The claims crusade gets personal

Before starting in insurance 25 years ago, Bill Paton was a centre half for Ayr United, playing alongside future Manchester United manager Sir Alex Ferguson in his last year as a player. "We had some good fun times with him, and he was anything but a disciplinarian then." It was 1977 and Paton was 20.

Perhaps it is the experience of being in a team and working together that makes Paton so passionate about his work.

Paton is constantly taking on new challenges. He's worked for an outsourced claims firm, run a loss-adjuster, spent many years with the AXA group of companies, and now returned to the corporate area of insurance with Zurich. In his own words: "I've been on both sides of the fence."

Paton has been Zurich head of claims for a year and half, but has kept a low profile while taking charge of reorganising Zurich's claims division, although he does have a fondness for marketing speak.

"The two things I really focus on are efficiency, which usually means customer service, and effectiveness in controlling the claims costs.

"We can always improve efficiency, we can improve effectiveness, but that does not mean that we will treat every customer the same, because as human beings and as customers, everyone's needs are different."

Keeping on the marketing theme, Zurich employs a dual reporting system, called 'matrix management'. This has nothing to do with the Keanu Reeves film, but simply sees Paton reporting to both UK chief executive Ian Stuart and European chief claims officer Lutz Bauer.

"The idea is that more and more we're trying to be global - especially in claims - as opposed to just an international collection of companies. We share the best processes that we can find in Switzerland, in Spain, in Germany, and the US."

The structure is broken down into four strategic business units: Zurich Municipal, Zurich Commercial, Zurich London and UK Personal Lines, with a separate claims operation to support each unit.

"Claims is our biggest output in terms of money, so the people in charge of each unit must have a say in claims, especially in the customer proposition. We will not let, dare I say, technical claims people overrule the customer proposition."

Under the new structure, claims services and suppliers have been taken from the business unit, and centralised into a new, separate area of responsibility with a dedicated team.

"Whatever the supplier, it's all centralised and each strategic unit will state its service requirements."

What this means in practice is that the people responsible for handling claims keep doing so, while all supply and service issues are dealt with by specialists.

But staying true to his demand for endless challenges Paton is still not satisfied. "I have an insatiable demand for my personal objective," says Paton with a wry smile. "We are going to be the most efficient and effective claims team in the UK. That is our mantra. But there's a long way to go."

Not everybody is happy with how Zurich reviewed its claims process. One loss adjuster says: "They had an incredibly detailed procedure and one has to question if it was worthwhile. They got huge amounts of information and comments from companies they did not end up working with. It was a phenomenal amount of work and wasn't worth the effort."

But it's not just claims within Zurich that needs changing, says Paton, but the process within the entire insurance industry.

He argues that reducing the legal costs associated with claims is not simply something that will help increase the profits of insurance companies. It will also help UK plc.

"We've got to get rid of, or at least reduce, the legal costs, not the compensation paid to the insured party.

"The whole idea that sits in with our higher level strategy is you get the claim settled before it's litigated. Why? Because once you go to lawyers, you have 40% hitting the claim."

It's important to measure what he calls 'avoidable litigation'. "This may be a claim where we can be more proactive, where we would spend £500 or more at a certain time. And this is easy in hindsight, you have to look back to learn how to go forward. A trial to me is a failure for both parties."

At this point in the interview, Paton's enthusiasm for claims is obvious.

"I'll blow the trumpet about claims, because I'm pretty passionate about the claims environment," he says.

So what's important now? "The two key competencies are underwriting and claims. Claims has almost been revived. The investment's there and we've been given a great opportunity and a great place to work in."

Paton then retreats into marketing mode by saying Zurich is the best place to work because all the staff have "fun".

"But the key thing we focus on is delivery. If we don't have delivery we don't have anything."

The issue of training and recruiting new people into the industry reveals another string to Paton's bow. A member of the CII's Faculty of Claims and an ACII himself, Paton says raising standards within the industry as well as within Zurich is a personal crusade.

Seeking talent

"When I came to Zurich, one of my main objectives - and this was discussed and agreed with Geoffrey Dale the chief executive at that time - was to increase our talent, and that could bedone by developing the talent within Zurich or recruiting externally.

"So we put a programme in place. Whenever there's a job at any level let's always look outside as well as inside. We benchmark the talent outside and inside the company.

Every person at manager level now has a development programme, personalised.

"My crusade was then for all our staff, but the industry has de-skilled and not concentrated enough on qualifications."

Paton believes there is a qualification for every person, whatever their level within the claims industry. "It doesn't need to be an honours degree in claims, it can be the equivalent of a GCSE or an A-level or a diploma. Let's qualify and get the skills upgraded.

"In the past the CII and the industry have focused on the top echelon. Let's get everyone qualified. They're proud when they can see they've made progress."

Paton is also on a crusade about public perception of the industry.

"Ten years ago in the UK, what was the customer expectation of insurance companies? Very low. Now they don't compare each insurance company, they compare the service levels with the retailers and with the internet. We have had to wake up to that.

"The primary focus of the claims handling strategic units now is in the customer focus, the customer proposition, the customer delivery.

That's the big difference. We've taken out fraud, major loss, catastrophic personal injury, governance and technical training and put them into specialist teams.

"What we haven't taken out, and we'll never take out, is the customer proposition. The customers are all different, and that's why it's broken down into four different areas."

Outsourcing claims

Paton says that attention to customer needs is the reason why Zurich is planning to keep its claims functions close to its heart.

"There are some areas of claims that I would outsource, where they are not key to core competency."

So will Zurich ever offshore the claims function? "The answer is a definitive no," says a certain Paton. "The vast majority of our operations will be UK-based."

The journey and the changes are not over yet, but with Paton in the driving seat, it won't take Zurich much longer to get there.

MATRIX REVOLUTIONS: HOW THE ZURICH UK CLAIMS TEAM IS ORGANISED

Ian Stuart - Chief executive UK

Lutz Bauer - Chief claims officer Europe

Bill Paton - Chief claims officer UK

Andy Pearce - Claims director UKPL

Vacant - Head of technical claims services

Tony Emms - Head of claims supply

Iwan Borszcz - Claims director Zurich Municipal

Anne Torry - Claims director Zurich Commercial

John Latter - Claims director Zurich London