Uncertainty is the root cause of variability in any business, and a dominant factor in increasing risk. When a crisis or a catastrophic event occurs, uncertainty and risk become amplified. Insurance companies that deal with mitigating these risks should be prepared for these events, especially, in the context of contact centers. The volume of calls can increase due to catastrophic events such as pandemics, natural disasters, and system failures. A crisis can send these call centers into a tailspin if they are unprepared, leading to customer dissatisfaction and operational failures.
The Current Pandemic and Its Effects
The insurance industry may be one of the worst affected sectors by COVID-19. Though the life and health insurance verticals have had more serious ramifications, general insurance has also been impacted by the severity of the crisis. Due to a variety of issues such as business interruptions, event cancellations, and travel cancellations, the amount of losses that may be needed to be paid out by the insurers could be huge. A preliminary analysis1 by The Association of British Insurers (ABI) estimated that a total of £1.2 billion (excluding London market and Lloyd’s market) in claims to be paid due to COVID-19.
Business interruption claims, in general, are paid out when there is physical damage to property, which would exclude pandemics. Most of these insureds comprise of small and medium enterprises (SMEs). In attempts at reviving the economy, policy makers in various nations have been requesting insurers to pay out claims irrespective of those exclusions2,3. According to Lloyd’s of London, insurers across world could lose more than £159 billion due to the global pandemic4.
In addition, the Landmark test case3 brought up by Financial Conduct Authority (FCA) against some of the major insurers in UK, has created a looming uncertainty. The test case has been raised over the issue of ambiguity in policy wordings for paying out business interruption claims. Even though the UK government had facilitated a relief package3 of £330 billion in loans for businesses, business interruption claims have been filed by many companies.
Considering the aforementioned newly arising issues coupled with standard information seeking, it is expected that there will be a huge surge in customer enquiries for P&C insurers.
According to the ABI1, call volumes have increased over 200%, for British P&C insurers since the emergence of COVID-19. Another report5 by Pindrop, a contact center security firm, reported a rise in call volume by 300% for both insurers and financial firms.
Due to increase in call volume and a reduction in capacity for contact center staff due to remote working conditions, there have been many cascading effects.
Handling times have increased along with waiting times due to reduction in overall capacity, which has led to higher call abandon rates. An increase in uncertainty and risk has led customers to panic, which is taken advantage of by fraudsters. Remote working has also reduced the capacity of the employees to resolve the calls, stressing the already strained staff.
In the near future, it should be expected that the volume of insureds in the general insurance industry may decrease due to the economy, employment rates, and the stock markets being in turmoil. For example, the Insurance Information Institute (III)7 estimates that private passenger auto insurance will be reduced by 23%. In addition to these direct threats, the slashing of interest rates by central banks could lead to insurers earning less than expected investment incomes. The initiatives taken to improve economic conditions can be applicable to any future crisis and hence, the mitigating initiatives mentioned will be relevant for any crisis as well.
Mitigating the Surge of Enquiries
In order to survive in these less-than-ideal market conditions, insurers must address customer claim and policy related queries with the utmost care.
Digital customer services, along with contact center optimization, remain a key area for improvement in this respect.
Due to the human involvement and the familiarity of the contact center processes, customers sometimes prefer to resolve their issues with the help of contact center executives. This makes the process a bottleneck in terms of customer satisfaction. Insurers must be able to accommodate the customers on a priority basis. To reduce the waiting times of customer issues, optimize employee capacity and implement certain procedures. An omnichannel presence to interact with customers will be an advantage to insurers, as the enquiries can be redirected to different channels based on their priority. To achieve the intended outcome, the interconnectivity and interoperability of these channels need to be emphasized.
Contact Center Optimization
Customer satisfaction varies based on a call center’s efficiency. In a reactive scenario, customers tend to get dissatisfied due to ineffective resolutions that take long amounts of time. In the case of a proactive scenario, contact center employees would be able to provide effective solutions to the customers with shorter waiting and handling times. A proactive scenario can be achieved through improvements in people, processes, and technologies backed by sound analytical solutions.
Fraud Detection System: Every day in the UK, around 1,300 insurance scams are carried out, with an average of £12,000 in scams uncovered8. Real-time fraud detection methods must be developed through supervised and unsupervised classification algorithms using call parameters. Filtering these fraudulent calls safeguards customer data and reduces additional costs for insurers by minimizing fraud expenditures. As per a research article9, advanced models can detect 90% of fraudulent calls in real-time.
Additional uses for analytics include:
- Triage Modelling: Research10 carried out by NewVoiceMedia finds that poor customer experience in the US costs companies around $41 billion each year through contact center experiences. Based on statements from customers, a classification model could help build real-time triage models. Employing a triage model reduces average waiting times for customers, thereby reducing call abandon rates and improving customer satisfaction. A BMC Healthcare Services article11 reveals that waiting times can be reduced by one-third using triage models.
- Dynamic Staffing Model: An analytics-based capacity management and optimization tool can enable optimal staffing and improve service level agreement (SLA) performance. Deploying of dynamic staffing models can benefit insurers by optimizing costs while improving efficiency.
- Call Volume Forecasting: Forecasting call volumes using dynamic techniques can help contact centers balance their workload and reduce excessive staffing.
- Digital Intuitive Virtual Assistant (DIVA): This is an advanced digital solution that provides a 360ᵒ customer view, proactive contextual insights, and embedded analytics combined with automation.
- Reducing Average Handling Time: Average handling time can be reduced with diligent training for standard operating procedures (SOPs) and careful monitoring. Real-time dashboards with key performance indicators (KPIs) and balanced scorecards can help this cause. Speech-to-text technologies can augment the support executives to provide seamless experiences.
- Intelligent Call Routing: Intelligent call routing leverages call data and the client data to optimally route calls to the appropriate employees or agents. This can reduce average handling times by 10% and close rates by 8.5%, leading to substantial financial improvements12.
- Repeat Call Model: A repeat call model is a predictive model that predicts the occurrence of repeated calls. Through the model, a corrective action can be called through digital platforms.
Digital Service Center
Due to the scalable and interconnected data, many insurers are now switching to digital platforms. The upcoming surge of enquiries may lead to problems related to scalability for conventional technologies. Insurers should understand the benefits of leveraging digital platforms.
Insurance agents are the primary point of contact for customers to resolve their issues. Agents need to be trained well on the usage of enhanced knowledge articles. They should also help customers become accustomed to new digital platforms that can reduce the load on critical processes. Agents should also be provided with the necessary remote working support during the current crisis. The insurers can also build and operate digital agent chatbots, trained using advanced natural language processing (NLP) techniques, to reduce the volume of enquiries to the physical contact center. Through virtual agents, customers can directly buy their insurance from insurers, which can translate to lower premiums for customers and higher volume for insurers.
Claim handlers and claim adjusters would be responsible for quickly and accurately investigating claims to ascertain the causes and risks covered. In order to avoid any unwarranted response from the customers, a remote claim handling mechanism should be implemented to attain a better claims settlement ratio. According to NAIC3, several state governments in US have already requested insurers to utilize remote claim verification methodologies to expedite the settlements. With the advent of geospatial analytics and image analytics such as image processing to pixelate or de-pixelate through advanced deep learning techniques, minute details of claim incidents can be analyzed with less physical intervention in shorter periods of time. According to a Forbes article13, 3D image processing has already helped several automobile insurers to expedite their claims settlement process, thereby reducing their allocated loss adjustment expenses (ALAE).
Digital support employees should provide enhanced support through increased focus on enquiries through digital platforms like web forums, email, mobile apps, and texts. Building connectivity between omni-channel support systems can reduce duplicate enquiries, improving customer satisfaction. A DIVA interface, supported with an effective database management system (DBMS) and Big Data solutions can accommodate the scaling up of enquiries. Techniques like sentiment analysis and topic modelling can automatically classify the tone of a customer’s query and categorize the problems effectively. Real-time web analytics can also be used to predict the next best course of action for a customer, resolving the enquiry through digital platforms without human intervention.
Insurers should turn the current crisis to their advantage by providing digitally tailor-made resolutions to customer problems. As the scope of risk reaching new horizons, P&C insurers should carefully develop their insurance policies with new risk profiles, and leverage digital platforms to communicate with their customers. With the pandemic disrupting several business activities, the surge of enquiries to the contact centers of P&C insurers can lead to severe customer dissatisfaction and cascading issues if mishandled. The implementation of techniques to mitigate the surge during this crisis will be instrumental in ensuring customer satisfaction for insurers.
Innovative technological and analytical solutions can be implemented by the insurers to mitigate the mismanagement of customer enquiries, thereby improving several key contact center metrics. The scope of these improvements include, but is not limited to, reduced costs, lower call volumes, fewer repeat calls, decreased hold and wait times, better average handling times, and decreased call abandon rates. Unlike conventional technologies, the majority of these technologies can be easily scaled up due to their advanced data processing techniques.
For insurers, contact centers and digital service centers play a crucial role in improving their brand image during any crisis. Digital, analytics, and enhanced human support systems provide these centers with a proactive approach in dealing with the customer enquiries, thereby improving customer experience and brand equity.
- https://www.abi.org.uk/news/news-articles/2020/04/ covid-19--payouts-of-over-1.2-billion-likely-to-be-made-tocustomers- according-to-latest-estimate-from-the-abi/
- https://www.insurancebusinessmag.com/us/news/ breaking-news/retroactive-business-interruption-measurescould- bankrupt-us-insurers-in-two-months-225240.aspx
- https://www.fca.org.uk/publication/corporate/biinsurance- test-case-agreed-facts-1.pdf
- https://www.insurancejournal.com/news/ international/2020/07/20/576166.htm
- https://www.pindrop.com/blog/flash-report-five-insightsof- covid-19-in-the-contact-center/
- https://www.persado.com/2020/03/call-centers-whathappening- whats-next-and-how-language-can-help/
- https://www.iii.org/sites/default/files/docs/pdf/q42019_ ecosnapshot_042720.pdf
- https://www.abi.org.uk/news/news-articles/2019/08/ detected-insurance-frauds-in-2018/
- https://cybersecurity.springeropen.com/articles/10.1186/ s42400-018-0008-5
- https://www.vonage.com/resources/articles/themultibillion- dollar-cost-of-poor-customer-serviceinfographic/
- https://bmchealthservres.biomedcentral.com/track/ pdf/10.1186/s12913-019-4660-6
- https://www.nice.com/optimizing-customer-engagements/ Documents/nx_mattersight_connection_slick_2019.pdf
- https://www.forbes.com/sites/bernardmarr/2015/12/16/ how-big-data-is-changing-the-insurance-industryforever/# 78f50973289b
Dileep Kaladasi Kumar