With GAP claims, it is all about communicating clearly with the customer. Larry Graves, senior vice president, Old Republic Insured Automotive Services Inc. (ORIAS), sat down with P&A Magazine to review some of the tips every provider should keep in mind for each step along the way. From having the right processes in place, to keeping those processes efficient - it will all add up to a GAP claims department that will be profitable for dealers, agents and administrators, as well as being a pleasant experience for consumers.
Graves’ first key point to keep in mind with GAP claims is the waiver language – today’s GAP policies are far more consumer friendly than they were in the past, he noted. “Waivers in the past were written with what is called the ‘greater of’ clause,” he said. Today, they use what is called primary settlement language. The ‘greater of’ clause relates to what the carrier will pay, and, in the past, caused a great deal of consumer confusion, he noted. Some carriers paid the NADA values, others, especially for California, paid the KBB value. The problem would occur when consumers expected the GAP policy to pay off the remaining balance of the loan, but with the 'greater of' clause in effect, that was not always the case. With this structure, the consumer was often on the losing side, which caused friction between them and the administrators.
By changing to the primary settlement clause, the contract forces the payout to use whatever valuation the primary carrier initially specified. This, Graves said, has simplified the language; it has made it easier for consumers to understand what they are entitled to, has made GAP claims much less fraught with peril and created far more satisfied consumers who see the value and are often therefore willing to purchase GAP policies on future vehicles as well.
The second key point in the evolution and management of GAP claims is communication. All good GAP administrators, Graves noted, need to be documenting every single communication attempt. “Every time they get hold of you, send a letter with what’s missing - every time,” he said. “And even if you don’t hear from them, send a letter every month for three months straight with what’s missing. Then, after three months, send a letter saying ‘we haven’t heard from you, so we’re going to close the claim.’”
Part of the problem, he noted, is that there is a large amount of documentation the consumer is required to provide in the event of a loss – and part of the administrator’s job is to make sure they know exactly what they need, as well as when and where they need to send it. Some of that documentation can include a copy of the finance contract, a copy of the police report if the vehicle was in an accident or was stolen, a copy of the GAP contract itself, and/or a copy of any other potentially applicable contracts, such as tire and wheel, windshield, etc., that were financed as well.
The problem is further compounded in that some administrators will accept the paperwork in a variety of formats, such as email or fax, while others still require the hard copies to be mailed. Some will allow consumers to send in a single piece at a time, as they procure it, while others will only accept all the paperwork together in a single packet. The key, for administrators, is to be very clear in communicating with the consumer so there is no confusion along the way as to what is expected from them. The goal is that they walk away from the experience with a positive result, rather than walking away feeling like the administrator took advantage of them.
Graves’ third key item for GAP administrators revolves around the systems – putting solid, streamlined systems in place are a benefit to everyone in the process. It is crucial, he noted, for administrators to be able to automatically track the status of every claim, including how many times the consumer has been in contact, what information they still need to provide, etc. This goes back to good communication – it is difficult to communicate effectively if the administrator does not have all the information readily available.
Today’s systems can do more than just keep track of claims status, however. Graves noted that, in some cases, he is seeing administrators put into place a system that will notify dealers when a customer they sold a vehicle to has filed a GAP claim. However, he cautioned, administrators need to be very careful with what information they provide and how they send it out. There are privacy laws they need to be aware of, and it is critical to ensure they are following those laws to the letter.
It is possible to provide that information to the dealer because the GAP policy is issued to that dealer in the event of a loss. This leaves room for the administrator to notify them that a consumer has filed a claim. “They can only give the name; dealers will have to pull the phone number from their own records. Administrators have to be careful what they say,” he stressed. But for administrators who have a clear policy in place that conforms to privacy laws, this is a great relationship to cultivate with dealers.The Right Process
At the end of the day, Graves noted, all GAP claims work essentially the same way. So the only way administrators can set themselves apart is with the level of service they provide around the claims process. For example, Graves said, one area GAP claims administrators can stand out is in how they structure the system for managing a claim. “Consumers can get upset,” he noted. “They initially deal with the first tier employee who deals with everyone, but some want to step up to the next level and you have to let them – you can’t make that a problem. If they want to talk to the manager, the answer should be ‘no problem.’ But that person has to be a settling person, who can help them understand the process and solve the problem.”
When consumer complaints start to happen, he noted, is when an administrator tries to tell consumers they cannot escalate their problem to a manager, or the person they are sent to as a second tier contact does not have the authority to help them. “You can’t always satisfy a customer,” Graves said, “but you can help them understand why you can’t give them what they want. It comes down to a really good customer service person. The first tier is good, but the next person has to be great at soft sales, able to talk to the customer and help them understand how their policy works.”
This, he stressed, is where training is crucial. “[Customer service representatives] have to know everything about the product, what the differences are between policies, and what they’re talking about,” Graves said. “There is not one answer that will apply to every consumer.”
He believes it also comes down to putting the right personality traits into those first and second tier positions. “They can’t be a driving type personality, like some of the best sales people – they have to be more amiable,” he noted. “They have to help consumers understand their policy, explain - nicely - how it works, and be able to detail why it won’t provide what they’re asking for. In a lot of cases, it is pretty cut and dry – there are not many things you can do.” But a successful GAP claims administrator will have the people in place who can help the consumer understand the limitations of their policy, and leave them walking away satisfied with the answer, even if it is not what they originally wanted. Training to ensure every representative understands the nuances of those policies and how to have the conversation with customers can make or break the process.
One example Graves offered was if a customer is behind in their payment. “They can’t just say ‘you’re behind on payments,’” he said. “They should say instead, for example, ‘The policy should cover the difference, but the only time this happens, that it’s not covered, from my experience, is if someone is behind on their payments. That’s the only time I see this situation happen, so maybe that’s why.’ They have to be able to back around it.”
At the end of the day, Graves noted that a big part of the battle with GAP claims is the sheer volume of information administrators have to keep track of. Beyond consumer data and communication, there are changing state and federal regulations that can effect how waivers are sold, managed and paid that can impact operations on a daily basis. He gives credit to many of the carriers for the level of communication they have with the administrators. Some of them, he noted, go so far as to provide monthly newsletters keeping administrators up-to-date on the changes on a state-by-state basis.
“That has been really good to see,” he said. “It takes a group effort, so everyone has a heads up and is ready for it; no one person can keep on top of everything. Sometimes even without a rule or regulation change, the interpretation of what a rule says changes, and everyone has to figure out how to change the waiver, and figure out how to make this work. Carriers are usually the best at the compliance side because, ultimately, it goes back to them.”
Managing an effective, profitable GAP product has a lot of moving parts, and requires the administrator to be on top of every piece, all the time. Better contract wording and more advanced systems have made significant improvements on that front, but it is up to the administrators to work on the last, and biggest, part of the puzzle – managing solid, constant and clear communications with everyone in the product lifecycle at all times, to ensure a smooth process and satisfied consumers.