The claims management process consists of a number of elements linked by activities and multiple entities. The insured, policy, insurer, originating occurrence for the claim, adjuster, adjuster’s claim evaluation, final claim determination, and settlement are all basic pieces of claims management, with more complex subprocesses taking place throughout the overall process.
When considering the claims management process, it has been common to think of its endpoint as the financial settlement; the resolution of the claim occurs once payment is presented to the insured and the file is closed. As insurers have competed more intensely for the same customer base, policyholder retention has become more critical, and their range of services has expanded. Policyholders also have come to expect higher levels of service in every aspect of their lives, including their insurance claims handling. In response, some insurers and third-party administrators have extended their property claims handling to go beyond the issuing of a check.
Over the past couple of decades, insurers and third-party claims managers have extended the function of the claims process to include a contractor referral program, either through building an internal self-managed program or partnering with contractor repair networks. Usually these contractors specialize in emergency response, general repairs, and disaster restoration for residential and commercial work.
For many claims, this type of general contractor direct repair provides an alternative for less complex claims that do not require the expertise of a field adjuster. In addition, contractor programs can be used for large or more complex losses where a field adjuster has completed an estimate and needs to secure an agreed repair with a contractor to assist the policyholder and help bring an efficient closure to the claim file. A broad variety of insurers have established their own contractor programs ranging from some of the largest national carriers to regional carriers as well as single-state writers. Contractor networks are not new to the insurance industry, with many insurance carriers having strategically implemented automobile repair body shop networks several years ago with much success. Body shop networks are similar to contractor direct repair networks in that they evaluate and credential service providers and establish quality service levels to help maintain consistent customer service.
Policyholders usually are made aware of the availability of—and option for—contractor programs during the initial contact by claim representatives, who screen assignments and refer those homeowners interested in using the program to an insurer-approved network contractor.
Structure and Representative Types
Contractor networks for commercial and residential repair services have existed for a number of years with many new entrants joining the market. The market includes new companies offering local and regional programs as well as the long-term, well established contractor networks that offer regional and national services.
There are various franchise restoration firms that service the industry as well as small and regional independently owned firms and large corporate-owned contractors. These companies work as part of insurance carrier programs that are self-managed by insurance carriers as well as participate in some of the national third-party administrator programs.
Non-Structured Model
There are many non-structured contractors—independently owned contractors as well as franchise contractor groups—which range from large to small franchises for various trades, including water mitigation, general contracting, textile restoration, and other services. These companies market and work directly with insurance carriers in various ways. This can include non-structured programs where they work informally with local adjusters or in smaller structured programs.
Insurance Carrier Self-Managed Model
Some national and regional insurance companies have established internal programs where they self-manage their contractor network. The credentialing and service level requirements have various ranges in these models, and performance is measured. An important note: Of the top 25 insurance carriers in the U.S., the majority have either a self-managed program or an outsourced contractor program, showing the importance of contractor programs to the insurance industry.
Outsourced Model
Insurers can also outsource their contractor program management to a third party, such as Crawford’s Contractor Connection, which partners with a number of the top regional and national insurance carriers and offers an expanding network of contractors in the United States and Canada.
The Relationship Benefits
An ongoing relationship with a contractor repair network can offer a number of benefits ranging from more satisfied customers to improved efficiency in the property claims process.
Greater Satisfaction, Increased Retention
By utilizing a network, insurers and administrators can increase policyholder satisfaction by extending and supporting the claims process beyond payment to final restoration. This is a more turnkey solution for policyholders that demonstrates a greater commitment to customer satisfaction and a higher degree of responsibility and accountability for an outcome beyond the closing of a claim.
Broader Brand Awareness
By offering a network in addition to their standard services, insurer and claims management companies can create a distinct brand identity that can be promoted for greater visibility in the marketplace.
Increased Quality Control
Insurers or third-party administrators can establish, monitor, and control network standards for higher-quality outcomes for the contractors’ work. Contractors can be prescreened, monitored, and credentialed for license, insurance, and financial stability.
Enhanced Efficiency
Network usage can increase efficiency in moving from claim to restoration completion since the contractor network is either “in-house” or has its systems closely linked to the insurer or administrator, speeding the process of policyholder contact, contractor notification, hiring, project initiation, tracking, and overall management, shortening the timeline from claims settlement to finished repairs.
What the Future Holds
Contractor repair networks are an additional component to the claims management process and can add significant benefits for both insurer and insured. Based on recent trends, it is evident that contractor networks are continuing to grow in scope and need by the insurance industry, attracting more contractors to this model, which provides a consistent level of opportunity for established contractors who provide high-quality service.
More insurers may develop relationships with established contractor networks rather than attempting to establish and grow their own networks. Insurers without such a network in their strategy should continue to evaluate whether adding a network may be a highly beneficial component in their efforts to expand services and extend their brand while providing greater customer satisfaction.