When an insurer receives a customer’s notice of loss, it presents the single best opportunity to deliver on the promise of differentiated claim service. But it can also leave a long-term negative impression on the customer if the process is not efficient and does not effectively advance the claim forward without the need for call backs. Since customers expect to report claims how and when they choose. Self-service options for straight-through processing of low-complexity claims are another way that insurers can differentiate their service. An effective and efficient notice of loss organization, combined with fast-track claim handling during FNOL, can transform operating processes while allowing insurers to realign claim resources with more complex claim-handling activities.
When an insurance customer or broker files a loss or damage claim with an insurer, the clock starts ticking. From that moment on, the customer’s service expectations begin to be impacted by his or her interactions with personnel, by the clarity of process explanations, and, ultimately, by how quickly the claim is processed. That moment of truth, known in the industry as the first notice of loss (FNOL), must be handled in an efficient, organized, predictable way because it affects customer satisfaction and retention, in addition to cycle time and downstream claim financials.
In such a competitive and commoditized industry, the way that a company handles FNOL can separate it from the competition. Customers are becoming increasingly price-sensitive, and using insurance information available at their fingertips, such as online quoting tools. If your insurance company can provide a claims experience that leverages technology solutions, reduces overall cycle time, and ensures customer satisfaction, it will create a distinct competitive advantage. And just as important, an effective and efficient end-to-end claims solution will improve claim mitigation efforts while having a positive impact on loss and expense ratios.
The first encounter
When a customer files an insurance claim, the FNOL is often the carrier’s only personal interaction with the policyholder. Setting in motion a smooth and efficient claims process, therefore, is crucial to customers satisfaction and retention.
Unfortunately, in many cases the FNOL can be the first experience in a long cycle of inefficiency, frustration, and inconvenience for the customer. That may be because, in light of constantly evolving technologies and customers’ interactions with other companies, insurance customers increasingly expect the claims process to be digital, transparent, automatic, and intuitive. Because many insurance carriers continue to struggle with legacy systems and processes that present challenges (such as an inability to capture and mobilize data from various sources), the FNOL process is not as effective as it could be.
However, by leveraging lean process refinement, digital technology, and analytic claims solutions, a company can improve the claims process. That starts with an effective FNOL, and ends with better-managed claims and lower loss costs.
The impact of an effective FNOL process
A customer’s first call to the insurance company about a loss is the action that starts the entire claims process. The claim intake and routing process has a significant impact on customer service, retention, cycle time, and claim mitigation efforts. Speed, accuracy, and transparency in the claim process are the most important factors contributing to customer satisfaction—and satisfied customers have a 13.5% better retention rate.
Traditionally, FNOL operations have been high-cost operations with inefficient processes that are not customer-centric. In this case, claims are segmented manually, leading to sub-optimal claims routing, multiple file transfers, and cycle time delays, all of which negatively impact financial outcomes as well as customer experiences. In addition, high employee turnover, a lack of workforce management, and the absence of resource-forecasting expertise can also have a significant impact on service levels and the overall quality and consistency of the customer experience. But carriers have had a difficult time keeping up with significant changes in claim volume (such as the aftermath of a hailstorm or other weather event) in order to support customers’ round-the-clock needs while also keeping pace with changing technology demands.
These traditional practices restrict carriers’ ability to use FNOL as a jumping-off point for outstanding service, immediate complex claim routing, and identifying low-complexity, fast-track claims for initial claims handling and straight-through processing. When the FNOL is not properly triaged, the claim takes longer to get into the hands of the professional who can handle it, and claim settlements are postponed. That can drive an increase in claim costs by adversely impacting cycle time in addition to delaying mitigation efforts and exposure identification.
Developing FNOL solutions
Continually evolving technologies make it easy to develop a streamlined process that can be used by anyone on the team, whether they are new staffers, temporary workers, or longtime personnel. Solving the FNOL problem should incorporate analytics, technology solutions, and lean process strategies, and requires attentiveness to key financial levers. While the exact solution will look different for different companies, there are a variety of common traits such as:
- Digitizing intake. Automating multichannel intake and claims routing can influence cycle time and claim outcomes.
- Automated segmentation with embedded analytics. By segmenting claims automatically, less-complex claims and 1st-party coverage handling can be addressed as part of the FNOL process, reducing consumer and carrier effort during intake and contributing to customer satisfaction.
- Prospective resourcing. Workforce management forecasting can support volume surges and customer needs 24/7.
- Right-sourcing. Companies can reduce loss-adjustment expenses and maintain consistency during volume spikes by leveraging an on-shore/off-shore strategy for end-to-end claim handling at claim notice.
The key to improving the FNOL process lies in generating greater customer satisfaction and launching a more effective claims process.
A better solution to claims handling can transform a company’s current process, and allow the carrier to reallocate highly compensated resources toward more complex claims handling activities.
Finally, a solution must support all intake channels that customers and brokers expect to use while integrating with suppliers and service providers. In so doing, firms can mobilize the data captured during FNOL, automate the segmentation process, and create a positive impact on claim outcomes.
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