pretty much the same from the consumer perspective, and it is simply a matter of who gets there first!
Of course, there are exceptions. In the US, Lemonade has made a great effort at storytelling, and they’ve seen huge success in that respect. In the UK, we can see High Net Worth companies positioning themselves as the service-driven claims operation that costs money – but is worth it in the end!
There’s a compelling need to be able to tell an interesting, engaging
and meaningful story about who you are and where you are going. Without this, you are just another vendor or claims department.
Responding to a tender on behalf of one of my supplier clients (not an insubstantial company), I was struck by the gulf between insurer expectations and supplier reality. A veritable tsunami of questions flooded the inboxes of the supplier bid team across a vast array of subject matter, but all of the questions had a single thread of connection between them.
Namely, that the questions were written by a very large company (an insurer), seeking to procure services from a relatively small company. Because of this, it soon became clear that the former had little cultural understanding of the latter, and were ruining their chances of finding the right supplier to suit their needs.
A Triumph of Style Over Substance
Procurement and claims professionals will have spent months preparing the Request for Proposal/Information, but will demand comprehensive answers within a few short weeks. The timetable from the viewpoint of the vendor is incredibly short – and is not so much a test of knowledge, skill and corporate attributes, but rather the ability to drive a square peg into a round hole.
With no time to revisit, revise or re-engineer, the vendor is left with no choice but to manoeuvre and manipulate information that they hope will satisfy the buyer. In other words, the RFP and the process surrounding it is no longer an instrument for the intelligent buying of goods and services by the insurer, but is instead an obstacle on the road to success for the vendor. A hurdle to be navigated, crawled under, leapt over.
The RFP is not a facilitator of making the right purchasing decisions but, instead, has become a mere shop window of presentation and style.
It’s Easy When You Know How
As someone who spends a great deal of time both drafting RFPs and, conversely, working with vendors who want to win business from insurers, I know that this is not the core intention. Purchasers genuinely want to hear about the competencies and attractions of the vendors. The latter are anxious to be able to respond positively and with integrity. Unfortunately, it doesn’t always work that way, and the blame lies firmly with the insurer procurement and claims teams.
But there are some solutions
Firstly, the RFP content should focus almost as much on the future as the present. Vendors do not stand still. Understanding their growth and development plans tells you more about a business than any number of queries regarding present day practices.
Secondly – add 8 weeks to the proposed date for responses. If you were thinking of giving 4 weeks to reply, then give 12. If you were thinking of 8 weeks, then give 16 – or earlier if the vendor wishes to submit. Suppliers need time to consider, reflect, and maybe even change how they are working as the demands of the RFP become clear. It’s better to have an honest and considered response than a response built on smoke and mirrors.
Finally, the RFP content and scoring should be weighted towards non-commercial considerations in the first instance – a ‘blind’ tasting of the proposal. Of course, the price matters – but not until much later in the consideration. Determine what the vendor is proposing to deliver before you make a judgement on price. Better to understand the former without your eyesight being ruined by the latter.
Requests for Proposals have a massive potential value to create meaningful relationships between buyer and seller. At the moment however, that potential is being wasted because of flawed process, cultural incompatibility, and too many boxes to tick!
