Special risk insurers rank lowest on Ontario’s auto claims satisfaction survey

By Martin Beaudry | February 20 2003 05:36PM

According to the Financial Services Commission of Ontario’s 2002 annual Auto Claims Satisfaction Survey, special risks insurer Kingsway General had the worst rating in terms of satisfying its clients when responding to claims of all the auto insurers in Ontario.

Released in December, the survey includes 46 insurers plus the Facility Association (a pool of insurers that take on high-risk business). Participant rankings gauged client satisfaction when they had claims. Overall satisfaction with the process and contentment with timeliness, helpfulness, knowledge and expertise, fairness, and keeping the customer informed were all measured.

Kingsway drew an overall client satisfaction of just 63%, with 35% very satisfied and 28% only somewhat satisfied. That is in sharp contrast to the industry averages of 84%, 62%, and 22%.

Steve Smith, Executive Vice-President and Chief Operating Officer for Kingsway, explains that his company operating in Alberta, Ontario and Quebec, specializes in covering non-standard risk.

A frequent problem is unrealistic client expectations for car valuations. As a high-risk insurer Kingsway gets a higher than average number of clients with older cars, and that will often entail factors that depreciate vehicles beyond expectations, says Mr. Smith.

In turn, Kingsway is subject to a lot of fraud, and is perhaps stricter than other insurers. In fact, Mr. Smith suspects others are losing more money than they should due to fraud, just because they are not being as strict.

There are potential red flags insurers can look for, says Mr. Smith. An example is claims with low-impact physical damage but for a large number of applicants, as in a case of debilitating back injuries reported by all four occupants in a minor collision.

Another potential fraud case might involve claims with uninsured and unidentified damages, such as with hit and runs.

Despite its vigilance, Mr. Smith affirms his employer is not profitable in Ontario. Further, he suspects none of its competitors are either. The company was approved for a 7% rate hike as of February 1, 2003.

Mr. Smith is also hopeful incoming regulations such as Bill 198 may control increased costs from actions by paralegals. He says the latter are putting insurers in an untenable situation, having to either make cash settlements or pay large legal costs. In addition, he says the current system is taking money from clients’ and sticking it in the pockets of medical services and paralegals.

Coachman, owned by SGI Canada, had the second worst results, averaging 76% overall client satisfaction, with 42% very happy and 34% only somewhat. There the story is one of critical mass and clientele, says Paul Christoff, Chief Financial Officer, for the company. He says the company is too small to provide the kind of claims service that larger insurers might.

With just 35 employees, Coachman does not have a 24-hour claims line.

Coachman is a niche writer, says Mr. Christoff, He points out that there are a number of companies that received results in the 75% to 85% range, so its grade is not far from the norm. It is also an improvement on the previous year, when the company drew an average overall rate of 72%.

For 2003, Coachman was approved to raise rates 7% on renewals as of January 1. It is also hopeful that the incoming Bill 198 will help control bodily injury claims and costs from paralegal activities.

In third worst position, Belair Direct, subsidiary of giant global conglomerate ING, was only slightly better than Coachman with a 77% overall average and 49% very satisfied and 27% somewhat. Regional Claims Manager Frank Law says the company was very disappointed with the result and has been working hard to improve.

Current internal surveys taken monthly by Belair indicate a satisfaction rate of 89%. Mr. Law points out the marked improvement and also noted that the FSCO data is based on claims almost two years old by the time it is made public, so it won’t necessarily reflect current services.

“Since that time we have made a number of alterations in what we are doing. First of all, turnover in staff has been curtailed considerably. At one time the entire industry was suffering from turnover, and that tends to breed some difficulties. We have [also] included customer service in our technical claims training programs and we have moved our appraisal service to a wider ING network.”

“The other thing we have done is try to streamline our procedures and our policies and our claims management into the ING program,” says Mr. Law. He points out that ING and ING Novex got above average scores of 86% and 85% respectively, so getting on par with them could only be beneficial.

Started in Quebec and then expanded to Ontario, ING Novex had previously operating virtually independently of ING with respect to Ontario auto. No longer. “What we have done is start to take advantage of the strength of the organization in terms of training, which has resulted in less turnover and [more] job satisfaction and more accentuating of customer service issues. It is having some benefit.”

Mr. Law says current monthly surveys show a result of about 89%. He adds that the fact Belair operates mainly online has a bearing. “The broker companies from that survey seem to have resulted in higher ratings than direct sellers. With direct writers you don’t have the cushioning with the policyholders, or a champion of the policy holders to some extent, or an explanation on some of the stuff through the brokers because they are dealing with people in their own neighbourhood that they talk to.”

Areas of contention for the company mainly surround communications. Replacement auto values are often in dispute, for example, necessitating good lines of communication to explain to clients why the company may not value a lost vehicle as highly as they might. “With a good explanation you get more agreement from the people as to the value and why you are settling at the amount that you are. [You get] less dissatisfaction. If you just go out and say it is a take it or leave it situation, people are not going to be happy.”

Another problem area is accident benefits, says Mr. Law. There are so many compliance issues, time limitations, forms to be filled out, and then the involvement of paralegals tends to make the process adversarial to boot. That creates an environment ripe for discontent, and Mr. Law is yet another hopeful that Bill 198 will alleviate the issues.