A job worth doing

"Why do insurers need four quotes for building work when slates come off my roof?" asked Five Live interviewer Fi Glover in a recent programme. "Well," said the interviewee, "would you buy a car without checking that you were getting the best price?"

This is the conundrum the insurance industry faces when trying to provide building repairs. You can take the first quote and get the work done fast, but it may not be the best value. This means higher premiums in the long run. Alternatively, you can request a few quotes and check that the value is right before proceeding. This risks the fury of Fi Glover and many other customers.

So what is the industry to do? Well, building repair networks have emerged. These are builders approved by the insurance company and usually run by a third party - often a loss adjuster. Work can be started quickly (no need for compiling quotes) and it is carried out at a cost approved by the insurance company.

Loss adjuster GAB Robins runs a building repair network called Sergon. And it is at the cutting edge of providing value for money in building repairs. Just look at the evidence. Over 95% of customers are satisfied with the work, while 30% of claims are repudiated - creating value for insurers. Additionally, builders are guaranteed payment within 28 days - faster than the construction industry average. This means builders like working for Sergon and produce good work, so they continue to work there.

Shrewd operator
Sergon managing director Arthur Rackstraw knows others are trying to find out the secret. "We're the market leaders and we know our rivals want to know what we're up to. They've been talking to our contractors to find out why they prefer to work for us."

Rackstraw is something of a one-off in the insurance industry. He's a shrewd operator, but someone who knows his 91 staff by name, has time for friendly banter and wears cowboy boots with his suit.

A chartered building surveyor and qualified loss adjuster, Rackstraw now lives close to Sergon's Nottinghamshire offices.

In 1999, Rackstraw formulated a plan for a claims management division. He wanted to be based away from the South where salaries and other costs were high. He wanted to operate on a largely paperless basis and meet insurers' wish lists for good service within affordable costs.

There would also be a big difference - he wanted fair play for his contractors.

The opposition was already up and running and Rackstraw needed to move fast. By May 2000, Sergon was open for business. Sergon was originally meant to be called Ergon - the Greek word for work. This name had already been taken by a power company and so an S was added.

Alongside national account manager Karen Dobson, Rackstraw has brought in a succession of quality household insurer clients and more big deals are in the offing. He says price - while competitive - is far from being the sole selling point. "We're not the cheapest and don't want to be."

Valuing staff
Visiting the operation, it is clear that staff are motivated and morale is high in the call centre - although Rackstraw dislikes the term, calling it a 'control' centre.

Sergon is based in former offices of the National Coal Board. Outside they are far from showpiece, being of standard 1960s design, but inside, they're pleasant, light and filled with plants.

Rackstraw says valuing staff is not a cliché. "We pay above the market rate and always promote internally if we can. I constantly emphasise we can work only if we really are a team; and I'm determined this business will provide stable jobs."

Not least, staff are buoyed by the fact the company won the 2002 Insurance Times Awards category for Service Provider of the Year.

Construction firms such as Mowlem and adjusters Crawford and Capita may run operations that are outwardly similar to Sergon, but, it seems, have not yet experienced Sergon's levels of success.

Rackstraw says the contractor relationship is what sets Sergon apart. Perhaps because of Rackstraw's experience in the building industry, he feels an affinity with them. Others, he claims, simply believe that hammering down the price is the key.

One of Rackstraw's favourite sayings is: "We're only as good as the person with the paintbrush." He argues that paying on time is only right and proper.

Those in the construction industry often run small firms and operate on tight margins. Cash flow is tight. The last thing they want is to be kept waiting for pay.

But, this is what invariably happens with insurance work.

Loyal contractors
Sergon takes a different tack. "We pay our people within 28 days. And even if they see a job that should be repudiated, they still get an inspection fee. Insurers know we won't do any work that is not covered in the policy."

Contractors who are left to battle faceless insurer accounts departments that so often lose invoices, are soon turned off insurance work. Equally, they don't have to waste time running round providing estimates. Sergon selects the right person for the job and providing it's covered by the policy, then work can start at once.

Beyond this, Sergon holds contractor conferences, sends out regular newsletters and offers technology and training to help them run their contracts smoothly. It even pays out cash at the start of the job - a "prelim fee" that ensures contractors use dustsheets and keep the property clean.

In return, high standards are expected and only one in 12 contractors is taken on. Contractors must be PC literate. Digital photography is often expected - Sergon staff can then check how the job is going remotely. And they need to be multiskilled.

Rackstraw says Sergon's auditing process is second to none. A team of 15 field staff keeps tabs on contractors, with the Nottinghamshire call centre team also monitoring all jobs from start to finish. At least 20% of jobs are physically checked out.

Rackstraw has plans to offer the service more widely. Retailers are in his sights and at a later date, a service could be offered direct to the public, including central procurement services.

Within a year, Sergon was turning in a profit, Rackstraw says, a considerable achievement considering the start-up costs. No wonder he says this is just the beginning. n

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