Russell Crewe promotes the benefits of a procured supply chain

' The UK insurance industry has undergone radical change in the last 15 years. As part of this change the manner in which claims are settled has become increasingly sophisticated, although insurers remain focused on two main aims: controlling and reducing indemnity cost and delivering enhanced customer service.

Most insurers use a procured supply chain to achieve this, with others servicing claims in-house engaging external providers to provide excess and surge capacity.

Some insurers impose their procured supply chain on their loss adjusters and claims handlers.

Others adopt the supply chain initiatives introduced by their loss adjusters or favour the more traditional approach of requesting estimates direct from the policyholder.

The remainder provide a further element of flexibility in the claims solution by offering the option of cash settlements or store vouchers.

Many insurers do not possess the structure, resources, or financial capacity to establish and develop their own supply chain beyond the usual contents suppliers. A supply chain developed within the business model of a loss adjusting partner can complement such arrangements and provide a total claims management solution.

Early supply chain solutions were inflexible and inconvenient, often resulting in policyholder dissatisfaction and leading to a public perception that the sole driver of supply chains was for the insurer to reduce claims costs without considering the policyholder.

Today, however, supply chain use is viewed as providing much sought after flexibility and reduced inconvenience for time-starved policyholders. Examples include the issue of store vouchers instead of actual goods and the latest initiative of pre-agreed and coordinated delivery times from multiple suppliers.

A number of major insurers now even promote their supply chain strategies in their advertising campaigns, emphasising the speed and convenience of replacement.

As ever, there is a desire to reduce insurance fraud, and today's supply chain model is a powerful tool in the battle, an obvious example being replacement goods or store vouchers, making it harder for fraudsters to gain inflated cash settlements.

Brokers have also recognised the need to become more involved in the settlement of their customers' claims.

By working in tandem with loss adjusting partners to take advantage of the supply chain solutions available, they can build reputations and enhance client retention.

The ability to provide a diverse range of solutions without the cost implications of managing the chain results in competitive advantage and market differentiation, while meeting or exceeding clients' increasingly sophisticated expectations.

A robust procurement process is vital to the success of any supply chain. High service standards and performance protocols must be a prerequisite and management needs to be alive to potential problems at all levels of customer service.

An integrated supply chain procured solely by the insurer or loss adjuster, or a combination of the two, signals a move towards a one-stop shop approach to claims solutions if reduced indemnity costs and enhanced customer service can be achieved. IT

' Russell Crewe is unit partner, national operations at Ashworth Mairs

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