Intelligence: Getting FNOL right
Being the very first point of contact is the ultimate aim for insurers when it comes to motor claims but, as Martin Friel finds out, only a change in mindset to truly put the customer experience first is likely to achieve this.
Many of us will be familiar with the mothers’ refrain of “I wants don’t get” but while many of us learned this lesson at an early age, it appears that insurers still haven’t quite absorbed it.
This is most obvious when it comes to managing the first notification of loss, particularly in the motor world. For insurers, early notification of an accident is paramount as it allows them to remain in control of the customer experience but most pertinently, it means that they can control the cost of the claim.
And the cost of motor claims is on the increase. According to Claims Metrics, part of WTW, claims inflation increased by more than 6% in the first half of 2021 resulting in an average cost per claim of £5,380.
It’s no wonder then that insurers are so keen to ensure that their customers call them first when an accident happens. Unfortunately, according to a survey by AA Accident Assist, what insurers want isn’t necessarily what they get.
The research found that nearly two-thirds (65%) of drivers would call someone other than their insurer following a collision. Given the scenario of a collision where nobody was hurt but the car required repair, 43% said they would contact their breakdown provider first, 20% of women said they would call their partner and 37% of young drivers said they’d call their parents.
Which suggests that insurer hopes of getting that first call will be, in the main, false. This is troubling as often the whole claims experience is dictated by FNOL.
“FNOL is the most crucial part of the claims process because it guides the way the entire claim is handled,” says Vicki Heslop, director of customer experience at Covéa Insurance.
“It should put the customer’s claim on the right track from the start but get it wrong and it can be very difficult recovering control. FNOL can make or break a customer’s trust in their insurer.”
But she concedes that while early notification is crucial to deliver a good claims experience, human nature can often get in the way.
“When a claim happens from a customer perspective, the range of emotions can be endless including shock, upset, anger, disbelief and much more,” she says.
Indeed, most in the market agree that the results of the AA survey aren’t exactly surprising.
“I don’t think people are unwilling to call their insurer in a time of need, it’s just that insurance is a compulsory purchase which customers hope they will never have to use,” says Stacey Goodchild, managing director of motor claims at Davies Group.
“I don’t expect many customers put the claims line contact number in their mobile phone just in case they need it, and many don’t carry the paperwork in their vehicle either. There is often an element of shock associated to the moment of an accident, so a parent or spouse can offer reassurance and support in that time of need.”
Even if they hold their collective breath like a frustrated toddler, insurers are never going to win in a one-on-one battle with human nature. They have to accept the fact that for the majority, their insurance company is not the first consideration in the immediate aftermath of an accident.
If human nature cannot be changed, then the operations of insurers must if they are to ever reach the FNOL Valhalla they seek.
“Insurers largely wait for customers to report an incident to them but in today’s connected world with artificial intelligence everywhere, is it right for insurers to wait for customers to call them when they need to make a claim in 2022?” asks Paul Stacy, director at Insurance and Mobility Solutions, a vehicle and driving data business.
He argues that insurer claims divisions are always last to the tech party and jokes that they “turn up without any wine too”. However, he says the blame for this does not lie with the claims directors as they are constantly under pressure from the rest of the business to reduce claims costs. But he says the tide appears to be turning.
“Normally, we would sell telematics and data services to the marketing, underwriting or pricing director,” he says.
“Now we are seeing claims directors signing those cheques. They are looking at these super low-cost options that can give them proactive FNOL alerts at a fraction of the price of a classic black box.”
Improving the process
While the full range of modern technology has a role to play in digitising and improving the FNOL process, the one that is going to make the biggest difference of all is telematics. There’s nothing new about this tech but its capabilities are increasing all the time as the cost heads in the other direction.
“I watched the Aviva Pay as You Drive launch in 2005 and I was in awe. I thought it was going to change motor insurance forever but there were good reasons why it didn’t quite work at first,” says Mike Brockman, CEO of Thing Co.
“It was never going to work first time, but you learn about what you got wrong and how you can make it better.”
While it didn’t change motor insurance forever, the use of telematics had a huge impact in the young driver market where the majority of drivers have a telematics device of some kind fitted.
“The business case for telematics works for young drivers because of higher premiums,’ says Stacy.
“People kind of gloss over that detail and point to the fact that telematics is still only involved in 5% to 6% of the market but that’s because its only young drivers. What has changed is these new solutions – apps and dongles – are very cheap. It will now work for different niches.”
Telematics will continue to make progress on the pricing side of things, but it is at the other end, in the claim, where it could make the greatest impact.
“In the future, electronic notification, whether that is through an app on the phone or some other device, is likely to become the dominant approach to FNOL,” says Jim Loughran, CEO of E2E Total Loss Vehicle Management.
“Some of the current eFNOL solutions are just an app placed in front of a form. Very few of them actually trigger an action automatically so eFNOL is still an aspiration rather than a reality.
“Some are actively selling the ability, but it does rely on insurance companies integrating the app into their own systems and their suppliers.”
The drive towards digitising the claims experience has been in full flow for a number of years now but while money and time has been invested, the results have yet to materialise in terms of improved customer service or reduced costs.
Consulting firm Altus has conducted research into just how digital insurer FNOL processes are. Of the 44 motor insurers they looked at, 55% had an online FNOL facility.
“In reality, this is still a mixed bag of true self-serve FNOL capability (leading to a more efficient claims process) and online forms which lead to a call back, arguably staggering the notification into multiple steps,” says Patrick Hayward, senior consultant at the firm.
“Insurers should really be focusing on an omnichannel approach, enabling customers to raise and manage claims through the channel that suits them best.”
Greater traction
Despite this patchy picture, there are some organisations that are actively using eFNOL, companies like AX, a credit hire and fleet management company.
“We currently provide eFNOL in all our vehicles, so we are able to contact our driver as soon as an incident occurs,” says AX director of commercial sales, Steve Molloy.
“Why eFNOL hasn’t gained greater traction yet is that telematics companies are still battling with ‘false positive’ readings.”
He explains that these false positives occur when the device notifies the eFNOL of an accident or impact, but the ‘incident’ could simply have been the car going over a speed bump.
“This means that the resource cost of managing eFNOL is still expensive, but the telemetry is improving,” he says.
The solutions to the FNOL ‘problem’ appear to be out there and they are almost certainly digital, and a familiar impasse between tech and insurance seems to be holding things up. But it could be that the problem lies elsewhere, that the issue is cultural rather than technical.
Insurers are looking at this as a cost problem when they could and probably should be looking at it as a service opportunity.
“When it comes to claims, the telematics tech allows you to be much more proactive in FNOL because the device can go in the car and it has voice capability,” says Brockman.
“The human in the car can speak and the voice recognition software recognises the speaker. The FNOL agent will already have all of the circumstances of the accident, the location, how severe the accident was and through the G force measurement, whether it was fault or no fault.
“You have all the relevant info and you know what the customer was doing before the accident happened.”
In this scenario, the insurer has captured that all important FNOL without any input from the customer other than relating their experience. It is a tantalising prospect but one that is still nowhere near being delivered as a standard experience. But it is possible.
And it could give insurers exactly what they have been looking for without having to spend countless hours and millions of pounds trying to persuade the motoring public to make the insurer their first point of contact.
“From a claim point of view, what matters is that customers contact their insurer as soon as possible, and preferably within 24 hours. The sooner, the better,” says Margaret Scott, head of claims strategy and customer experience at Allianz Commercial.
“It is a great show of trust when the insurer receives the first phone call and our claims handlers always provide the best possible support, both emotional and technical, because they have the expertise to move things forward.”
The most important word she uses here is trust, an emotion that is in short supply in the relationship between the industry and its customers. But rather than hoping a customer trusts their insurer, an insurer can use its FNOL approach as the perfect way to build trust in their brand and the wider industry.
Much has been said in recent years about insurance moving away from simply selling policies and paying claims towards a much more service-based model, but precious little progress appears to have been made.
Changing point of view
If, however, insurers are to get what they want out of the FNOL process, they need to start looking at it from the customer’s point of view, not their own selfish, financial perspective. They need to start looking at FNOL as a service, an opportunity to wow their customers, rather than simply a process to be managed.
“Insurers should be taking steps to make the overall process of claiming as painless, efficient and coherent as possible – while maintaining the right level of control – by capturing the incident information accurately from the outset, utilising other data sources such as telematics devices, advanced driver-assistance systems and third-party damage analysis tools,” says Hayward.
That perspective is a client-facing one which is at odds with the financially focused one insurers currently hold. But if they are ever going to make real headway on their FNOL ‘problem’, they don’t just have to get over a tech hurdle, they have to get over that mindset hurdle. They need to start approaching the problem from a customer perspective.
Because what insurers are asking today is really pretty unreasonable. They want their customers to act in a certain way purely for the financial benefit of the insurer. There is no give in that scenario, only take. But if insurers were to get the tech right and pitch the importance of FNOL on the basis of a superior customer experience, they may finally find that they start to chip away at the intractability of human nature and the rising cost of motor claims.
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