Preventing stress from becoming distress

Stress responses are hardwired into our biology and serve an evolutionary role in helping us think and act quickly in threatening situations. Thankfully, we live in the modern world, and the origins of the stress response, like bumping into a sabre-tooth tiger, are relatively infrequent occurrences, in my area of London at least.  

This doesn’t mean that stress has been consigned to the past, like loincloths and cave painting. Globally, stress levels are on the rise as the world becomes more interconnected and complex. On the personal level, stress is unavoidable, especially when making decisions that impact our money.

Making an insurance claim is a potentially high-stress experience for many customers.  Not only will they be experiencing the stress of whatever caused them to make a claim in the first place, like a damaged car or flooded home. They’ll simultaneously need to deal with the stress of navigating the claims process and worry about the final cost to them.

To understand how to communicate with customers experiencing stress, being aware of how stress can impact financial decision-making is vital.

 The impact of stress on decision-making

• Not all stress is bad for decision-making; it must be mentioned that stress can have a positive impact on decision-making. In the short term, low-level stress can sharpen focus, providing an impetus to act, helping to counter the inaction or avoidant behaviour tendencies of some customers. It could be helpful to use customers' baseline levels of stress to prompt them to take action to relieve their emotional reaction. At the outset of a claim, firms could consider emphasising that engaging with the situation and communicating efficiently will help solve it faster. This approach must be carefully managed to avoid increasing stress and mitigate against potential harm.

• High levels of stress impair decision-making; stress impacts decision-making quality, making people feel an increased sense of time pressure and spurring knee-jerk decisions. Customers who experience stress may be more likely to take risks to achieve financial gain or be more conservative to avoid losses. It also weakens our ability to understand information being presented to us, which is critical to navigating complex policy covers. This can lead to bad outcomes during the claims process as customers may fail to understand their choices or be stressed into making a sub-optimal decision about the value of their claim.

• Chronic stress can drive individuals to disengage from the claims process; when stress turns to anxiety, through high levels of stress or repeated exposure, customers may disengage from their claims entirely to avoid negative emotions. In a previous blog, we assessed the anxiety-avoidance cycle in terms of financial worries, and navigating complex claims procedures coupled with damage or loss of personal property will drive similar responses. To prevent poor outcomes in the claims process, stress must be managed before it drives customers to disengage.

How firms can help customers manage stress in the claims process

• Simplify the language of the policy; uncertainty is one of the key drivers of stress. Customers uncertain of the claims process and what will be covered by their product will inevitably be stressed as they wait to hear whether their claim will be paid. Starting with the quote and buy journey, covers and claims procedures should be explained in clear and simple language so customers have clarity before the claims process even begins. This can pre-emptively reduce stress driven by uncertainty by helping customers be better informed about their product.

• Set expectations for the claims process; once the claims process has started, reducing uncertainty about claim duration and procedure can help reduce stress in customers. Stress driven by uncertainty or confusion about a specific topic, like the claims process, can be reduced by supporting people to understand that topic better. Giving customers an indicative timeframe and explaining the firm's decision-making processes can help customers understand their situation. When customers feel informed about their situation, they will be less likely to feel stressed, rather than waiting in the dark.

• Communicate empathetically with customers; feeling alone and isolated leads to increased stress. Firms should consider that making a claim and waiting in the dark can feel isolating for customers, as they wait to hear news or feel that their insurer isn’t on their side. Communications should be phrased in a way that presents the claims process as something that the insurer and the claimant are working on together. This should be coupled with an active and pre-emptive communication strategy, so that customers feel that they don’t have to chase for updates. Even just continuing to touch base with customers about their claim could reduce stress, letting them know that they’ve not been forgotten and that they aren’t alone.