The calamity that is claims

Claims are given quite a lot of air time. Everyone seems to have an opinion about them - unfortunately most seem to centre upon what other people are doing wrong.

I chaired a roundtable yesterday which was very enlightening but not necessarily fruitful. If anything, rather than uncovering any solutions, we spent an hour and half (I had to forcibly shut everyone up as the room was had been booked by someone else) bemoaning every single issue and potential hazard that loomed on the horizon.

One reason why the debate was so wide ranging was because attendees came from all areas of the chain and everyone had something to say on the subject (this is not a given; unfortunately some people attend and spend the whole debate looking like a rabbit caught in headlights).

We started with a straightforward question - what is wrong with the claims process? And although I had about 15 questions in front of me, we didn't really need any more prompting than that.

Immediately an insurer spoke up and said that brokers who took the reins on first notification of loss over-complicated the process. He said that because of his fraud system, the insurer had to speak to all policyholders and would not accept broker referrals. This meant they often dealt with disgruntled customers who had already explained their claim three or four times. He couldn't see why brokers wouldn't hand the clients straight over and streamline the process.

However, brokers present felt that this approach was wrong and that their own systems needed to be trusted by insurers. If they referred a claim which they had vetted then that should be good enough for any insurer. Brokers also said it was all well and good for this one insurer to be on the ball and hot on receiving claims but there was a vast disparity between how different insurers dealt with the process. Unfortunately that was one of the only things the insurer agreed with, saying that brokers were equally inconsistent.

We moved onto claims management companies (CMC) and this was perhaps where the most interesting issues were raised. It was accepted that, now these mouths were present in the food chain, they were unlikely to leave and therefore something needed to be done to ensure they were reputable.

An attendee from a CMC called upon the ABI and CII to produce a test of reasonableness for CMCs. If they adhered to certain guidelines regarding repairs and timings then at least this part of the process could be more transparent. Sounds perfectly plausible which begs the question, why hasn't it happened yet? In fact if broker and insurer behaviour is so varied, why not have a test of reasonableness for everyone?

As one attendee quite rightly pointed out, with all these issues, if the industry continues to allow for dysfunctionality and disarray then the only way an answer can come is if it is imposed from outside. Already we are looking at litigation on referral fees and who knows if this won't then swell into a wider investigation on how brokers sell legal expenses as a whole?

Essentially if brokers and insurers refuse to cooperate and look to someone else, namely the government, who has limited understanding and a love of wide sweeping, crowd pleasing gestures, to call the shots then they only have themselves to blame when they don't like the outcome.