COMPLAINTS: BEST PRACTICES NOTES

Because states are generally consistent and insistent about complaint-handling, most companies are compliant with the law. However, many companies have taken steps to go beyond the law into the realm of Best Practices with defining, recording and tracking complaint activity. The following ideas in these areas are from companies across the industry.

Defining Complaints

Most companies have started with the definition of a complaint as a written communication from either a consumer or a regulator. Insurance Marketplace Standards Association (IMSA) took this definition a step further, and defined a complaint as, “A written or documented verbal communication…which primarily expresses a grievance.”

  1. One Best Practice from IMSA indicators is that the company consistently reviews customer correspondence to identify situations that could result in complaints before they become complaints.
  1. In this vein, a few companies have a form that a Customer Service Representative can initiate. If the Rep received a phone call or letter that is not classified as a complaint, just an inquiry, yet the Rep is concerned about producer conduct implied by the consumer, the Rep can report that conduct for further research or investigation by the company. These reports are not done lightly, and are not taken lightly by the company, but may carry less weight than a true customer complaint.

The following Best Practices are used in various companies to assist their staff in discriminating between a phone call or letter of inquiry and one that is a complaint.

  1. The first is to train those who may receive a complaint, including but not limited to Customer Service Reps, on a list or series of “red flags”. These terms are those such as Department of Insurance (DOI), regulator, and lawyer. Any use of this terminology escalates an “inquiry” to a complaint. Customer Service Reps are also given some guidance on the tone of a letter or, especially, a telephone call, to identify which consumers are unhappy.

D.Another is that the company simplifies the identification of a complaint versus an inquiry by saying, “If an inquiry cannot be resolved to the satisfaction of the customer by the Customer Service Rep, and must be passed up the ladder, it automatically becomes a complaint.”

Receiving and Recording Complaints

  1. More companies are beginning to log complaints received by telephone. They also ask for the complaint in writing, but capture the basic information over the phone first. Although this may increase the number of complaints received in the short term, it can lead to a decrease in complaints both to the company and, more importantly, to the DOI. How does that work?

There are a couple of ways this can lead to a lower complaint total. The first is that the company can start working on an improvement more quickly, if the complaint is valid and the company needs to improve. Secondly, if the telephone call(s) is linked to the customer or policy-owner, the company becomes aware of an unhappy consumer. This avoids the phone call or letter to the DOI wherein the consumer states, “I called the company three times and nothing was ever done about my problem.” Even if a written complaint has never been received, the company has had the opportunity to resolve the complaint before it goes further.

  1. A number of companies with appropriate capabilities are actually recording each telephone call to the Customer Service Department. There must be a system of logging the call and management review of logged complaints and recorded information to make this effective. Certainly, these records can be used when there are issues that require a detailed review. And some companies record calls just to protect the company in case of legal action. Others, though, are finding these records to be of value to the company and the consumer beyond a protective role.
  1. A few companies have, additionally, taken a hard look at the codes they use in logging complaints. They find that the typical regulator codes are not specific enough to help them evaluate and trend complaints.

At least one company has gone further this direction by adding “nitty gritty” codes for such categories as rudeness by the producer, rudeness by a home office person, and violation of Gramm-Leach-Bliley.

Producer-Specific Complaints

Some ways that companies look at their producers in relation to complaints are these:

  1. In a company with captive or “closely-tied” producers, when a producer is asked to respond to a complaint by a regulator or consumer, the amount of time taken to respond is tracked. This information is folded into the producer profile. Items in the profile are used to determine continuing appointment status or disciplinary action, in some cases.
  1. In a multi-line company, complaints are tracked across lines of business for a total ratio. This allows the company to gain a better perspective on a producer or agency, and to see which lines of business are of particular concern.
  1. In some companies, a quarterly report of a producer’s 12-month rolling complaint ratio is reviewed. A high volume of complaints can trigger a closer look at that producer’s complaints, submitted business and persistency. “High volume” must be defined by each company, depending on the nature of and lines of business involved.

Some of the Best Practice ideas presented here may not be practical to apply in your company, but at least one or two might be a good fit. Because the matter of complaints is of high importance to regulators, the risk for companies is also high. By continuing to improve internal procedures that can cause complaints, as well as improving the processing of complaints, your company can continue to lower its risk and exposure.