Who really controls claims reputation?

Sep 14, 2012

London insurers, traditionally seen as offering a personal service, are now faced with a growing pressure point:  maintaining service performance in the midst of mushrooming technology solutions and increasing amounts of outsourcing. If insurers do not address the issue of how to deliver a quality and cost-efficient service then the reputation of the London Market for service and commitment to paying fair claims will be adversely affected, affecting the ability of the market to grow.

The Gracechurch Claims Performance Monitor has shown fluctuating service performance for insurers across the board in 2012. Declines have been ‘patterned’ i.e. cross- market, hitting all insurers regardless of service reputation or track record.

These fluctuations should be a wake-up call to the market, bringing as they do, a halt to two years of consistent market improvement.

But what’s causing it and can it be reversed?  

We have already written about ECF potentially contributing to a ‘computer-says-no’ culture, but other market-wide challenges exist, especially around the (increasing) use of third parties. In such a diverse market, both technically and geographically, insurers have little choice but to use outside experts more and more. Indeed, costs for provision of third-party services now run into hundreds of millions, with billions of pounds of claims under management.

So what does the insurance market get from these “services” other than technical expertise?

The obvious answer for the insurers is reduced exposure, lower risk and local knowledge. But there are less obvious and seemingly often unmeasured factors such as ‘experience’. So what value, if any, do third-parties really add to the broker and client’s experience in terms of communication, peace of mind or speed of resolution?

Out of the back of the ECF debate, brokers are now asking insurers for more contact, better relationships and more transparency. If however, much of the claims management is being driven by outside expertise how will the insurers deliver this and how will they manage expectations?  How accountable are all these third parties to the clients and how can insurers demonstrate that they actually help effective resolution?

If London wants to avoid declines in claims service quality then it is essential that claims teams now start to develop more effective ways of managing the increasingly multi-faceted relationships between claims teams, third parties, underwriters, clients and brokers.