Why towing problems may impact auto insurers' customer satisfaction
A recent WSJ story reported on a California towing company that has only 46 employees when it could use 100, and that’s having serious implications for its ability to meet demand. According to the story, it takes the company up to three hours to arrive at an accident scene, which is a long time for a motorist to stand by the side of the road with a disabled vehicle.
Unfortunately, this is not an isolated case, because the WSJ’s reporting corresponds to what HONK saw in a survey it fielded earlier this year. Tow providers are finding it difficult to hire enough people to keep up with work, and more than 1 in 5 are having to turn jobs away because they have more jobs coming in than they can handle. Tow providers had to lay people off during the height of the pandemic due to far fewer people on the road, but now that traffic levels have roared back to overtake pre-pandemic volume, they’ve not been able to hire enough operators to meet renewed demand.
That’s a big problem for auto insurers because roadside assistance is their most common interaction with policyholders. Certainly, the vast majority of a carrier’s business, revenue and profit center around protecting policyholders from losses in accidents or other causes of vehicle damage. But policyholders are much more likely to have a flat tire or a dead battery than they are to get in a wreck. As a result, though roadside assistance accounts for a relatively small part of an insurer’s services — a service that is almost always contracted out to a third party — it has an outsized effect on the customer experience.
So, when policyholders find themselves broken down on a hot day far from home at the side of a country road, if they end up sweating for hours waiting on a tow operator who gives them no indication of when they might arrive, they’re going to be upset. And they’re not going to direct their ire at the third-party roadside assistance provider. They’ll be angry with the insurer who underwrites their towing and roadside coverage policy. Simply put, long wait times result in lower insurance carrier NPS scores, which hurts customer retention.
To cope with the labor shortage, the vast majority of tow providers (73%) are now prioritizing work. And while one might think that they’d prioritize the most lucrative jobs or those they receive from city or county law enforcement, but, in fact, their number one priority is to complete the closest jobs first.
It stands to reason. By taking closer jobs, service providers’ trucks assist more motorists and spend less time driving back and forth. However, most motor clubs don’t dispatch jobs that way. Instead, they operate on a territory model, where one company has exclusive rights to all jobs in a certain geography. These territories can cover a large area, which means it may take quite some time for a tow operator to arrive on scene. If there are closer jobs, the provider is likely to do those first, because in this way, they can complete more work in a day, and more volume means more revenue per truck.
There is a technological solution to this problem, it’s location-based dispatching. In a world where GPS is ubiquitous and smartphones and mobile devices are everywhere, analytics can crunch location data to offer new jobs to qualified tow operators who are closest to the scene. As a result, stranded policyholders get faster service, tow operators get more jobs per day, and auto insurers end up with happier customers and better NPS scores.
Of course, location-based tow dispatching won’t completely solve the current problems with tow operator labor shortages and slow response times. But it can mitigate their effects and provide faster response times than would be possible without the aid of this technology. In this environment, auto insurers can use every advantage they can get.
