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Any property/casualty insurer investigating the increasingly popular concept of a single call center to respond to all policyholder questions could learn from the costly mistakes of other insurers.
The blunders, which largely relate to bouncing callers among too many call handlers, can make the initially expensive call center management projects totally inefficient, said John L. Ward, chairman of Ward Financial Group in Cincinnati.
The call center concept is a "red hot" customer satisfaction issue for insurers, according to Mr. Ward.
The concept first took off about two or three years ago, when technological advancements made such centers more feasible, he said.
Ward Financial does not have enough data through its benchmarking project with 125 insurers to conclude definitively that having such a center is a best practice in maintaining high customer satisfaction. However, Mr. Ward said the available data suggest that is the case.
The benchmarking project consists of a total of 100 property/casualty and 25 life/health insurers, all of which pay a fee to participate. The participants include 21 property/casualty insurers and six life/health insurers that Ward Financial has identified as the top performers in their respective industry segments at balancing solvency and profitability.
Among the property/casualty insurers in the benchmarking study, few have installed the centers. But about half of the property/casualty companies plan to do so. Ward Financial did not have enough information on life/health insurers' current use of or plans for call centers to reach any meaningful conclusions.
A call center that works right is far more efficient for policyholders than calling their local agents or insurer claims offices, according to Mr. Ward. Ideally, a single call handler at a center can address all the questions a policyholder may have, he said.
With a sophisticated call center system, an automated operator can explain the system to callers while searching for their files after identifying the callers' phone numbers. The system then displays a caller's policy file on a call handler's computer screen just before the caller is connected to a live operator. That way, the handler knows immediately who the caller is and the details of the account.
"That's phenomenal customer service," Mr. Ward said.
The price tag for a system capable of achieving such goodwill is several hundred thousand dollars in equipment plus the cost of staffing the center, he said.
Insurers can see a payback, though, Mr. Ward said. That will happen if call handlers in at least 85% of cases can resolve all of their callers' questions without bouncing the caller somewhere else, he said.
"We see a high correlation between the first-call resolution rate and customer satisfaction," Mr. Ward explained.
But, some insurers have not set up their centers properly, he said. At those centers, call handlers bounce callers to one or even two more operators, Mr. Ward said. "That does nothing to improve the efficiency of the company."
The top-performing companies in Ward Financial's benchmarking study have achieved that 85% rate. Others in the study report a 55% first-call resolution rate.
In one extreme case, Mr. Ward said an insurer invested heavily in establishing a call center but could not get its computers to pull up callers' files quickly. The call handlers had to take messages and call customers back after the computers eventually retrieved the files. That call center "was completely inefficient," said Mr. Ward.
"Until companies have the tools in place to better leverage their call center investment, they're better off not making that investment," he said.
Some handoffs may not be terribly detrimental when insurers first bring the centers online, Mr. Ward said. But he advised insurers to eliminate those handoffs within the first year the center is in operation.
Another best practice for call centers is answering a call within 15 seconds after the automated system switches a call to a live call handler.
The top performers in the benchmarking study achieved that response time. Others in the study reported a 25-second response time.
The top performers in the study reported that only 2% -- a best practice rate -- of customers abandoned their calls before reaching live call handlers. Other study participants reported a 5% abandonment rate.
Busy signals and unanswered lines after numerous rings typically prompt callers to abandon their efforts, Mr. Ward explained.
The abandonment rate underscores the importance of having the right number of call handlers on duty. "Or you have the cost of the system and frustrated customers," he observed.
Mr. Ward also recommended surveying customers to determine how well the call centers are performing. About half of the study's top-performing insurers with call centers have implemented customer satisfaction techniques such as survey call-backs and mailings.