Survey Reveals Large Untapped Market for Claims Companies
In recent years, the bread and butter work for claims management companies has been handling PPI (Payment Protection Insurance) claims. Since the deadline for submitting a PPI claim came and went on August 29, 2019, many industry professionals have been asking, “What is the future of the claims management market?”.
We recently ran a YouGov poll of 2,000 UK-based adults to learn about the types of claim people have used a claims management company (CMC) for. Of the 21% of respondents who had previously claimed through a CMC, the type of claims made included PPI, PBA (Packaged Bank Account), delayed flights, mis-sold mortgages, credit card and insurance claims.
Perhaps the most striking result was that 79% of respondents had never used a claims management company, which represents a large, untapped market for claims companies.
Many people are unaware that CMCs exist, do not understand how they work or are wary of using them due to news stories about the handful of rogue companies who have acted unethically. How can claims companies build consumer trust and tap into this huge untapped market of potential clients?
Building Consumer Trust
With the end of PPI claims and increased regulation of CMCs since the Financial Conduct Authority (FCA) assumed responsibility for overseeing the sector, it is estimated that up to 80% of financial claims management firms could disappear. Those remaining will have to register with the FCA and abide by their rules.
For the 20% of CMCs that survive, this could represent a positive shift in consumer perception of the industry. Any claims companies that continue to operate must meet minimum standards of best practice, making them appear more trustworthy to potential claimants.
For the 79% of respondents in our survey who have never used a claims management company due to mistrust, this could mark an important change. With more stringent regulations in place and only those willing to offer a transparent service remaining in business, a previously wary consumer could become a future claimant for your CMC.
According to the Chief Executive of the Alliance of Claims Companies, Simon Evans, mistrust of CMCs is unwarranted. Responding to allegations by Wonga, the former payday loans company, that a high volume of CMC claims contributed to its demise, Evans stated, “a few bad operators had been responsible for nuisance calls, and that CMCs provided access to justice for millions of people”.
Tapping into the Market
To convert the untapped market into clients, CMCs must develop a good understanding of the type of claims people are interested in making and ensure that they offer the relevant expertise to help. After PPI claims, insurance claims and delayed flight claims were the most common amongst our survey respondents.
According to research by Which? almost two-thirds of flight delay compensation goes unclaimed every year. The consumer group found that 900,000 people could be eligible for compensation, but only approximately 38% of them ever claim.
And it’s not just compensation for delayed flights that frequently goes unclaimed. Billions of pounds in compensation, from mis-sold credit cards to erroneous parking tickets, go unclaimed every year in the UK.
Many consumers are unaware of their right to claim or uncertain of how to do so. Making a claim seems like too much time, hassle and effort when life is busy. And will the time invested pay off anyway?
Raising awareness of the convenience of using CMCs is where the companies themselves can step in and turn some of the 79% of people who have never used their services into satisfied customers. Raising awareness of the services a CMC provides, sharing information about consumer rights to claim and building trust by stating compliance with the FCA’s regulations will go some way to attract new claimants. But the main driver that will encourage an individual to claim is how easy it is to do so.
Powerful, feature-rich claims management software can automate key processes, making it quick and easy for clients and CMCs to process a claim. Self-serve options allow a client to onboard themselves — no need for lengthy call queues waiting for an advisor. Features such as configurable questionnaires — whereby new clients are asked questions based on their responses to previous questions — ensure that the correct information is gathered from the start. As a result, the claimant will not be contacted multiple times for follow-up details.
Industry-specific software makes it easy for a consumer to start and track a claim. CMCs offering a simple and efficient claims handling process will win out over the competition every time.
Book a free consultation with one of our experts today to learn how our claims management software, Logiclaim, can help you access the largely untapped market of potential clients.