age age of the vehicle population
naturally increased. This metric
currently sits at 11. 5 years, and IHS
Automotive predicts it will increase
to 11. 7 years by 2018.
Why does this matter? According to CCC, total loss frequency
increases as the vehicle population
ages. From 2011 through 2015,
more than 70 percent of all total
loss valuations were attributed to
vehicles older than seven years.
During that span, the percentage
of all claims declared a total loss increased from 14. 7 percent in 2011
to 15. 4 percent in 2015. As the pool
of claims increases, so does the
need for keeping customers and
employees satisfied and engaged.
Volume isn’t the only metric
trending up that affects the satisfaction and retention of these two
groups. Given the rise in total loss
frequency, it’s no surprise that average length of rental (LOR) — a
proxy for average length of repair — has
also increased. According to Enterprise
Holdings Inc., average LOR rose to 11. 5
days in the fourth quarter of 2015, up 0.3
days year-over-year. Assuming a daily
rental charge of $31, this would equate
to approximately $356.50 per claim.
With claims departments facing constant
pressure to reduce cycle time and costs,
a higher average LOR is certainly unwelcome news.
One metric that no industry likes to see
trending downward is customer satisfaction. Unfortunately this is a figure that
P&C claims departments are struggling
to boost in a significant way. According
to Capgemini’s World Insurance Report
2015, throughout the insurance lifecycle,
claims servicing has the lowest percentage of customers with a positive experience. The report also demonstrates that
customers who file an insurance claim
tend to have lower positive customer experience levels than those who do not.
In North America in 2014, 37 percent
of the customers surveyed by Capgemini
reported a positive experience with auto
insurance if they made a claim in the
past year, versus 46 percent of custom-
in the 21st Century
In the property and casualty insurance industry, there are no greater influences on a company’s success or failure than its customers and employees. Keeping these two distinct groups happy and
engaged is critical, but can be challenging under any circumstances
— even more so given the expectations that customers and employees
have of companies in today’s tech-savvy, on-demand economy.
Technology offers opportunities to boost customer retention and
employee engagement, but as America’s insurance sector faces new
challenges, carriers will have to act fast in the competition to attract
more customers, as well as the workforce’s top talent.
Picking up speed
According to CCC Information Services,
Inc., automotive insurance claim frequency and loss costs increased in 2015,
finally returning to pre-recession levels.
But what’s driving this trend? In the de-
cade preceding the recession, new-vehi-
cle sales averaged 16. 7 million units per
year. That figure plummeted in 2008, and
remained below the prior 10-year aver-
age until 2015, resulting in approximately
22 million fewer new vehicles hitting the
road during that time. As consumers delayed new-vehicle purchases, the aver-