Trust Your Customer
How digital trust strengthens customer loyalty
Fraud analysis and customer experience
"The insurance industry is stuck in a world where customer loyalty is awarded to those who can deliver the best experience. But insurance companies can’t just underwrite every policy and pay every claim – at least not right away. They need to do their research, and they need to do it instantaneously.
There’s a key factor holding back the speed of insurance: trust.
While trust is important in any industry, it’s of ultimate importance in ours – it’s the very concept insurance is built on. For our industry, trust is everything – and it’s as complex and delicate as the relationships it connects. Trust is easily shaken and is nearly impossible to regain once lost. Customers will move to another insurer if interactions are not satisfying.
Automating might not seem easy, and letting go of something so human is hard. It feels unnatural. However, by using the right technology, most of the customers become trusted customers and customer experience and loyalty actually improve significantly.
The good news is, that organizations that can instil digital trust will be able to participate in 50% more ecosystems to expand revenue generation opportunities. It is time to start building the relationships your customers demand and deserve.
The challenge that every company faces every day has been the same for hundreds of years: attracting and keeping the right customers. In the past, there was less choice and customers were more patient. They searched, compared, considered and made a choice. This process could take a little time.
That is radically different now. Technology enables very quick orientation and decision- making. This causes customers to become impatient. They want to be informed very quickly and demand real-time decision-making and service.
And of course insurers and other financial service providers want to comply with these demands. Good processes are at the heart of maintaining customer trust. At the same time however, trust is a key factor holding back the speed of insurance. But this haste can also be an obstacle to due care and responsible decision-making on the part of the insurer. Especially from the viewpoint of fraud prevention. This is the subject of this e-book. We discuss the alleged conflict between customer interest and due care. Is there a conflict? The answer is: no! It fact it is an opportunity to achieve and maintain good customer experiences and loyalty.
Trust Automation
The conditions that shape the insurance landscape have brought trust directly to the forefront of conducting good business. Trust is hard to maintain in service-based businesses, in part due to the volume of interactions.
Running technology to automate trust allows insurers to improve operational efficiency following the 3 pillars of trust:
• Standardize, safeguard and automate competence; deliver products & services through process excellence & know-how;
• Increase customer satisfaction by showing your motives; driven by the intention to do what’s best for your customers you interact with and think how to balance the needs for different groups when needed;
• Enable fair processes and treatment of customers. Processes should be open and transparent, both for trustworthy customers as for those you need to verify.
Holistic approach
Not so long ago insurance was mainly concerned about the risks to be covered by means of an insurance contract. The contract had to cover many risks and be legally watertight. Discussions with customers and the final choice were purely about the contract. Of course, insurance is still about the cover and the right premium. But many insurers now opt for an holistic approach. Insurers try to understand individual customers and to provide a product that fits a particular customer at that particular time. Insurers offer individual solutions, which take into account specific wishes and lifestyle or are based on information gathered by technology, customized and on-demand.
In line with this, many insurers offer additional services such as repairing damaged items, the rapid deployment of emergency services and arranging replacement transport, etc. Even more recent is providing advice on personal safety, potentially harmful driving behaviour or detecting potential sources of damage. Advanced methods of data analysis and location determination are used for this.
The Road to Insurtech Innovators
In recent decades, insurers have been followers of technology. For a very long time, systems that were implemented in the 1970s formed the basis for all processes. Of course, new elements were added every now and then, but the basis worked pretty well and stayed as it was.
But to be able to make use of the huge digital developments and the resulting opportunities, many insurers are now busy replacing their core system. They are looking for a system that makes it possible to process big-data and Artificial
Intelligence. Many of these systems are still under development. This means that insurers, after having been followers of technology for decades, have now become forerunners of technology.
Partnership
Traditional insurance companies operated as independently as possible. They developed and built their own systems, did not share information and were 100% owners of all resources.
This is also changing. Many partnerships have arisen between insurers and insurtech technology suppliers who specialize in certain applications. These insurtech companies, develop and manage advanced applications to make special customized offers to insured parties via smartphones and the data that smartphones can collect. Hence, insurance on-demand. It is significant that the technology supplier can also take the initiative to enter into a partnership with an insurance company.
A great example of such a partnership is cooperation with specialists in the field of risk analysis and fraud detection and compliance to screen every interaction immediately on informational fairness. Advanced systems, which run outside the company and are continually being improved, help the insurer to find suitable customers and prevent and detect fraud.
In addition to this, these partnerships have led to a technological advantage that can be retained because innovation is the lifeline of the insurtech sector.
Focus on customer experience
In the recent past, the policy of insurers largely revolved around distrust by default: financial management, damage control and controlled interactions. Now everything is about the experience of each individual customer. The market is no longer a bundle of statistics and generic group characteristics based on market research. The market is always one unique individual who is approached and provided with service in a manner that is suitable to this individual. This creates actual mutual involvement.
Driven by the intention to do what’s best for your customers you interact with and think how to balance the needs for different groups when needed. Technology enables these smooth interactions.
Fraud more difficult to detect
As data availability increases, systems become more complex and diverse. This has an impact on the speed of the decision-making, which makes it also becomes more difficult to prevent and detect fraud. Therefore in different departments, trust is a key factor to run your business.
• At underwriting, automation trust makes sure only trustworthy customers enter your book of business.
• At claims, trusting your good customers allows them for a smooth process, while the system ensures that suspicious claims never go unnoticed, and will automatically flag unwanted behavior.
• At investigations, you can verify trust you’ve invested and reveal all suspicious behavior.
Where previously a gut feeling of the employee would protect the company, this is really no longer enough. No matter how good the underwriter or claims adjuster is, the large numbers and the required speed make the use of advanced technology inevitable.
Dilemma? No dilemma!
If the likelihood of fraud increases, you can only reduce the size of gaps in the net. This means that you require information and need to ask questions and carry out checks.
All this is necessary to ensure that fraudsters do not take out insurance in the first place and, where they are (already) a customer, they are discovered in time. But you do not want the acceptance process to stagnate or become unpleasant for the customer.
Some see this as a dilemma. On the one hand, advanced risk selection and fraud signalling could lead to a worse customer experience; resulting in customers leaving the insurer, worse image and worse results. On the other hand, if you are too easy, you open the door to fraudsters and attract more fraudsters. This also leads to a bad image and worse results.
In fact, there is no dilemma at all. Neither lead to the result you want to achieve: a good image and better results!
Trusted customers take precedence
The question is how can you structure risk selection and fraud detection in such a way that it does not deter customers but allows you keep fraud at bay and optimize the portfolio.
The answer is simple: move from distrust by default to trust automation. Make it easy for (potential) customers to trust. The vast majority of customers can be trusted. It is only a small part who not trustworthy. These you need to pay extra attention to. Technology is the key to achieving this.
When using a Trust Automation platform all your customers are screened the exact same way. Insurance risks or potential for fraud are highlighted. This systematic approach allows you to streamline the policies or claims with low risk levels and focus your energy on the higher risks.
But who to trust?
Fortunately, the vast majority of your customers are good customers. And you know them, often for years already. Still, having objectifiable resources to assess trustworthiness can support you in all interactions with your customers. Trust automation technology allows for normalization and standardization of high volume processes, while still allowing highly trained staff to provide feedback and support exceptions when necessary.
Examples are:
• Primary verification, in which available sources are consulted to check whether the personal details are correct, the given income is correct, there are other comparable insurance policies, the bank/credit card details are in order, any agent is reliable, etc.;
• Text mining, where large amounts of text are analysed for patterns and tendencies;
• Anomaly detection, identifying items or events that do not fit within the expected pattern;
• Social network analysis, whereby social structures are mapped out on the basis of many sources and persons who do not seem to be related to each other can still be connected;
• Voice analysis, which uses automated voice analysis to catch signals that give an indication of someone’s state of mind (relaxed, stressed, secure, insecure, etc.);
• Financial risk analysis, in which the financial risk of a company or person is charted on the basis of public sources (creditors, previous bankruptcies, unclear shareholders, previous losses, temporarily uninsured, etc.);
• Predictive modelling, in which the likelihood that the customer in question is unreliable or a claim is fraudulent is calculated on the basis of (a selection of) the above methods.
Reliability score
This score shows when a claim or policy is above the insurers risk threshold for expedited processing.
Green light
Trusted customers receive a green light and the insurer can expedite services. They receive their policy or claim for damages via the priority lane of the STP process. These are by far the majority of customers. Customers with a low risk score do not notice any controls occurring the background. The customer experience is straightforward and the customer is left feeling like they are trusted by the insurer. If at some point in the process a score shifts from low risk to a higher risk the customer is more understanding because they have been shown trust to this point.
Well-intentioned customers will not perceive basic control as disturbing, on the contrary. These customers have nothing to fear and will be happy that the insurer is making visible efforts to keep fraudsters at bay. Good customers want to do business with good companies!
Amber light
Customers for whom, on the basis of claim and damage behaviour or other grounds, there is doubt about their intentions, morality and reliability are given an amber light. They are therefore not in the priority lane. Their policy application or claim will be flagged for verification. Those who are not in the priority lane have extra motivation to ensure that the insurance remains in place and will in many cases refrain from trying to commit fraud.
Red light
Finally, those customers who seem unreliable on the basis of the calculation of probability. They get a red light and can be turned down by insurance company. In the event of a claim, it will be subject to a thorough investigation.
Benefits for High Trust customers
High Trust customers benefit from speed. Transactions happen at a much faster pace – allowing the customer to handle their business and move on with their lives.
Benefits For the Insurer
Customers are not the only ones who benefit from a high trust relationship. By expedited the due diligence on low risk customers the insurer can focus resources on the high risk transactions. Given there are fewer resources that are higher risk it also means a potential reduction in overhead.
It also cannot be ignored that the speed gained from real-time risk checks lead to higher customer satisfaction and hopefully better retention among these highly valued customers.
Operational benefits
A large stream of trusted customers, handled via the priority lane, provides operational benefits. Trust Automation empowers your employees to focus on providing fast and reliable services, without burdening them out on error-prone, manual tasks. When, for example, payment can be made faster and the repair of a car takes place faster, this saves on the costs of a rental car.
By providing targeted information employees know where to focus their energy. For example - Adjusters who are shown real-time risks know where to focus their investigation. This leads to better referrals and fewer false positives. This is not only efficient, but also more fun for the Adjuster who now gets to improve their fraud fighting skills. Better referrals lead to better investigations, which lead to more accurate outcomes – thereby increase the impact of your SIU department.
Whether improving the speed at which Adjusters can process a claim, or helping pull together data for faster Underwriting analysis a Trust Automation platform increases your operational effectiveness. It is easy to see how this can have a direct impact on your combined ratio by improving efficiencies on your expense ratio and your loss adjustment expense.
Conclusion
Fraud analysis seems to stand in the way of trust automation, customer loyalty and customer experience during this period of rapid orientation and interactions. Impatient customers want to be informed very quickly and demand real-time decision-making and service.
This e-book has shown that the opposite is true. A well-organized system of trust automation means that the vast majority of customers can receive better service. They are trusted and receive the treatment that someone who is trustworthy deserves. This is not at the expense of the image and results of the company. Not at all. Technology helps to improve customer experience and to strengthen the loyalty of customers. At the same time, insurers benefit from screening all interactions in a consistent, accurate and unbiassed manner, while maintaining the opportunity to add subject matter expertise when needed. Ultimately, it is all about trust.
About FRISS
FRISS is the leading provider of Trust Automation for P&C insurers. Real-time, data-driven scores and insights prevent fraud and give instant confidence and understanding of the inherent risks of all customers and interactions.
Based on next generation technology, the Trust Automation Platform allows you to confidently manage trust throughout the insurance value chain – from the first quote all the way through claims and investigations when needed.
Thanks to FRISS, trust is normalized throughout the organization, enabling consistent processes to flag high risks in real time.
Further reading:
Gartner explains why trust is foundational for the future of insurance in this blog:
Trust is Foundational for the Future of Insurance - FRISSWatch the video on Trust Automation to learn how this methodology supports your business: here
FRISS supports the future of the policy lifecycle, in this quick video we explain how: here
CEO and Co-Founder Jeroen Morrenhof explains how FRISS is looking to make insurance more trustworthy:
How FRISS is looking to make insurance more trustworthy - FRISSFraud is still a topic on the agenda. Learn about the latest trends in the 2024 Fraud Report:
Insurance fraud insights 2024
