Andrew Holt asks Towergate's claims director Simon Gifford how the insurer has dealt with the challenge of extra claims following a summer of floods
After the trauma of the floods that struck throughout the UK, comes the aftermath for the insurance industry in the form of claims. It is at these times that the industry is tested to deliver on the promise it gave when people bought insurance.
Simon Gifford, claims director at Towergate, is in a good position to give an account of the experience and challenges faced. “We have had about 1,100 claims, which across our structure worked well,” he says.
One of the reasons for this, says Gifford, is because Towergate doesn’t have large claims teams in one place, making the process more manageable.
“Our claims teams are embedded in individual businesses around the country. One of the advantages that gave us was that one office was not bombarded with claims. The biggest office that was hit was Hull, which was understandable, but it wasn’t bombarded.”
Gifford adds: “Our strategy helps in terms of customer service. Having people on the ground is so important.”
The number of claims –1,100 – seems very low in such a difficult scenario. “It is down to our diversification of book of business and a bit of luck,” confesses Gifford.
“We write so many types of business. We write niche and books of business that would not have been exposed to this type of problem.”
And he admits that the situation was so unusual, no claims patterns emerged about who was hit and why. “There seems to be no correlation between the size of loss and the more fastidious underwriting approach. And I think in the case of non predictive flooding of this type that has to be expected.”
Overall, Gifford says that the industry did well collectively during the floods, but the worry for him is that the mainstream media will switch to the negative cases where there has been some perceived failure by insurers or the industry.
“The industry has responded really well. But you could have a situation where two claimants live next door to each other, one of which has been project managed very well and the other hasn’t. When that starts to happen there will be some negative PR.
“What happens then is the 98% that are happy are swept aside by the 2% that are not. And it would be inconceivable with a situation on this scale that somebody somewhere doesn’t have a problem.
“The key is how quickly companies respond to that problem. We are trying to be proactive, so we don’t get these cases. As a business we pick up few complaints, but you can never be complacent.”
It is often said that the industry works collectively well during a crisis, but not during times of stability. Gifford contests this. “I would argue we do all the time. We look after our customers outside emergency situations as an industry.”
“The industry has responded really well. But you could have a situation where two claimants live next door to each other, one of which has been project managed very well and the other hasnâ€™t. There will be some negative PR
Simon Gifford, Towergate
Gifford says the model Towergate uses in its claims approach is based on the best of the broker approach – superior to that of the insurer. “We carry the broker ethos through the whole organisation. It is behavioural. Brokers are far more at the coalface in terms of an all-rounded approach.
“You don’t get that behaviour from insurers, which have segmented their claims process. Insurers dealing with a claim are detached from the service reality in a way that we are not.”
Another factor that is important is the length of time claims take. There is nothing more frustrating than a claim that drags on. “We have shortened the period of claims. And during the floods we made sure that no businesses went out of business,” says Gifford.
On the household side, Towergate has already dealt with 38% of the claims on its book from during the floods. “We really have tried to shorten that timetable, where possible.”
Gifford has over 20 years’ experience in the industry and has naturally seen many changes in the claims environment over the years.
“These things are circular; things that go around, come around. The motor market is extremely complex and that has been a bit of an eye opener.
“With regard to motor insurance claims, there has been a real change. Now the market moves very quickly. Historically motor is a lesson to everybody on how not to do claims.
“If insurers had been more tuned in, and I include myself in that, and able to keep up to speed with customer expectations, we would have been doing everything that is now being done but sooner and probably even better.
“With household, we moved from a position of giving customers choice to giving customers a supply chain mentality. We restricted the choice available to customers. The controlled spend approach alienated customers, and in a service industry, that is not good. But that is changing.”
And of course IT has a part to play here. “IT will contribute to tremendous change. What those systems can do, by taking the claims proposition forward and freeing up staff to deal with the customer, is amazing. We have spent the past 15 months looking at different systems to do this even more.
“We are an acquisition-driven company and as a result we have absorbed so many systems. We are therefore investing heavily in technology.
“As a business we need to be looking ahead to make ourselves more efficient and help us with our compliance.”
So where now for Towergate? For Gifford it comes back to the customer. “For us our retentions are very good – they have to be – that is the segment of the intermediary market we are in, dealing with customers.”
Insurers warned over insufficient flood scrutiny
UK insurance providers are risking insufficient scrutiny as they process claims from the summer floods, data integration firm Informatica has warned.
The huge volume of claims has created unprecedented customer data management demands for the insurance industry.
The ABI has stated that insurers are currently under severe time pressure to handle more than 50,000 claims, that followed Julyâ€™s extreme flooding in the Midlands, West Country and Yorkshire.
The ABI estimates that claims could reach as much as Â£3bn.
While many insurers have undertaken extensive projects to integrate data across disparate IT systems, few have taken sufficient measures to ensure that the data can be accurately profiled, particularly in cases where customer records date back many years.
Without the capability to profile data accurately and therefore make effective correlations between different types of customer data, insurers risk settling flood claims under pressure without the benefit of full visibility of the accuracy of customer information.
Mark Dunleavy, data quality consultant at Informatica, says: â€œWith the weather becoming ever-more unpredictable, insurers need to be considering how they can avoid finding themselves in this situation again.
â€œTo this end they need to proactively profile their customer data, which will provide them with the necessary insight to recognise where and how their business is exposed as well as better understand their capital requirement management.â€