At a time when claims are falling, the new Cila president is determined to boost membership, but standards is also high on his agenda. Ben Cook reports
The first task new Cila president Andy King has set himself is to boost Cila membership among non-qualified staff working for loss adjusters. King picked up the baton from outgoing president Michael Burnett last month, and his primary goal is to continue the recruitment drive his predecessor instigated. "A major initiative started off by Mike Burnett is the inclusive membership concept which has been a response to increased regulation," King says. "We are trying to make sure we have disciplinary control over all customer-facing staff working for chartered loss adjusters." But King says this won't mean Cila will "come in with a big stick" and start making demands of adjusters. "What will happen is that all of the non-qualified customer-facing staff will become ordinary members of the CII and there will be a small fee involved."King says the need to register all customer-facing staff working at adjusting companies is a result of the advent of FSA regulation in 2005. "We need to be seen to uphold standards in order to ensure the protection of the retail customer. That's what regulation is all about."Registered membersKing adds that a Cila committee called Synergy is currently working towards a 2005 deadline as it aims to ensure that all customer-facing staff at adjusting companies are registered as Cila members. King adds that Cila has tightened up its own regulatory practices to ensure its members comply with the FSA's Insurance: Conduct of Business (ICOB) guidelines. "There's a much more streamlined set of procedures in place - things will happen much faster in line with the ICOB rules." Disciplinary standards will be further bolstered by the new ABI/Cila claims code, which sets out best practice guidelines for loss adjusters working for insurers. King says the new claims code is expected to be finalised and distributed to members imminently.King admits that times have been tough for loss adjusters recently as claims volumes have dipped. "Generally speaking, claims numbers have fallen - there haven't been many catastrophes," King says. "The last major catastrophe was the floods in Central Europe, which was two years ago."
Increasing deductiblesBut an increase in the size of deductibles has also hit adjusters hard. "There are a lot of policies out there with much larger deductibles. One way companies are keeping the cost of insurance down is by substantially increasing their deductibles," he says. King cites the experience of one unnamed company whose deductible has increased from $2m to $50m in recent years. "When you have that situation, there aren't going to be many claims."But the immediate future for loss adjusters is starting to brighten, King believes. "Analysts say the indications are that we're in for a year where there'll be a number of natural catastrophes. My take on the immediate future is it's pretty good. There will be more claims," he says. With fewer claims kicking around, adjusters have been looking to branch out into different areas in an effort to boost revenue. King believes that arbitration and mediation are two fields where adjusters can add value for clients. "In the areas of mediation and arbitration, though largely the preserve of lawyers, loss adjusters can bring their skills to the table," King says. "Adjusters are often brought in to take the heat out of a situation, and to deal objectively with the fact of the policy and the solution - those individuals would make first class mediators and arbitrators." King fully supports adjusters that are moving into these areas in order to cash in on their expertise. "A few of our members are starting to go into these areas and I certainly would encourage others to train to be a negotiator and visit the Chartered Institute of Arbitrators to see what they have to do to become an arbitrator."
Andy King on...Insurers driving down rates "Some of the rates that have been imposed on adjusters by some insurance companies have been low. Given the requirements that the regulator is imposing in the ICOB regulations, it is important that adjusting firms are able to properly demonstrate training and competence. Everyone wants this: the regulator, the insurer, the policyholder and the broker. To do this properly costs money. There has to be a fair commercial rate for these services to be delivered."
Adjusters possibly being regulated in France"We had a meeting with FUEDI [the European loss adjusters federation] in Rome and I outlined what had happened in the UK in terms of regulation. The situation in France is unclear but it doesn't look as if adjusters in France will be directly regulated by the authorities. That should be the case because the Insurance Mediation Directive makes it clear that loss adjusters working for regulated insurance companies are to be exempt from having to submit themselves for authorisation."
The Cila/CII faculty of claims"The idea is to promote the examinations that the faculty offers and I think it will achieve substantial growth because of the need to demonstrate training and competence - one of the best ways of doing that is to have people taking exams and structured training where they come out with qualifications. It's also important to continue that training. I'm very bullish about the faculty of claims. I think it's going to do extremely well."