By Ian Summers, Business Development Director at Sequel
The key to tackling this feat is to view the London market through the customer’s perspective. To achieve this goal, insurers needs to ask themselves: what do customers see when they look in the firm’s shop window?
London has an enviable reputation for managing large claims following major catastrophes across the globe, but there is still a perception that low-value claims are London’s chink in the armour. After all, the complexity of handling a claim related to a damaged oil rig in the Arctic Circle is totally different from an employee slipping on a wet floor at work – so why would a firm apply the same methodology or process to both?
This one-size-fits-all approach is the result of decades of handling some of the world’s most complex claims, using archaic generic transitional systems to handle these situations. It would be foolish to argue that these systems don’t eventually get the job done, but their lack of efficiency, complicated structure and outdated servers delay claims and provide little data for use to improve service and optimise pricing.
Market initiatives have been introduced to address this problem, most recently with the Volume Claims Service. Used to encourage more activity on Lloyds’ high volume, lower value claims, the fast-tracking tool had an extremely slow uptake with fewer brokers using the service than were even involved in its development. Later, the LMG claims sub-group was set up to broaden this user base to include brokers, Lloyd’s and company bureau insurers, with the aim of improving customer experience, technology and data quality. The LMG claims sub-group also produced a paper to reinforce the view that the customer claims experience must be at the heart of all enhancements made to the claims process. It also suggested that merely refreshing and updating existing models and systems would not be enough to make the difference that is needed.
Initiatives like these are important, but only provide part of the solution. The perception that smaller claims are not managed efficiently increases the pressure on insurers to dispel this image and exceed expectations. The emergence of new start-up providers who are not burdened with legacy systems is a very serious threat, and established firms need to find new ways of competing with these more nimble competitors. Relying on old and outdated systems will therefore be a serious detriment to the growth – or even survival – of the business.
Nowhere is this more apparent than in the claims process. Ultimately, the claims process is the shop window through which customers see insurers and reinsurers. In 2015, this window is cluttered, dusty and rarely updated. To maintain London’s preeminent position in this market, firms must accept that technology is an enabler for London to capitalise on its knowledge and expertise.
Whilst a refit will not be cheap, failure to re-dress and restock our shop window using enhanced technology solutions is simply not an option. By engaging with modern technology, insurers will be able to adopt more flexible and scalable strategies in the claims function very quickly.
For actuaries in particular, it is imperative to capture claims information across the entire portfolio quickly and accurately. Understanding this data requires greater granularity than is typically captured, and that needs to be aligned to the specific line of business. Only then can actuaries have the information they need to make fact-based decisions. Unless this claims data is easily accessible, assumptions tend to be made, which can lead to expensive pricing and reserving anomalies for the firm.
Partnering with a specialist technology provider therefore is imperative to making sure that the design of a firm’s IT system is tightly linked with its current and future business objectives for the claims function, and that it has the built-in flexibility and scalability that the firm will need to stay competitive in the future.
When considering how to update claims handing systems, firms need to think about the displays that will take them from a window-shopper to a paying customer. A transparent, smooth, up to date and modern claims process will increase not only footfall and client on-boarding, but will also have a positive impact on customer satisfaction – and ultimately the bottom line.
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