Insurers are under continuous pressure to improve and enhance their service levels for brokers and insureds. This will be more important than ever in 2023, as companies battle significant headwinds related to economic inflation and supply chain challenges.
Inflation is not a new challenge for the insurance industry. History has shown that the industry can cope with annual increases in insured values and costs. What is unique about this post-COVID-19 pandemic inflationary period, according to Definity CEO Rowan Saunders, is the “unprecedented” pace of interest rate increases, which could (and some believe it already has) tip Canada into a recession.
Economic challenges have also compounded other issues, primarily shortages and delays in the supply chain – trends mostly triggered by the pandemic. As Saunders pointed out, fixing cars, homes, and businesses is “much more difficult” today than it was pre-pandemic.
“We’re moving into a rating environment where consumers are stressed,” the Definity CEO added. “In certain markets, there’s been very firm P&C conditions for a number of years. We were thinking that might normalize, but it doesn’t look like that’s going to be the case. And as that [continues] into … 2023, we could very well be into a recession [which puts] much more pressure on service as well.”
Service levels have been difficult for insurers to maintain due to an industry-wide staffing crunch, with firms struggling to allocate enough resources to call centres and customer service roles handling administration and claims. The staffing issues were also compounded by the COVID-19 pandemic.
Testing times present an opportunity for insurers to add value and enhance broker and customer relationships. This is a top priority for CAA Insurance, according to group president Matthew Turack, as the firm is still building relationships with independent brokers across Canada after entering the broker distribution market in 2017.
“Service and [our] service commitment is extremely important to us at CAA,” said Turack. “We look at: What can we control? What can we do with our team and with our staff? What do we owe to our brokers as a commitment to them, and to insureds directly as a commitment to them, and to the wider community? What can we do around that service level?”
Turack said he hears one demand day-in and day-out from broker partners and insureds – strong communication.
“Our brokers and insureds want us to communicate in real-time, to be there to answer the phone when [they] call, and to respond in a rational, reasonable period of time when [they] email,” said the CAA group president. “Don’t take a week or two weeks to get back to [them]; 24 business hours is reasonable - and make sure that you constantly communicate.”
Communicating bad news is not always straightforward. As Saunders pointed out, many brokers and insureds are struggling with insurance rate fatigue after multiple years of premium increases. Now, they’re dealing with wider economic challenges like inflation and a potential recession, as well as ongoing supply chain woes.
Turack commented: “We can’t create shingles automatically to appear when there’s a shortage of shingles that we can use to fix a roof, or a bumper on a car that needs to come from another country. That’s not in the business we’re in, but we absolutely can communicate to our brokers and our insureds: What’s the status of their claim? What’s the status of their repair? Is there going to be a delay?
“That ongoing communication, that open and transparent communication is where you build the trust. That trust, especially during these times … and maintaining that trust, to me, is the most important thing.”
