The Loss Review Process.

Are your VSC and Tire & Wheel policy coverage definitions fact or fantasy? Are you paying dozens of abusive claims daily without even knowing it? Do your own service departments follow your claim policies and administer claims fairly for both the customer and you? At NationsGuard, we help bring awareness to “hidden waste” through our claims loss review process.

In this article we will explore:

• The importance of understanding claims policy in practice.
  
• What is a loss review?
• How does it work?
• How does it add value to the customer and the dealership?
• Managing “Goodwill” in the light.

The Importance of Understanding Claims Policy in Practice.

What do we mean, by “claims policy in practice”? Your claims policy is made up of the contractually defined time and mileage definitions of coverage coupled with coverage limitations. For example, a Tire and Wheel Road Hazard policy covers tire and wheel damage caused by a “road hazard”. It specifically limits and excludes “collision damage”. A road hazard is something that’s not supposed to be on the road, i.e. construction debris, nails, bolts, bits of broken vehicles, potholes. The coverage cost of a tire and wheel road hazard policy is based on “expected losses due to road hazards”.

Your policy in practice is how your service departments apply that policy. Many service advisors don’t understand the concepts of “expected losses” and “risk sharing”. As a result, they often “misapply” contract coverages thinking they are doing the customer a favor, when in fact what they are doing is increasing losses with the dealer’s money. An example of this is a customer that runs off the road to avoid a collision. In the process, both front wheels and tires are damaged by the curb and the ditch. Maybe the vehicle doesn’t sustain body damage, but this example is collision damage and should be covered by the customer’s collision policy. Why is this collision damage? Because the curb and the ditch are supposed to be there, they are not road hazards, and they are not on the road by accident.

We often see in practice a Service Advisor observing that a customer has tire and wheel coverage and placing a claim against that policy. Unfortunately, to get the claim approved, they (or the customer) have to misrepresent how the damage occurred, because the claims adjuster will understand that it is not a covered situation and deny the claim. “If we say you hit a pothole, it will be covered.” That Claims Advisor has just changed your policy in practice to road hazards and collision damage, which will skew losses and create HIGH and unsustainable loss rates.

In order to manage policy losses within expected ranges, it is critically important that your policy in practice reflects your actual claims policy. But, how can you know whether your policy in practice matches your stated claims policy? NationsGuard has developed and provides “Loss Reviews” for this very purpose.

How Does a Loss Review Add Value to the Customer and Dealership?

Proper management of the claims adjudication and approval process contributes to:

• Better customer write-ups and communication between Service Advisors and Customers in the service lane. By asking the customer for clarification for better complaint documentation, the service advisor is demonstrating more interest in the customer’s issues and is helping the tech along the way to better problem diagnosis.
• Better problem diagnosis leads to more effective and often lower cost repairs, reducing repeat complaints and “comebacks” which customers hate.
• Proper 3Cs management spills over into all aspects of the service write-up process, improving service performance in general.
• Proper claims adjudication takes “Goodwill” claims decisions out of the hands of Service Advisors and Techs and puts them into the hands of dealership management where they can be properly controlled and leveraged for the greatest customer satisfaction benefit!
• Proper adherence to these best practices brings claims losses into planned and acceptable limits, reducing the need to raise prices on contracts to cover unwarranted and out-of-control losses.
• Manufacturer Warranty Audits follow these same Best Practices, the difference is that failure to comply with these practices for manufacturer warranty results in warranty chargebacks, which is real money out of your dealership’s profit! NationsGuard Loss Reviews have helped compliant dealerships avoid costly manufacturer warranty chargebacks.

Managing Goodwill in the Light.

The greatest benefit of a properly executed loss review process is that it produces a controlled claims management process. By knowing and consciously managing the claims we pay, we then have the capacity to pay Goodwill Claims to help good customers as dealership management has a need or feels it is warranted. In other words, it gives you, dealership management, the flexibility to “break the rules” when it is in your best interest to do so. If your losses are already exceeding 100% on a contract type, you will be very reluctant to grant an exception to a good customer for “Goodwill”. When losses are managed within the defined limits, Goodwill becomes a cost-effective tool to improve customer satisfaction in selected cases where management needs or wants to “grant” an exception.

The Loss Review process provides the data and facts necessary to keep coverage limits real. NationsGuard has a well-defined and proven loss review process and the experts to help you execute it at your dealerships. Let us help you get control of your contract losses today.