The Aronda "Black Box" - Bridging the Gap of Mistrust in Insurance Service Relationships : A Study of Damage Adjustment as a Critical Episode

Abstract: Problem: The nature of insurances, and indeed the customer-provider relationship in insurance services, lends itself to distinctive characteristics. These characteristics have particular implications on overall perceived service and relationship quality, and thus customer retention. The arguably singular characteristic of mutual mistrust prevalent in insurance service relationships, is a source for costs and lost profitability for insurance companies in Sweden. Bridging the “gap of mistrust”, potentially offered by a seemingly simple service, could entail significant benefits for both parties in an insurance service relationship.   Research Questions: Does the Aronda Service have the potential to improve a damage adjustment process in a provider-customer insurance service relationship?   Can a more effective damage adjustment process improve an insurance service relation between provider and customer? To what extent do the providers perceive that the damage adjustment process is critical to a customer’s stay or switch decisions in an insurance service relationship?   Purpose: The aim of the thesis is two-fold: The aim is to investigate and describe the impact of the damage adjustment process in customer relationships between the privately insured and property insurance companies in Sweden And to assess, the potential of the Aronda Service to improve customer relations for insurance companies by improving (in terms of customer satisfaction) the damage adjustment process. Methodology: A qualitative method with deductive reasoning was used. The highly contextual nature of customer-provider relationships was deemed, for the purpose of the study, best suited using a qualitative method. Data collection comprised of interviewing several professionals pertaining to the field of property insurance and damage adjustment, academic literature, peer-reviewed articles, and Ph.D. Dissertations.       Theoretical Approach: The theoretical approach is based on consolidation of widely used theories in the field of service and relationship in the “Critical episode on insurance relationships” perspective, presented by Mikael Gidhagen, Senior lecturer at Uppsala University, Sweden. Although the perspective is originally created for B2B relationships, proved great applicability and relevance.   Empirical foundation: The empirical foundation consisted of a number of interviews with respondents with extensive corporate and private insurance industry experience. The secondary empirical information was gathered from governmental, consumer services, and industry regulatory bodies’ websites and publications. Conclusion: The uncovered prominent issues in insurance relationships between private individuals and property insurance service providers can at the very least be aided, if not solved, to the benefit of both parties by the proposed digital version of the Aronda “Black Box”. As the importance of documentation in more cases of insurance claims than not are paramount, and by decreasing the coverage knowledge gap of customers, facilitating a matching of service expectations and actual service delivery, customer satisfaction can be more readily achievable for insurance provider. A readily achievable level of customer satisfaction, in turn, means probably prolonged customer retention, and ultimately higher profitability for the insurance companies. As “it cost more to attract a customer, than it does to keep one.”