There is no point in skilled loss adjusters handling low value claims, says Bill Dye. It is time for change
We have all seen it. We have all thought about it, but what are we doing to adapt our industry to the market conditions we have lived through for several years?
We have choices: we can either carry on as we have before and hope things just pick up and get better, or we can use this as an opportunity to consider more radical ways to transform the fortunes of our businesses.
We have to change the way we do business. We have to harness the power of technology.
A classic example is the loss adjusting profession. We all know that it does not make sense for insurers to spend £200 on a loss adjuster's site visit, which would be settled for £600. We all know this simply doesn't add up. And is this really loss adjusting? Should it be the role of a trained and experienced professional to spend time handling very simple claims?
Over the years, the specialised role of the loss adjuster has been reduced in value. Many activities that should fall under the title of 'claims handling' are today mistakenly confused with this profession.
Capita commissioned industry specialist Troika to look at views on loss adjusting within the industry to examine whether the need for change was felt universally. Top-line findings indicate that a change in the way claims are handled is sorely needed. The research found that the insurance industry "has reached a critical point in the way in which volume claims are handled".
Appointing loss adjusters for the high number of property claims reported "is no longer a cost- effective approach," it said.
We need to take a step back, stand outside our day-to-day roles and find a new way of doing things. This new approach needs to do two things: provide a cost efficient service to the policy holder; and keep the cost of claims down for the insurer. One way would be to take loss adjusting back to the purely specialist and technical professional service it once was.
Ultimately, the number of site inspections the field force have to make will be reduced through increasingly handling claims on the desktop. The field force can then focus on providing effective management of the supply chain - further reducing leakage levels, special investigations activities and other specialised services.
The service providers need to be prepared to follow through on these beliefs and ideas: a significant investment in the development and implementation of appropriate technology would provide some of the savings needed by insurers.
And, as long as the new claims management process, combining technology with a field force and a supply chain is strong enough, it can add value to the claims process for insurer and insured. Through the introduction of strategic software tools, this new approach could speed the settling of claims, and ensure fraud and leakage control will be as good, if not better.
Of course, we can never replace the true role of the loss-adjusting professionals. Complex situations, high value claims and specialist areas demand the skills of a professional adjuster. By introducing a new process for the resolution of the large number of low value claims that arise, experienced loss adjusters can be freed up to handle more complex claims.
In this industry, where the current choice for the insurer on personal lines claims is either to pay a service provider for a loss adjuster on each claim, or keep it in-house, a new solution would offer a third and fresh choice.
The introduction of a new solution would make financial and business sense for the industry, and would provide a swifter and more efficient service to consumers, allowing insurers to focus on their core skills; to become more competitive, and able to look ahead into the future without fear.
One thing is clear: the future of low value, high volume loss adjusting does not lie in the labour intensive practices and procedures of today. A change is needed that will allow these claims to be handled at minimum cost and best efficiency.
Bill Dye is managing director of Capita Insurance Services