There has been much talk about claims management in recent years, but what exactly is it ? There are apparently two schools of thought concerning this important issue.
The first is the insurers' point of view, which is the faculty for minimising both the administrative cost of handling a claim that has occurred and the value of its settlement. This can only lead to a substandard service to the claimant, whose interests could be seriously at risk.
The second point of view must surely be that of the claimant, whose paramount interest is the implementation of the contract (the policy) between the claimant (insured) and the insurers.
The Principle of Insurance remains the same in claims management and its purpose is to place an insured in a similar position that they were in before the claim occurred.
I believe this can only really be achieved by an expert loss assessor, who would have the necessary skills in the preparation and negotiation of claims learned through years of experience from representing claimants in the negotiations of claims.
Numerous brokers and other intermediaries have no hesitation in recommending loss assessors to represent their clients following the occurrence of a claim. Sadly there are still many brokers and intermediaries who do not see the importance of this need. This omission can be of grave disservice to the client. It is of the utmost importance for a claimant to be represented promptly, and to have a representative with comparable or superior skills in relation to the loss adjuster who is the representative of the insurer.
Those brokers and intermediaries who do not see the wisdom of having expert assessors to represent their clients following a claim, should ponder the consequences of this and reconsider what advice they should give them to ensure a satisfactory and proper conclusion of the claim, bearing in mind that they have a "duty to care". And because of this, it is incumbent upon them to provide adequate and satisfactory advice.
Many unemployed loss adjusters are now entering the arena of loss assessing and provided they have adequate skills, there is nothing wrong in this. The problem arises in determining how they are to acquire such adequate skills which are essential to the satisfactory conclusion of a claim, on behalf of the claimant.
The loss adjuster has the knowledge of interpreting the policy wording for the benefit of the insurer, having always acted for them. This is entirely different to interpreting it to the benefit of an insured who has now become a claimant.
The loss adjuster would not have the experience and expertise necessary to prepare a full and detailed claim. To acquire that knowledge, one would require working full-time for an assessor for a significant period of time.
It has not been the province for an adjuster, generally speaking, until recently, to purport to act for claimants, having previously continuously claimed that because they were impartial, it was not necessary to employ an assessor to represent their interests, as they, being loss adjusters, would deal with the claim fairly.
When the loss adjuster has worked for insurers, they are accustomed to being handed a detailed claim, whereas acting for the claimant the assessor has to start with a blank sheet of paper and prepare a full and detailed claim, which, without the necessary skill set, would be difficult to achieve.
I now refer to "the great unknown of insurance"– business interruption. I believe that the skills for this type of claim take very many years to acquire – far more than material loss claims.
I personally started our loss of profits department (as business interruption was then known) shortly following the cessation of hostilities after the end of World War II.
Here again, and most importantly, it is the experience and expertise of the professional loss assessor, who is continuously dealing in this particular discipline over a lengthy period, who has acquired the skills in preparing and negotiating settlements which will place the claimant back in the financial position they would have been in had no loss occurred.
Why an expert is needed
The following is a classic example of the necessity for a claimant to employ an expert professional loss assessor to represent their interest. A computer system failure occurred between June and July 1998 at the premises of a manufacturer of laboratory equipment, causing serious disruption to production and sales resulting in a substantial business interruption claim.
We previously acted for this company, following a major fire, and the managing director was about to telephone and instruct us to act for them when their broker advised them that "as this was a simple claim it could be handled by the broker in conjunction with the loss adjuster appointed by insurers".
In July 1999, there was an offer of settlement of £50,000 made by the adjuster and recommended to the claimants by the broker as acceptable. The insured was most unhappy with this suggested settlement and instructed our company to represent them. Protracted negotiations took place between the adjuster and our business interruption assessor and finally, in December 1999, we were able to obtain an offer of £200,000, which was accepted by our clients. An improvement of 300%.
I believe that this could have been achieved many months earlier, if we had been appointed immediately following the loss.
In conclusion, I feel that the definitive moment to the nature of this problem came when a respected journal recently commented: "The danger of a skills' shortage is not, however, just a problem for adjusters. It would also create a problem for insurers and brokers who are increasingly looking to highlight the quality of their claims' handling services as a defining factor".
I rest my case.