Only massive rises in premiums can outstrip the increase in claims costs and save the industry. That's the message that has been passed down from reinsurers to insurers through their brokers to customers over the past year or so.
Just look at the evidence. The Institute of Actuaries reckons that more than 1% of UK gross domestic product is consumed by claims and that lawyers are taking out up to 40% (see page 11).
Until now, the story has been accepted as true. If nothing else it has the ring of truth. But new evidence is casting the story in a different light.
Last year, analyst Datamonitor controversially said that there is no claims culture in the UK.
It was convenient to ignore the report. Liability insurance premiums needed to rise and any talk of claims having peaked would have sent the wrong message to clients - even though the price rises were needed to correct the inbalances of the past couple of decades.
But more evidence is emerging that claims are on the wane. Talk to claims managers and they will tell you that frequencies are down and settlement inflation is no longer rampant. Lawyers will tell you that the legal framework for settling injury claims, which are the main inflation driver and are reckoned to account for a third of all claims, is settling down.
The evidence for change is, so far, anecdotal. On 7 March, the IUA and the ABI are holding a conference to launch the third bodily injury study (for more information email:
nicky.yetton@iua.co.uk . It is likely that the study will provide evidence to support the hearsay.
Feelings at Capita are running high. Chief executive Paul Pindar is on a charm offensive (page 26). The reputation of the firm as a top-flight loss adjuster is on the ropes - ask any of the claims directors with big insurance companies. As one director told me - we let them go because service standards were not up to scratch: they were hard to contact, information was slow and staff were often late. Oh dear.
Pindar is aware of the reputational damage that is being done. Tough, fun and direct, Pindar says Capita will be a top flight loss adjuster in 15 years time, handling £1bn of business.
Many thanks for your kind comments about our new look TimesTwo magazine. Please keep them coming, because we aim to publish what is useful to you. If there is something you would like to see us cover please email:
andy@instimes.co.uk .
Andy Cook
Editor
