Attempts by claims industry bodies to unite the fragmented claims market have received a mixed welcome. Rachel Gordon finds that industry players remain unconvinced all interests can be served under one roof
The rising cost of claims has hit insurers hard, but a side effect of the challenging market has been the growing importance insurers are placing on the people who work in this often complex and demanding sector.
Recently, there have been several new initiatives and developments by trade bodies and associations to strengthen the reputation of claims professionals.
The latest announcement came from the Chartered Institute of Loss Adjusters and the Chartered Insurance Institute. They have jointly set up the Faculty of Claims to provide a forum for all those involved in claims, promote good practice and encourage progression to qualified status. It will be chaired by Jonathan Clark, a CII treasurer, past CILA council member and a senior vice-president of Crawford & Company. Mr Clark is also something of a mould-breaker in the traditional low-profile world of adjusting, being a well-known commentator and someone who has courted the media in a bid to raise awareness of key issues - he was one of the first to speak out in favour of regulation by the Financial Services Authority.
The past decade has not been easy for CILA - there have been extensive redundancies, with respected names disappearing and numbers dwindling. While the Society of Claims Technicians has created wider membership, these are testing times and loss adjusters' value is under constant scrutiny.
CILA's roots stem from 1941, it received a Royal Charter in 1961 and a Grant of Arms in 1979, and sees itself as the pre-eminent body for loss adjusters. Entry is not easy and individuals need to gain five years of experience as an independent adjuster and pass the institute's rigorous examinations.
In the past two years, however, other trade bodies that represent those working in the claims industry - albeit largely for those in claims management companies - have set up. The Claims Standards Association and the Personal Injury Federation, which last month announced they were to merge, had both been established following the aftermath of the collapse of Claims Direct.
The new body will be called The Claims Standards Federation and its core aim is to develop a code of ethics and standards to ensure a higher level of service and better protect consumers - it is in the process of publishing a framework code of practice and is in consultation with the Law Society, the government and the banking and insurance industry.
CILA has not sought to forge links with the CSF and it is understood the new body has not yet tried to work with the institute. Graham Cave, CILA executive director, admits: "We are not aware of any other bodies seeking to contact us and if they say they are speaking for the whole claims industry then we would want to distance ourselves. We are the claims institute and have worldwide links with global organisations the European Federation of Loss Adjusting Experts (FUEDI) and the International Federation of Adjusting Associations and have set stringent criteria for those wanting to join us."
Andrew Wigmore is spokesman for the CSF and is managing director of Health Squared, a London-based consultancy. Mr Wigmore is adamant the CSF is desperately needed, and totally refutes the idea it is seeking to steal CILA's ground. "We have made it clear we want to speak to and work with as many in the claims industry as possible. Many we deal with are in the legal profession but trade bodies such as the Forum of Insurance Lawyers and the Association of Personal Injury Lawyers are not there to help the consumer in the same way we plan to."
As part of its consumer facing role, he says the federation has conducted research among those who have used claims management companies. "We wanted to find out where there was poor service and confusion about what was being offered."
The collapse of The Accident Group and Claims Direct has worried consumers and Mr Wigmore says the federation will promote ethical standards and act as a watchdog. "We will be for the consumer and will be setting up a helpline and offering independent advice. We will help people find solicitors close to them but make sure they are given a choice."
Mr Wigmore says the federation currently has 35 member firms and wants to work closely with insurers, saying this can only be for the common good. He explains issues on the agenda will include looking at whether legal intervention is necessary in all claims and at ways to prevent litigious action. "There could be ways in which we could save insurers money. We need to accept that those who suffer a personal injury will want compensation and that the present system has resulted from the Access to Justice Act. We've already had very useful meetings with Axa and Zurich."
He describes meetings with senior staff, including the chief executive officer of Zurich's general insurance business, Geoff Riddell, and Axa's head of claims, David Williams, as positive. "They have both been exceptional, really enlightened. They are both clear about the realities of the claims management industry and want to work with us to improve standards."
He says the federation has no wish to exclude CILA either. "We're not looking to compete - it's a big world out there. We're about raising standards in the claims management industry. If this does not happen, the government will move in and this will not be beneficial for the reputable firms that already exist. We would like to talk to CILA and see if we can share common ground."
The Law Society says it backs the new organisation. Chief executive Janet Paraskeva says: "The Law Society welcomes the merger of the PIF and the CSA as a further step towards better standards in the claims management sector. The society wants to see an effective and comprehensive scheme to guarantee that customers of claims management companies will get proper service that is in their best interests and be able to seek redress when they do not."
A further thorny issue for CILA is loss assessors. While working in the claims industry it acts on behalf of claimants. Mr Cave says there is no reason they could not become members of CILA, but stresses they would have to comply with the institute's charter. "They would have to prove they are acting independently and this is what has caused problems in the past."
Malcolm Harvey, managing director of Lorega (formerly known as Loss Recovery Group), says that he has favoured CILA taking assessors as members for years. Lorega employs some 90 loss adjusters that work for brokers' clients to help prepare and negotiate claims - in effect working as assessors.
"I'm a CILA member and think the institute could have regulated both sides of the industry. The problem is CILA has backing from insurers and they could object to assessors being allowed in. But it appears too late now. Our understanding is that assessors working for the public are now set to be regulated directly by the FSA, while adjusters will remain outside."
There is no doubt that the claims market is fragmented, but bringing it all under one roof is not something that is ever likely to happen.
Claims managers within insurers - and large brokers - are unlikely to join either CILA or the CSF. According to Graham Gibson, claims operations director for Groupama: "My first port of call is always the Association of British Insurers and I'm on its strategic claims committee. This covers the key areas the industry is concerned with, such as employers' liability. Putting everyone together could raise competition issues and I fully appreciate that most loss adjusters are fiercely independent and value their own institute, which we respect."
As Barry Whyte, chief executive of adjuster The Claims People, comments: "We are members of CILA and the General Insurance Standards Council. It is difficult when you have such a diverse community of interests. All I can say is that the emphasis on raising standards has to be good news for everyone in this market."
|Should adjusters be regulated by the FSA?|
"I think the whole market should be regulated, whether adjusters, assessors or anyone handling claims. The situation at present is that adjusters are one step removed from Financial Services Authority regulation. It is understood assessors are to be regulated, however, which will bring benefits for consumers. Many assessors are already operating to higher standards."
"We're in favour of a level playing field. In terms of assessors, there have been cases where a claimant has signed up to hand over up to 10% of the settlement and is then shocked when they find out how much this is. We want to see proper disclosure. I would have liked CILA to have taken assessors within its remit and been the unauthorised regulator, but now feel the FSA needs to regulate the whole sector."
"The services a qualified adjuster offers are based on truth and equity and this is what bringing best practice to policyholders is all about. We want to see the FSA look at its recommendations for claims handling and take it one stage further by introducing regulation for claims handling."
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