Nick Patterson:: Don’t be a soft touch on claims costs

The loss and liability adjusting sector has, for many years, been seen as the sector that deals with the fallout – whether it’s a man-made disaster such as the Deepwater Horizon oil spill or long-tail liabilities like mesothelioma.

As the industry has become more competitive and the needs of insurers have changed, however, adjusters have had to widen their scope by developing services to reduce risk and becoming claims management providers. Loss adjusters today need to provide insurers with value – and not just on the bottom line.

For a start, we must not only be tough on claims but the sources of those claims. This means good risk management – from health and safety at work training to full audits of risk processes and documentation. This must be combined with the ability to identify emerging risks and trends that are developing in the market by working closely with our insurer and broker colleagues in the underwriting community.

Of course, however much risk management you have in place, accidents will happen, and when they do there needs to be a proactive response where the quality of the investigation is critical. This extends to the rapid deployment of other services, such as rehabilitation. Some employers in sectors prone to accidents in the workplace, such as healthcare, hospitality and food processing, are losing money hand over fist simply because they are too slow in responding to and managing accidents to get people back and fit for work. The services an adjuster can provide to speed the notification and management of claims creates real value for brokers and insurers.

When it comes to legal costs, early decisions regarding liability are key. Garwyn recently dealt with a case where the claimant fractured his finger while moving metal barriers. Liability was conceded in full, as the system of work was unsafe and no training or supervision was provided. We made an early offer to settle before medical evidence had been obtained, in the sum of £2,500, and this was accepted. The claim was settled within six weeks of first notification, and although costs are awaited, we anticipate significant savings on the level normally claimed.

Finally, measurement should be multi-dimensional, encompassing savings achieved, policyholder perception, service-level agreement compliance and denial rates. Measurement must also cover litigation rates and successfully litigated cases. This is perhaps the most difficult area to address, owing to the uncertainty of the judicial process. The same arguments apply when contesting contributory negligence and costs claims.

Choose the right case with the right team, make sure that the evidence is there, costs are under control, the arguments on contributory negligence good and significant savings can be made. Insurers shouldn’t be seen as a soft touch on claims costs.

In a recent case, having reached a very favourable settlement regarding damages, we still had to repay the recoverable benefits of more than £50,000. The benefits were subsequently appealed and this was successful: £50,086.17 was repaid by the Department of Work and Pensions.

‘Prevention is better than cure’ is as much a mantra for liability adjusters as it is for risk management professionals, but legal costs are often inevitable. That’s where a strong defence team can prove invaluable – and the difference between a four-figure and five-figure settlement. IT