Living and breathing the 'Zurich way'

Change can revolutionise the way a business operates. This was the challenge Bill Paton, Zurich chief claims officer, set himself when he directed the restructure of the insurer's claims function.

Eleven months on, the company has switched to a structure that focuses on business claims rather than the traditional municipal, commercial and personal business units.

In the process, he has put in place the final framework of what has been a gradual evolution of Zurich's claims processes.

Earlier this year, Paton revealed a transition to a "dual-matrix" reporting system, enabling Paton to report to European chief claims officer Lutz Bauer and chief executive Ian Stuart.

The convergence of the commercial and municipal divisions into one business unit was the first stage of change.

Last month, the insurer restructured theclaims function to pool the company's expertise. Six sections were created: claims supply; motor claims; property claims; casualty claims; technical operations; and finance.

Now, all motoring claims are handled in the same department instead of duplicating processes in commercial and personal lines.

Paton says: "What this system does not do is dilute the customer proposition and that is why I think this is going to be successful."

This commitment to customer service will be further enhanced next year when a new IT business system is introduced to support the revamped claims structure.

According to Paton, the restructure echoes changes to the Zurich ethos, otherwise known as the 'Zurich way'. It may sound like a Zen-like state of being, but it is just a customer-focused methodology to inspire greater efficiency among the network.

In practice, it shares business methods among the company's branches in Spain, Germany, Switzerland, UK and North America to provide a consistent approach around the world.

"You have to live it, breath it, and show that it works. You can't transfer things like this automatically because each country has different data protection rules, but you can share the basic principle to achieve the most efficient practice on a global level," says Paton.

"The idea is that regardless of whether you are a claimant in the UK, Switzerland or America you will have the same experience. This ideology has also driven us to restructure the claims system in the UK."

Paton says the sharing of ideas was already happening in fraud detection. The UK's processes and techniques are being adopted by Zurich's offices in Germany, Switzerland and Spain.

However, the reasoning behind the change is the development of more efficient customer service. Paton believes this is essential to target the challenges that face the market, especially to reduce inflationary pressures on premiums and contain claims leakage.

"A lot of claims companies are trying to contain claims leakage and Zurich is heavily involved in trying to influence the factors that affect the marketplace in terms of claims inflation."

By lobbying the government over the terms of the Compensation Bill, Paton hopes to prove a connection between the level of premium and the cost of claims.

Paton objects to the 'double-handling' waste that results in large legal fees, which he says can cost up to 50% of the claim. He says improving internal processes can cut costs in the claims process.

Zurich has developed its own team of 31 field specialists trained to investigate fraud using cognitive interviewing processes. Paton said this took the onus of detecting and pursing fraudulent claims from customer service staff and upheld Paton's creed of "efficiency and effectiveness".

"Claims inflation is still running substantially higher than what peopel think as a result of the competitive nature of the marketplace. Insurance companies are still seen as 'cash cows' and fair game to anyone wishing to get revenue out of the system," he warns.

Yet the company is taking a multi-faceted approach to tackling fraud, drawing on the resources of its European counterparts and committing to an ABI market agreement to pool data with other insurers to identify organised crime rings and fraud.

"The industry has come a long way in terms of identifying and combating fraudulent claims and the sharing of data is paramount in the continuing fight. Insurers must work together to tackle fraud, in particular organised crime. We are committed to supporting and contributing to this new initiative."

With a structure for an improved claims operation, Paton is not relaxing his grip. He says he will pursue innovative ways to reduce cost and improve customer-service. IT