Claims - Service first

Few would disagree with the concept that a company's claims service represents the shop window of an insurer. It is also an area that comes under intense scrutiny from the press. The question is, do insurers have sufficient tools in their armoury to ensure a positive claims experience?

Skilled claims handling professionals play a vital part in the quest for high service standards, according to Jon Dye, Allianz Cornhill's claims director. "It is very important that the customer can talk to someone who understands the issues, and can engage with them," he explains. "It is about empathy, but it is also about skills and knowledge." Mr Dye believes the industry still has room for improvement in this area. "I'm not sure the industry has necessarily helped itself over the last decade in terms of making sure its claims staff really understand the issues and are therefore in the best position to help."

Times are changing, however, and the good news is that many are now realising that investment in training will pay dividends. Certainly, Allianz Cornhill in particular is putting its money where its mouth is. Mr Dye explains: "We have our own programme, Excellence in Claims, which follows the same structure as our Underwriting Academy. It is a structured modular training programme which gives people both the technical and soft skills they need to do their jobs." Mr Dye says he has been pleasantly surprised that in addition to the in-house training, there has also been an increase in the number of staff studying for the Chartered Insurance Institute exams. "If you make professional development part of the day job then people will take it up and run with it," he comments.

In addition to a focus on people skills, insurers also need to keep pace with developments in the processes involved in handling claims. Mediation in particular, is beginning to gain momentum (see box).

Tony Newman, Allianz Cornhill's claims controller, is adamant that this route provides clear advantages to both insurers and claimants. He explains: "If you run a dispute to trial it is unusual for both parties to come out feeling ecstatic with the result - normally you both feel slightly aggrieved. Because mediation is a consensual process, and nothing is forced upon you, then in theory you both walk away feeling happy because you didn't have to agree to the settlement terms." The overall result, he says, is a happier claimant, a happier insurer and a dispute that has usually been resolved more quickly and more cost effectively.

Mr Newman says for those cases which Allianz Cornhill has managed to run to mediation, it has seen a success rate of 92%. He adds, however: "Unfortunately, we've offered mediation on a significant number of cases and 66% of those offers have been rejected by claimants." There are certainly a number of challenges ahead in convincing all parties of the advantages represented by mediation. "I suspect it is mainly a culture issue," says Mr Newman, adding that it is something that needs to be sold not only to lawyers but also to claims handlers.

So is it up to the insurance industry to take the initiative when promoting the benefits of mediation? "Absolutely," says Mr Newman, "The change agent here has to be the insurer. In the first instance we have to do that by educating our own staff and our panel of lawyers and, in fact, we've built it into our business protocol that our lawyers have to consider mediation and other forms of Alternative Dispute Resolution."

Rehabilitation is a good example of an issue that has already benefited from efforts across the insurance industry. Insurers certainly seem to have bought into the concept, says Bob Rabbitts, Allianz Cornhill's technical claims manager. However, he adds that there is still plenty of work to do on proving the cost benefit case.

Mr Rabbitts emphasises that the greatest cost is in the need for future care. He explains: "It's not just about getting back to work - it is fundamental areas like someone's capability to wash and dress themselves. You can save many thousands of pounds if you can reduce the need for care. If, for example we can reduce care by just two hours a day because someone can do a little more for themselves, that can accumulate to around £10,000 a year. If you multiply that out, in ten years, you will have saved £100,000."

Mr Rabbitts believes there is an increasing awareness, not just among insurers but also among claimants' solicitors of the advantages inherent in rehabilitation.

It is of course essential that the insurers continue to focus on service standards across the board. There is no doubt that a good or bad claims service will have a lasting effect on a customer's impressions of their insurer. Therefore, whether you are talking about human resources issues or alternative dispute resolution, the message is that it is not just about isolated initiatives. As Mr Dye concludes: "It is very much about creating a culture of change."

CEDR SAYS MEDIATION MARKET CONTINUES STEADY GROWTH

Centre for Effective Dispute Resolutions (CEDR) Solve's* caseload for 2004 increased by 8% to a total of 693 cases compared to 642 in 2003. This increase was primarily attributable to growth in court and sector-specific schemes. A record 502 law firms used CEDR Solve for dispute interventions in 2004.

Settlement rates for commercial cases remained steady, with 75% of cases settling on the day of mediation or shortly thereafter.

Case activity continues to be spread across a broad range of sectors, with supply of goods and services retaining its leading position at 22% (up from 18% last year). Sectors showing particular growth in the year included personal injury (up by 32%) and property and construction (up by 7%), whilst finance cases fell by 33%.

Source: Centre for Effective Dispute Resolution

* CEDR Solve is CEDR's dispute resolution and prevention service.