19th April 2023
The Financial Ombudsman Service (FOS) annual report is an interesting read for anyone working within the industry. Detailing the nature of the most common complaints, as well as those most frequently upheld, it provides genuinely useful insights into how financial services businesses can better manage their products and services. This year the report brings the interesting news that upheld complaints rates against insurers once again equal pre-pandemic levels, with 28% of complaints being upheld. So, what does this mean for the insurance industry?
The fact that insurance complaints have returned to pre-pandemic levels isn’t wholly surprising. As normality has returned, more claims have come through. However, against a backdrop of the global talent shortage and a problem with talent retention in claims handling, service standards could reasonably be expected to drop. The widely reported issues within supply chains, in particular in the motor and home claims processes, are also contributing to delays – in some cases significant delays – therefore customers become frustrated prompting them to escalate complaints.
The problem is that customers don’t care about the reasons behind delays or what they see as poor service. Only how they are being personally affected. If complaints continue to rise, backlogs are likely to accrue, reducing the firm’s ability to adequately meet the expectations of the customer or the FOS. With the focus on good outcomes very much being the topic of the moment with the Consumer Duty imminent, firms shouldn’t be allowing this to happen.
What do upheld complaints mean for insurers?
If the FOS upholds a complaint against an insurer, the insurer will generally be asked to pay financial compensation. And with compensation limits recently raised to £375,000 for events which occurred after 2019, just the financial impact alone is not an outcome to be taken lightly, but it’s also not the only consideration.
When an investigation is launched into a customer complaint, it can be highly disruptive for an insurance firm. Finding evidence and building a case to dispute a complaint can be resource heavy, time-consuming, and expensive. Especially if you don’t have the technological backup to facilitate the simple documentation of each customer contact. Reputational damage is also a consideration.
Resourcing – sometimes the best way to improve your complaint-handling process is simply by investing in people to help deal with customer complaints quickly and efficiently. Short term contingent resource can help clear a backlog and help to get firms back into a better position to deal with incoming volumes.
Upskill your workforce – Make sure your team is equipped to handle customer complaints as effectively as possible by providing them with adequate training and resources. Apprenticeships, eLearning modules, and refresher courses can all be effective ways to ensure your team are up to date with the latest complaint-handling protocols.
Data & Automation – Automation can be a great way to reduce the time and resources spent handling customer complaints, as well as reducing the risk of human error. Investing in automated solutions such as AI-powered chatbots and virtual assistants can help free-up human resources to focus on more complex tasks. Utilising tools such as speech and text analytics and sentiment/behavioural analysis can help uncover valuable insights to improve your complaint-handling processes.
Process Review and Root Cause Analysis – An independent review of the complaints process can help to uncover gaps and recommend measures required to improve processes and reduce volumes. It can also provide an industry-wide view on best practice and ensure firms are not outliers when it comes to providing good outcomes to their customers.
Technology is becoming more and more popular as a tool to aid complaints handling, including:
Speech recognition and auto audio transcription can provide an accurate record of every customer interaction. Enabling simple storage, categorisation, and data search.
Voice analysis, such as Natural Language Processing (NLP) programmes, can be used to detect tone, emotion, and inference in real-time, to instruct call handlers when they may need to change their approach to a customer – perhaps adopting a more cheerful or more serious tone of voice or conciliatory language – to help prevent complaints arising.
Activity monitoring, using artificial intelligence (AI), can actively scrutinise call handling and customer interactions to detect any potentially problematic behaviour or training gaps amongst call handlers.
Most importantly, any tech solution deployed to support complaints resolution needs to be scalable. Ensuring that all complaints, regardless of type or current volume, can be completely resolved within the 90-day period stipulated by FOS.
No insurer wants to be in a situation where their complaints volumes are going up and their FOS uphold rate is rising. It is expensive and disruptive, not to mention, of course, that firms really should be focussing on providing good outcomes and reducing the risk of complaints in the first instance.
But when it happens, there is support and technology available to resolve the problem as quickly and effectively as possible and to proactively look at addressing gaps/issues in processes that may be contributing factors. At Davies we help many insurance firms manage both their claims and complaints effectively and efficiently. Please get in touch if this is something you’d like to know more about.
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