The London insurance market and technology have proved to be uneasy bedfellows. Recent history has been littered with industry wide projects that have failed to reform quite antiquated processes. Yet even the most hardened cynic would concede that settling claims has been transformed very much for the better over the past five years. The Electronic Claims Files (ECF) system introduced by Lloyd’s and the IUA, its company equivalent, has now been adopted by virtually all insurers for every sort of claim. According to the ECF user group, end-to-end transaction processing time has reduced by an average of 15% as a consequence.
Despite this, overall satisfaction with London’s claims service standards has surprisingly declined a bit in 2012 according to a report published by Gracechurch last week. That the consultants only surveyed claims-brokers, whose opinion of ECF probably mirrors that of a CD retailer towards the digital downloading of music, could have something to do with the negative sentiment. The traditional role of the claims-broker to haul mountainous files through the streets of EC3 to advocate face-to-face with insurers is rapidly diminishing. In the parlance of the age, broking firms are significantly “de-skilling”, “off-shoring” and “down-sizing” their claims teams. Undoubtedly insurers are now talking to claims-brokers less as the report indicates but it might be wrong, however, to deduce that the quality of the claims service to the end customer is in decline.
Indeed the survey highlights a number of Lloyd’s carriers who have improved their satisfaction scores significantly. Those that were previously drowning under the weight of a paper-based system and endless queues of brokers are now concentrating on what really matters. Freed from the shackles of maintaining a monotonous process, high quality claims professionals are being attracted back into Lloyd’s businesses. Value-added intervention with underwriters, MGAs, TPAs and most importantly the customers and their insurance advisors seems to be on the increase. Individual insurers are receiving very strong feedback.
Yet there is no room for complacency; even though adjudicating claims has sped up since ECF was adopted, the accounting and settlement which follows remains clunky. It is still taking too long for the market to make clients good after they suffer a loss. An evolving and complex picture, therefore, that may encourage Gracechurch next time to dig even deeper and canvass a much broader range of opinion than the claims-brokers interviewed in 2012.
Roger Bickmore 
An interesting overview Roger, having myself been one of those that had the task of hefting piles of claims folders around the market I can certainly see the benefit of an electronic claims system. Where I might perhaps disagree though is on the questions of the benefits of such a system to the policy claimant if it brings no acceleration in release of funds and your point regarding underwriters being allowed to concentrate on what really matters. Perhaps I misunderstand but to my mind, claims are still the shop window of insurance and claims service is one of the most important yard sticks by which the industry is judged. What then are the more important tasks to be concentrated upon?
Thanks Jase. By stripping out the paper based to-and-fro admin, my point is that ECF allows claims teams to focus on adjusting the loss itself; being more proactive, making better quicker decisions (which is what really matters). With time now to work more closely with underwriters and placement brokers, the claims guys are becoming quite inventive in tailoring reporting protocals with Clients, MGAs and TPAs to speed up the process. Getting funds out faster, however, remains a problem still to be more fully resolved I gather.
Thanks Roger, I understand better and agree with you, being able to reach a decision faster has to be good for al involved.
Good analysis Roger. We need to get rid of the humdrum stuff and give claims handlers a chance to leverage their skills and experience. Client service is key but only one piece of the jigsaw. Claims Directors need to turn claims data into an offensive weapon!
Good post Roger. As the ‘architect’ of the Gracechurch Report, I’m bound to point out that we interview claims brokers because currently they are the best placed group to judge claims service in detail; clients are often too far removed to know what actually goes on and producing brokers have different interests. That said, we will soon start covering clients, as there is I believe an increasing need to measure what benefits are actually accruing from all the change that is happening – i.e. real outcomes not what brokers or insurers judge to be successful or partially successful about various initiatives. As you rightly point, out the market is still seen as slow overall and many insiders argue that inefficiency is rife so it is about the bigger picture, especially as London needs to compete globally. That said, it is really positive to see that a number of insurers are taking claims service so seriously and seeing genuine improvement. My final point is that processes, such as ECF can have unintended consequences, one of which appears to be a perception that insurers are now communicating less well – hiding behind screens as brokers describe it. Perceptions like these, once they take hold can be difficult to shift, regardless of the fact that ECF has resulted in some progress.