California’s Camp Fire raged from November 8, 2018, until it was finally contained on November 25, becoming both the deadliest and most destructive wildfire in California history. The fire covered an area of over 153,336 acres and has destroyed over 18,000 structures, including nearly 14,000 single-family homes. Insured damage estimates are currently in the range of $10 billion USD. This, of course, comes on the heels of November’s Woolsey Fire and August’s Mendocino and Carr Fires, among many other, smaller incidents, combining to make 2018 a record year for wildfire destruction in the state.
The loss of more than 100 lives to these fires is tragic. The loss of property, however, was not unforeseen by insurers, who have spent the last few years increasing their risk assessment of area homes to the point that many insurers have deemed large areas of California homes uninsurable. This practice has become so widespread that the state has been forced to become more involved, relying on the California FAIR Plan as a last resort for the now 1 million plus homes deemed wildfire risks.
The risk is so great that area homeowners are now forced into a new normal of rapidly ascending premiums and shrinking coverages. A California Department of Insurance report found that from 2010 to 2016, complaints of residents being dropped by their plans or facing vastly increased premiums had tripled.
The Homeowner’s Expectations
The market may be shifting, but there are still plenty of Californians who have accepted higher rates as the price for keeping the homes they love. While it’s the prerogative of the insurance company to charge what they deem appropriate for their policies, consumers expect responses that are fast, accurate, and fair according to the terms of their policy. And what’s more, consumers are becoming increasingly willing- and able- to voice their dissatisfaction if those expectations are not met.
Catastrophes like the Camp Fire then become a crucial moment for brand loyalty. Fraught with emotion and unsure of the future, creating a positive customer experience in a moment of extreme need can win a customer for life, while mistakes or slights, real or perceived, can lead to a customer airing their displeasure across a myriad of social media outlets. So what constitutes a positive customer experience?
J.D. Power and Associates recently released a pulse study that measured policyholder satisfaction following the Michael and Florence hurricanes from earlier this year. Companies as a whole performed well: 87 percent of respondents stated that their insurance company had met or exceeded their expectations.
Chief among policyholder concerns was the communication from their insurance company. Opinions on communication provided a strong correlation to satisfaction, and again, those numbers were fairly impressive: 90 percent of policyholders reported being contacted by their insurance company for assistance, and 79 percent reported that their insurance had fully detailed their coverage options prior to the hurricane.
Consumers expected prompt, clear, and consistent contact, and showed they were prepared to reward those companies who performed well. Seventy-eight percent of customers who indicated they were “delighted” with their insurer’s post-catastrophe service claimed they will continue to purchase from the same insurer; that number dropped all the way to five percent for customers who were “displeased.”
It remains to be seen if insurers can reach the same standard for these wildfires. The wildfires present a number of obstacles that aren’t applicable to hurricanes. Wildfires arise quickly, leaving homeowners often less prepared, or unable to access important information. They may also keep both homeowners and adjusters outside of the affected area for a longer period of time, making it difficult to make rapid assessments. Furthermore, although California has relaxed its regulations to allow out-of-state adjusters help expedite the claims process, the state is still notorious for its byzantine regulations.
The Corporate Response
Of course, none of those mitigating circumstances matter much when you’ve found yourself without a home and without any answers. Even when there isn’t a whole lot the company can do about the former, it’s quite clear that consumers have some resolute expectations about the latter. So what recourse do the companies have to ensure excellent customer service in a troubled time?
- Increase claims personnel available to handle the claim volume. Farmers shifted the responsibilities of more than 130 claims staff to help sufficiently cover the North Bay fire in 2017- a significantly smaller blaze than Camp. This is a common practice, but in dire times, even more help may be needed. On-demand workforces have become a useful augmentation for insurance companies, and as long as they’re up on California’s regulations, the state is actively encouraging that companies take advantage of out of state help
- Leverage administrative assistance. While adding adjusters is a good move, not every part of the wildfire claims process needs to be handled by the adjuster personally. Cloud-stored video walkthroughs are quickly becoming a best practice for fire-risk homeowners, but the process of cataloging the contents of those videos is time-consuming. So, too, is the process of taking statements, not to mention the number of missed calls- and lost time- that comes with attempting to make contact. A claims services company like ACS can take on these administrative roles while freeing up adjusters’ time for personal communication: a huge win for brand loyalty.
- Leverage emerging technology. There has never been as many tools available to collect and verify information as there are today. Social media posts can confirm a host of information, including establishing identity, which can be an issue in fire claims. Satellite imaging and photos from airplane flyovers can establish before and after comparisons that can serve as a framework for prioritizing claims and initial communications. Even drones are now being used to perform damage assessments, often before adjusters would be able to access the area on foot.
As tools and resources for customer service improve, insurance companies have the ability- and the imperative- to fulfill their commitments to their customers in as timely and accurate a manner as possible. Although the temptation to recoup short-term losses will be strong, it’s important to avoid a much bigger mistake and create an evangelist against your brand. By ensuring they do everything within their power to provide a fast, friendly, and comprehensive customer experience during an especially trying time for the policyholder, insurance companies can continue to build upon the goodwill they created in handling hurricane claims earlier this year.