While challenges persist the claims market ‘seems to have settled down’, says head of specialty claims
The claims market is facing a range of challenges, but the claims process itself remains the most important part of the insurance transaction.
James Webster, head of specialty claims at insurer Hiscox, says that while the claims sector is stabilising after a difficult 2020-2021, brokers have a role to play in this process.
“Claims inflation is continuing to be felt across all lines of business,” he explains. “Building costs have dramatically increased, but the impact of claims inflation is lot wider than simply in the property risks.
“Over the past six to 12 months we have seen all our suppliers increasing their prices – such as lawyers, loss adjusters and other third party suppliers – to varying degrees, which has reflected the rising costs of energy and materials.”
On top of these obstinate issues, Webster adds that underinsurance remains a key issue for the market and – given its potential effect on the ability to handle claims – is an important factor for all underwriters and their claims departments.
“Underinsurance is a concern for those insureds that have a policy with limited coverage and an average clause,” he says.
“We are seeing issue for property claims and also liability claims where the limits within the policy are not adequate. We have liability coverage with limits from £10 million to £10,000 and claims costs are increasing, which only adds to the need for limits to be adequate for the potential exposures.
“The fact is we are here to support our clients with their claims and we want to work with them to ensure they receive what they expected to receive under the policy.”
Brokers are key here, says Webster. He explains: ”In many ways, the broker’s key role when it comes to claims is just before the claim process begins.
“They can ensure the clients understand what they obligations are under the policy and understand what they can expect from the policy’s coverage.
“They need to identify where they can add value to the process and they can play a role in supporting the insurer if there is a dispute.
”No insurer sets out to deny the best outcome for the customer and the broker can also ensure that the claim is heading in the direction that the policyholder would like. They can work with the insurer to provide the response and service that the customer would and should expect.”
Business as usual?
Despite the continued threat of underinsurance and the impact this can have on the perception of claims departments from customers, Webster says the claims market is enjoying some much-need stability.
He says: “The market seems to have settled down. There was a lot of movement in 2020-21, but for the last year and this year it has returned to a more business as usual feeling.
”The market will always create challenges, but insurers need to identify trends early to they can be prepared and support the customer.”
And while there were challenges for those working in claims to surmount, Webster says claims have not become any more complicated in recent years.
“They are not more complex, but we will always have claims that will fall outside of the policy wordings that go into grey areas, which need to be assessed and managed.
“Where there are grey areas, it is important that we work with the insured and come up with a way that we can deliver the best outcome for the client. [However], the best outcome for the client and the best outcome for the insurers can sometimes not be the same.”
At Hiscox specifically, Webster says the claims ethos remains customer centric.
“Our approach is focused on the customer and we ensure there is a human touch,” he explains.
“There is no one-size-fits-all in claims and we need to understand the customer’s concerns and their motivation as to what they expect [before] we work to see how we can get them there.”
As a sponsor of Insurance Times’ Claims Excellence Awards 2023, Hiscox is broadly supportive of technological innovation and excellence within the sector. Webster says technology has improved the claims process, but cautions that it cannot be allowed to take the human interaction element away from claims handlers entirely.
“Technology has had an impact,” he explains. “Everyone has a smart phone so can take and send three or four pictures, which will allow the insurer to ascertain whether there is a claim without the need to send a member of staff or adjuster to the claim site.
“While we will use technology to increase efficiencies for our customer, it cannot come at the expense of human interaction with the customer. We understand that our customers will come to us at what is likely to be at their lowest point – their house may have been damaged or destroyed, or they may be subject to a claim which could destroy their business.
“It is important that you can deliver a human response. Technology delivers many upsides for the claims process, but we ensure that our customers have human interaction when they require it to ensure that we can work out the best outcomes for the customer.”
Webster adds: “Claims remain the most important part of the business. In some ways, it is where the magic happens. You can have the best policy wordings, underwriting systems and pricing, but without the ability to handle claims you have a worthless product.
“It is a great place to work because you are really making a difference to people and businesses. You can restore a person’s home or provide the support that will keep a business operating. It is a mix of technical expertise and human relationships.”