The man overseeing reform of the London market’s claims process tells Lauren MacGillivray how technology is driving his five-year plan to shine a light on the insurer’s shop window
With the Lloyd’s Exchange touted as the saviour of the London market’s previous technology problems, it’s easy to forget about one piece of kit that survived the purge. The electronic claims files (ECF) initiative has proved its mettle and Lloyd’s still has big plans for it.
It won’t happen overnight – there’s a five-year plan, to be unveiled later this month. But the idea is for ECF to eventually link into the Lloyd’s Exchange by switching to the same Acord (Association for Cooperative Operations Research and Development) messaging standard that the Exchange uses. “One of the things in our five-year vision is that where we need to exchange claims messages, we need to make sure there’s consistency,” Tim Willcock, head of claims for the Lloyd’s Market Association (LMA), says. “For a long time, [the London market] has embraced the Acord messaging standards in order to achieve that consistency.” The LMA provides professional and technical support to Lloyd’s underwriters. All underwriting businesses at Lloyd’s are LMA members, who together manage an underwriting capacity of more than £16bn.
Willcock’s job is to oversee the reform of the London market’s claims process on behalf of managing agents. The easy-going member of LMA’s senior management team had no problem making a last-minute switch to another office at Lloyd’s so that the photographer would have better lighting for snapping some shots during the interview with Insurance Times. After a short ride in the iconic glass lift, Willcock settles comfortably at one end of a long board table. All it takes is one question and he launches wholeheartedly into how claims technology fits into the plans for the Lloyd’s Exchange.
The Lloyd’s Exchange, which will be trialled in a year-long pilot starting on 1 June, allows brokers, insurers and back-office staff to share information using a single messaging standard – or, put simply, everyone can plug into it and talk in the same language. Meanwhile, ECF is strictly for claims and is made up of two systems – claims loss advising and settlement (Class) and insurer’s market repository (IMR). The former enables claims messages to be sent, while the latter is like a large filing cabinet that holds the supporting documents for claims.
The systems are contracted through 2012 with Exchanging – not to be confused with the Lloyd’s Exchange, which is run by IBM. “Last year, the LMA, IUA (International Underwriting Association) and Liiba (London and International Insurance Brokers’ Association) got together and negotiated a revised contract for the insurer’s market repository – it’s been rolled out across all 250 firms in the London market. To get every firm signed up to a single market agreement is no mean achievement,” Willcock says. “So we’ve now got that in place, and electronic claims files are also a reality, and we’re handling more and more of our claims this way. That’s allowing us to look at different ways of processing claims.”
The five-year plan, which is part of the claims business requirements review, is looking to speed up settlement and make the claims process more transparent. The idea is that clients will be able to see how their claim is progressing. “We’re looking very much to improve the client’s experience,” Willcock says. “Claims are the insurer’s shop window. It’s the delivery of the promise, and claims are a critical factor in retaining your clients.”
Lloyd’s has also started to introduce a segmented claims model. In this model, claims are sorted into different categories based on value, complexity and risk. Less complicated claims will be handled more quickly.
When it comes to electronic infrastructure, Lloyd’s is the first to admit it’s been like a faulty string of Christmas bulbs – with one burnt out here and another there, the whole string kept going out. But joined-up thinking has led to a bright new era. In this case, it means signing up to the Lloyd’s Exchange. Ironically, if everyone subscribes to the same messaging standard (Acord), they will have more freedom when choosing other suppliers to provide trading platforms and back-office solutions.
Willcock says it’s the LMA’s job to promote choice. “In order to have that choice you need consistency. Acord would give us, in terms of messaging, that consistency of data that would be included in a message package to be swapped between brokers and insurers.
“Certainly, some of the recommendations coming out of the claims business requirements review will be to try and figure out what choice means and where it is appropriate.”
Willcock does not see claims and the LMA as sidelined from the Lloyd’s corporation – to him, they are equal entities. His perspective is no doubt influenced by his background: he started out on the underwriting side, joining a Lloyd’s syndicate in 1979. “In those days, although I started off being a ‘scratch boy’ doing data entry, premium and claims processing, as you progressed, there was nothing to stop you from handling claims as well as the underwriting side.”
In the early 1990s, he was asked to take charge of claims with a managing agency, which he considered a “natural progression”. He believes the claims profile at Lloyd’s has continued to rise since then. “In the past, claims has been seen as a little bit of a poor relation to underwriting. If you talked to people about what they wanted to do when they got into insurance, predominately it was about the underwriting side and meeting the clients. The perception was that bonuses would be larger and the client-facing role was more comprehensive. That attitude is changing.”
Complex and high-value claims have led to more sophisticated claims handling. But Willcock says there’s now also a more “holistic” attitude towards claims handling, meaning it’s no longer treated in isolation and contributes to areas like risk management. “Businesses are getting more sophisticated in way they look at risk, and claims professionals have shown they can contribute to the way businesses function – not by simply looking at claims and by having an impact on the bottom line, but also providing input to all the other areas of business,” he says.
But technology remains the main driver for claims’ improving reputation, which is why the five-year plan is so vital. So far, 90% of new claims are going straight into ECF. This sounds impressive but legacy claims remain an issue, as do claims that aren’t yet compatible with the ECF technology. “We’ve got an increasing curve on take-up but we’re still not at a place where we’ve got more claims inside ECF than outside,” Willcock says.
He’s also worried about whether the workforce has the right skills. “If you have a claims person who’s been dealing with claims for 30 years, they started out dealing with paper files. It’s difficult when they’re put into an environment where they need various skills around a Microsoft package, having to identify data and read spreadsheets.
“We’re doing well in terms of the number of claims going in there but as that number increases and moves towards 100%, have we got the right people with the right computer skills to make sure we can cope with all those volumes?”
It’s a valid point but it’s the LMA’s job to ensure training and development so that managing agents can manage claims properly. And as a man who remembers the days when everything was written on a piece of paper, Willcock knows there’s no going back. IT