It is often said that claims are the shop window of insurance, where the industry fulfils its promise to deliver on what the customer has purchased. But there is a dilemma here. It is that not all claims are genuine.
The ABI’s annual release of fraud figures show the crime of fraud is rising. Its most recent statistics estimate the annual cost to the industry is around £1.6 bn – up from £1.5bn the previous year (page 6). But how can the industry deal with this without alienating the customer? It is an on-going problem that will never seemingly have a simple answer. And the worry of alienating the customer is one reason why some insurers often accept some fraud as part of the insurance process.
But if the claims process is about maintaining the reputation of an insurer and insurance, then outsourcing has had a negative reputational impact. Outsourcing service levels have traditionally been well short of expectations when it comes to claims processing. And as is noted here (Page 11) reputations can be lost very quickly if the claims department isn’t up to scratch.
And on disaster recovery, it seems that the lessons of Buncefield have not been learned (page 30). Businesses are still failing on the disaster recovery front.
But as Biba’s Steve Foulsham notes, brokers have a major role to play (page 34). They can advise their SME clients about the importance of business interruption and disaster recovery, because it is only an extension of risk management and brokers are now advising on this all the time. So many brokers are clearly seeing the opportunities of solving businesses’ problems. And that is what broking and insurance should be about.