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The London Market is seeking to make transformational changes in claims to bring it in line with the rest of the insurance industry. Immediate priorities focus on introducing new technologies, but other areas need to be addressed. People-centric initiatives such as a more inclusive claims culture, the introduction of tech-savvy talent into the workforce and development of diversity must to be worked on concurrently with technological improvements.
The challenges of the current claims culture
The London Market needs to make a cultural shift - not just claims. A series of scandals forced key market participant Lloyd’s of London to review a toxic working environment. Complaints of a ‘lad’s culture’ where alcohol, drug use and sexual harassment of female staff are commonplace. Additionally, there is a gender pay gap of almost 20% compared with a UK average of 9.6%, plus a loss of £1 billion in 2018. The loss was mainly due to claims payouts of £19.7 billion for natural catastrophes such as the Californian wildfires.
These issues run side-by-side the everyday business challenges of keeping up with changing customer expectations and maintaining a reputation as the market-leading claims service. So, what can the London Market do to overcome these considerable challenges?
Lloyd’s have stated they “will build a diverse, inclusive environment that reflects the global markets we work in and in which everyone is treated with dignity and respect.” Despite signing up to initiatives like the Women in Finance Charter and the Inclusive Behaviours in Insurance pledge, recent scandals indicate there is much work ahead of the market if they are to truly embrace an inclusive culture.
Lloyd’s have already changed their code of conduct, by banning anyone under the influence of alcohol or drugs from its City of London workplace. They have also threatened to impose lifetime bans on sexual harassment offenders. However, these initiatives merely treat the symptoms, not the cause of the cultural problems.
To adequately address the issue, the market needs to create practices which support inclusive working. For example, by creating clear policies that inform staff what is expected of them behaviourally backed up by strong discrimination, bullying and harassment policies. Moreover, by introducing flexible working to and family-friendly parental leave, maternity, paternity and adoption policies will attract working parents. Allow post pension age working for older workers who want to continue working.
Why diversity matters
As well as the ethical reasons why diversity is essential, it also makes sense financially. Companies who invest in and promote diversity have better financial returns than their industry averages. Those whose personnel reflect its customer base will have a better understanding of their needs. Different voices will bring different ideas to the table and innovation will flourish. Identifying and addressing unconscious bias, whether in recruitment or promotion processes, will stop us giving people jobs or promotions based on our values and beliefs. Instead, potential and capability will be the deciding factors in recruitment decisions.
Technology is already revolutionising the claims process. Low-value tasks are being automated using intelligent automation. Online claims portals are speeding up the entire process with customers able to report claims and upload documents online. Insurers can make electronic claims payments.
Introducing new technology means the number of traditional support roles will reduce, and claims departments will need to add different skillsets. These skills might include those of data analysts who can analyse and combine claims data sets to enable decision making. Or help develop the role of high-level customer relationship staff who can deal with complex issues.
Technical claims knowledge will also be highly valued to assist customers in putting together their risk mitigation strategies. Perhaps most important of all, managers will need change management skills to help their staff deal with the pace of change and ensure the implementation of new technologies is successful.
The changes needed to bring the market in line with the rest of the industry in terms of both technology and culture are not insurmountable. However, people will need to be realistic about how long it will take to make such large-scale changes in a market notoriously resistant to change. Register now for TIN’s London Market Claims 2019 conference and find out how influential technology is transforming claims and diminishing its current challenges.