April 19, 2019

“Flo Won’t Handle Your File”: Claims in the Social Media Age

Viral phenomenon on the Internet more frequently concern “Cats that Look like Hitler” or racy photos of Prince Harry cavorting in Las Vegas.

Insurance claims rarely go viral on social media, but that changed recently with a controversial underinsured motorist claim involving Progressive Insurance Company. (Find background on the case at the following link: http://money.cnn.com/2012/08/17/technology/progressive-settlement/index.html?hpt=hp_t2 ).

The sad facts here are straightforward. Progressive Insurance Company policyholder Katie Fisher died in a 2010 automobile crash in Maryland. Allegedly, the other driver ran a red light, though there was a dispute as to who had the green light and the right-of-way. The driver that struck Katie’s vehicle was under-insured. The good news: Katie had bought UIM — underinsured motorist coverage.

The bad news:  to collect, Katie’s family had to sue the other driver for negligence to force Progressive to pay. However, when the family sued the other driver, Progressive’s attorneys associated with the other drivers attorneys to defend the liability claim. As a result, the deceased’s brother went viral in social media rounds, complaining that Progressive used premium dollars to defend his sister’s killer in court.  That makes for an arresting headline.

This claim illustrates the importance of an insurance company being attuned to social media and having a social media policy. Of course, here Progressive did not stick its head in the sand.  It did not ignore the social media buzz surrounding its handling of the case. Apparently, it responded but responded in a way perceived as tone-deaf.

Progressive in a Lose-Lose Situation?

Maybe Progressive Insurance Company was in a no-win situation. If it ignored the social media banter about its stance, consumers would accuse it of insensitivity. It entered the dialogue to justify its actions. In so doing, people accused it of being tone-deaf to consumer sensitivities. I don’t know what response Progressive could have launched on social media that would have satisfied its critics.

This vignette underscores how little people understand what they buy when purchasing underinsured motorist coverage. Buying underinsured motorist coverage essentially risks putting you at odds with your own insurance company. In such a claim, your own insurance company is incentivized to show that you in fact were at fault for the accident and/or that your injuries were not the result of the negligence of an underinsured driver. People assume that the insurance company to whom they paid their premiums will always be on their side. Typically, this is the case. Typically, this is the alignment of interests.

In underinsured motorist coverage and claims, however, “typical” doesn’t necessarily apply. Here, interests are aligned differently. Just because you pay your insurance company for the coverage doesn’t mean that — in a claim involving an underinsured adverse driver — your insurance company is going to act all soft and fuzzy.

Of course, insurance companies would not effectively market and sell underinsured motorist coverage if they made this reality explicit and spotlighted it in the sales process. People don’t think it through.  Nobody really believes deep down they will be hurt due to the fault of an underinsured driver. If they pay for the coverage, perhaps they pay for it begrudging at best.

Policyholder Ignorance About UIM Coverage

So, those who say “Shame on Progressive” for its stance adverse to its own policyholder could add, “Shame on the policyholder” for not realizing the dynamics in underinsured motorist claims. Of course, it sounds callous to be lecturing a family on the dynamics of claims-handling when they have lost their daughter in a fatal car accident.

Further, there was a reasonable question of fact as to who had the right-of-way. Should Progressive and its adjusters have ignored evidence that the deceased may have been at fault in order to pay the claim? It’s difficult to fault Progressive’s adjusters here, as tempting as it may be to do so. There was a legitimate dispute as to who had the right-of-way and who ran the red light. Was Progressive wrong for exercising its legal right to seek a judicial determination of liability?

Personally, I don’t think so.

Nevertheless, insurance companies now face not just bad faith risks over how their claim department handles or mishandles an automobile loss. They also face reputational risks if disgruntled consumers take to Twitter, Facebook, blogs, Tumblr, etc. to air their gripes.

Internet Megaphones

The Internet and social media provides a bully pulpit and cyberspace megaphone for anyone who has a beef, whether that complaint is justified or specious. On the other hand, since everyone now has electronic megaphone via the Internet, World Wide Web and social media, the cacophony of complaints can create a “white noise” effect that makes any one complaint difficult to stand out. This complaint did stand out, though, and got widespread media play.

While it is tempting to say “No comment” or to say, “We won’t try our case in the media,” insurance companies — like other businesses — cannot take an ostrich approach and stick their heads in the proverbial sand.

The takeaways and lessons from this and yet go beyond Progressive Insurance Company. Katie Fisher’s case illustrates that in the 21st century,

  • insurance companies must have social media policies,
  • they must monitor social media, and
  • they must be able to articulate a concise yet compelling message to an often skeptical audience.

It’s not enough to handle the claim conscientiously.

It’s not enough to handle it in accord with the policy Conditions.

It’s not enough to comply with state insurance department regulations.

It’s not enough to believe that you acted in good faith.

If you have an under-insured motorist claim, you must realize that your adjuster will not be perky Flo from the TV commercials.

 

Insurers Need Social Media Strategy

This case study also spotlights the need for insurance companies to have a refined social media strategy. That goes beyond grappling with questions like, “Should we be on Facebook or Twitter?” or, “Should we have a blog?”

Sorry — those questions are so 2010. That no longer cuts it as a coherent social media strategy.

It’s no longer enough to have a digital footprint in the social media world. The content of what companies put out on social media is vital, scrutinized, and should promote their brand. Content is king.

Moreover, insurance companies must have institutionalized disciplines to monitor what is being said about them on social media so they can respond quickly and persuasively. The consumer conversation about your service and policies is going on — with you or without you. It is best that goes on with you.  It’s best that you have an opportunity to be aware of customer service firestorms brewing so that you have the opportunity to squelch them, address them and nip them in the bud.

You may have to justify your steps in the court of public opinion through social media or suffer the consequences of a public relations black eye if you hunker down and go incommunicado.

As this case study shows, adjusters are sometimes damned if they do and damned if they don’t. Pay the claim in the face of conflicting evidence, and be second-guessed for poor decision-making by higher-ups. Contest the claim and align yourself with the other drivers insurance company, and you get criticized in the court of public opinion for callousness.

No one promised adjusters a rose garden and they certainly don’t get to operate in one in the age of viral posts and social media!

Kevin Quinley CPCU, AIC, ARM  is a claim consultant and Principal at Quinley Risk Associates  LLC near Richmond, VA.  You can reach him at kevin@kevinquinley.com or at (804) 796-1939. 

 

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