Insurance companies need to trust their customers and pay up as quickly as possible in order to keep costs down and reduce customer churn, says Richard Love, Head of Insurance and Financial Markets at specialist IT consultancy, Detica.

Love comments: “The best way for insurers to reduce costs is to settle claims as promptly as they can, but to do this effectively you need to understand and trust your customers. Insurers have a wealth of client data at their fingertips, which could be used more intelligently. This information has the potential to provide more tailored and cost effective claims management.

“There is a fundamental lack of trust between insurers and their customers, and little focus on developing better relationships. Insurance companies fighting to keep costs down, aim to ‘get rid’ of claimants as soon as possible, leaving no room for a relationship to develop.”

The number of customers voting with their feet and switching to competing insurance companies is rising, with 20% of motor insurance customers admitting to changing their insurers every year. In Detica’s view this is because the needs of the customer have largely been forgotten, with insurers offering a ‘one size fits all’ approach in an attempt to minimise expenditure.

“By simply applying existing customer data to the claims process, insurers can gain a better understanding of their client base and so treat them as individuals – something which will give them an immediate advantage over competitors. In this way, insurers can hope to keep hold of existing business as well as keep costs to a minimum”, concludes Love.