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Wednesday, Sep 02, 2009
Finding a Replacement Car is voted the most logical service for Insurance Companies! A Research Study into the Auto Insurance Market provides results that going the 'extra mile' will retain your best customers.

The 'Customer Research Study into the Motor Insurance Market' published in January by the Bristol Business School affirms some of the current ailments of our market - not just in motor. For example, it reports many insurers and large intermediaries are more interested in cutting costs than improving customer service. Unfortunately that's patently true, but sobering to see it in print backed up by scientific analysis. The report also cited evidence from a recent study in the USA that showed insurers who drive down the cost of managing individual claims lose their best customers, and keep their worst - paradoxically ending up with higher claims costs than before.

The report was prepared by ABA Research and Professor Merlin Stone, business research leader for business consulting services at IBM UK. The subtitle - 'Is a Micra a fair swap for a BMW?' - provides the clue that the 'free' courtesy car features quite extensively. In fact, 91% of respondents want a replacement vehicle delivered to their door, and 22% expect a car equivalent to their own. Professor Stone says the replacement car makes a big difference to customer perception of an insurance provider's service. "Sometimes it decides whether a customer renews or not. We found that just under half those claimants offered a replacement - and very few were - were given a car inferior to their own, and were five times less likely to be 'satisfied about the company' and twice as likely not to renew. Customers do not want to be left without a car after an accident."

Having read the report, it's clear the courtesy car is one of the major tangible offerings that motorists now relate to, when trying to value motor insurance. Prof Stone says however, that very few enquire about the options for replacement vehicles at the outset. The replacement car (a personal view this) for accident damage victims could become a millstone. A short-term solution to a noncustomer oriented problem back in the early 1990s, the post-claim courtesy car had nothing to do with transforming the customer experience after an accident. It was a cost saving initiative. The idea was to channel accident damaged cars through fewer repairers - hungry for work during recession - in return for lower hourly rates and parts discounts. The big problem - how to persuade reactionary motorists to allow their cars be carted miles away rather than being repaired at the local bodyshop? The repairers came up with the answer, and the funding. Presto! Home collection and redelivery, plus a free courtesy car. Just shows how hungry they were during that recession.

Time moves on, and many things change, but this latest research suggests the motoring public now assume their motor policy automatically entitles them not only to a temporary car, but a model akin to their own. In reality of course, very few insurers' policies even mention this, and they rarely apply to total loss or theft claims. The research also confirms people claiming on a third party's insurance have more chance of getting a replacement vehicle. Well, we all know how attractive the insurance gravy train has proved to some vehicle hirers, don't we? A final conclusion from Professor Stone: "The only time insurance buying customers really find out how good their insurer is, is when they have to make a claim. And when claimants have experienced the total insurance service package from their insurer, our research indicates this fuels a determination to seek something better next time."

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