The Knowledge Expert View: SME claims – a study in good outcomes
Jason Eatock, Head of SME and Adrian Spencer, Commercial Broker and Claims Services Director on providing SMEs with good service
What does a ‘good customer outcome’ in SME insurance claims look like?
At the time of a claim, SME customers want their businesses back up and running quickly and efficiently to minimise any threat to their livelihood.
Staying in business, resuming growth plans and ensuring SME businesses are back up and running quickly after an incident are all equally important. And beyond benefiting individual businesses, healthy claims outcomes help sustain a sector expected to be the engine room of the UK’s economic recovery.
Protecting SMEs has been a pivotal part of the FCA’s thematic reviews, which revealed a disparity in the treatment perceived by smaller enterprises versus their corporate counterparts or personal lines customers. Indeed, feedback from SMEs suggested dissatisfaction with insurance products.
That said, SMEs often buy on price without thinking about a potential claim, the likely settlement and post-claims service. This should be an important part of their decision making, however, because the insurance market’s claims offerings are highly variable.
In turn, SMEs and their customers have become more complex and diversified in the wake of the last recession, which means they need specialist advice more than ever. This presents a fertile area for brokers to develop a proposition that considers the claims process.
What do SMEs need?
For many SMEs, insurance buying experience is based on personal lines products and most lack the specialist support such as risk management found in larger companies. There is a requirement, therefore, for SMEs to have access to expertise and advice because they don’t fit neatly into either the direct sales model for simple products or the sophisticated buyer model for larger commercial customers.
Where SMEs might be comfortable dealing with a car damage claim, areas such as liability and estimating business interruption require another level of expertise. This means having a good broker and dealing with a quality insurer.
Getting a fair claims settlement
The FCA has been keen to ensure that protection of SMEs via the insurance industry is a fundamental principle. And, as it concluded, a poor claims experience can have a significant impact on the ability of small businesses to both continue and return to their pre-loss trading level.
Equally, Law Commission reforms affecting commercial insurance legislation – leading to the Insurance Act 2015 – have removed policy conditions that meant insurers could refute a claim even when it was unfair to do so.
Zurich stated early its willingness to abide by legislation change and has been taking the steps needed to protect commercial customers. The fact that we turn down a tiny minority of commercial claims exhibits our ethos of seeking to pay valid claims as quickly as possible.
We have also introduced a ‘Rule of 3’ claims approach for our handlers and suppliers:
• Move the claim forward
• Satisfy the customer
• Take ownership
Simple rules to manage claims by, they also give teams ownership, responsibility and freedom to achieve good customer outcomes. Claims handlers are empowered to deviate from accepted processes where it is the right thing to do.
The broker effect
Brokers are undeniably vital to both the SME customer and insurer through the entire insurance process, ensuring the customer knows what they’re buying, has the right level of cover and is not underinsured – another major concern for the FCA. Brokers not only give customers a good picture of what they’re buying, they can also advise on what will really happen at the point of claim.
The broker’s role as a go-between and mediator is also extremely useful during the claims process, helping to navigate the customer through often alien territory and adding a level of knowledge and reassurance that non-mediated channels just can’t offer.
When an SME faces a major incident resulting in a large claim, it might not only be the company itself that suffers a loss: there can be the risk of personal bankruptcy for some business owners.
One of our starting points, therefore, is how to keep the SME in business after the claim. This means thinking laterally, with flexibility and imagination, to help people find ways to carry on in business. That’s where the best claims commitment becomes extremely important and where the genuinely good customer outcomes are witnessed.
KEY POINTS in the FCA’s Thematic SME claims Review:
• Having an easy process for notifying a claim
• Presence of a loss adjuster
• Understanding circumstances
• Having an action plan
• Co-ordination of contractor activities
• Settling claims in a timely manner
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