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The London Market Claims Annual Report explores the key claims issues facing directors both now and in the future.
Last year’s report was written just after the London Matter 2017 update was released which highlighted a number of significant challenges that still remain and underlined the fact that modernisation is not moving at the required pace.
Since then progress has been made in the claims space with the Single Claims Agreement Party (SCAP) going live in September and the exploration of more strategic claims transformation under the LM TOM Phase 2 project.
However, many feel that the pace of change could be quicker, opportunities to innovate are being missed and ‘devil is in the detail’ when it comes to implementing modernisation initiatives. Based on the responses from London Market Claims research survey and interviews with leading claims practitioners from across the value chain this report explores some of the key challenges in the market.
As always I’ll keep commentary to a minimum and let the comments from participants speak for themselves.
I'd like to take this opportunity to thank the sponsors of the report, Hyland, for their support. Check them out at onbase.com/solutions/insurance
The LM TOM Phase 2 is all about claims and 100% of our survey respondees agreed that this initiative would help claims transformation within their organisations. Given that phase 2 has only just been agreed and funded, its unsurprising that 66% said that the TOM currently had no impact on their company but the majority (73%) agreed that phase 2 would have a positive impact on the market as a whole.
Within the scope of phase 2 the biggest item on people’s agenda was the Single Claims Agreement Party (SCAP). Comments were broadly supportive,
“It’s the biggest step forwards in 20 years from a claims perspective.”
“I think that’s an enormously positive development and we should get it as soon as we possibly can. I think it is one of the things that has slowed down development of the London market.”
However, questions were raised over how it is going to be implemented on a practical level:
“How has it helped to simplify claims handling, as to my understanding it has not helped at all”
“I think it’s going to present a lot of challenges. It’s a completely different way of working and I think you’ll find it gets streamed so it works for some claims and not for others, and then the exception becomes the rule.”
Many pointed out that agreement of a claim was only part of the challenge as speed of settlement was still too slow in today’s digitally enabled age. Others thought it could have been more ambitious from the start. These two comments sum up these points nicely:
“Because of the way it’s been set up, with a lack of any automation sitting behind it and a lack of change to systems, I don’t think it’ll be a panacea for speeding up settlement because of all the problems in the background in terms of processes.”
“I think we’re halfway there with SCAP, now the final hurdle is to move settlement/money faster.”
Technology led change and digital innovation is impacting every aspect of the value chain and claims is no exception. Respondees agreed that it was either extremely important or very important that the London market invested in new technologies. However, with over 60% saying they were on just starting to leverage digital to transform claims it appears that the industry is still at the beginning of the digital transformation journey.
This poses a number of challenges, not least because as we are all aware claims is the point at which the client experiences the service that has been promised. From the survey, meeting client expectations was the number one driver for claims transformation with businesses (83%). However, as client expectations around service delivery, transparency and speed of change increase, it becomes critical that digital technologies are embraced to meet these rapidly changing demands…at the moment there seems to be a lot of talk and not much action. These respondents sum up that sentiment:
“We are spending a lot of time talking about all things digital and technology related. But the danger of that is everybody’s talking about it, but how realistic is it really?”
“How can we use digital and how is it actually working? It’s certainly not moving as quickly as we might have hoped so how can we speed that up?”
The other key driver for claims transformation is to achieve operations efficiency. At the centre (quite literally) is the Bureau, and under the remit of the TOM phase 2 distributed ledger technology (Blockchain) is being looked at as a potential solution “to provide a possible alternative to the bureau for certain processes.” (LMG, 2018). The challenges was put succinctly by one participant:
“I’ve been in the market for 34 years and it’s basically the same system.”
In order to start benefiting from the opportunities that digital can provide in claims it is critical that organisations start to be less risk adverse when it comes to experimenting with the technology. Just moving from paper files to electronic files is not going to transform claims operations and is not digital transformation. The real risk is that the industry could be left behind as more nimble, locally based competitors deliver a superior claims service to London’s.
The rigidity of systems and mindsets that exists across the market in many forms is highlighted by this year’s survey. Here are a collection of comments that touch on some of the key challenges practitioners face.
“How do you develop a much more agile way of working that can nurture an innovative culture to solve the challenges of tomorrow? That’s a real challenge as there is a resistance in management that, ‘this is the way we’ve always done it’.”
“The risk that new products or new processes fall over and make it worse”
“Most brokers and insurers have 'customer relationship’ or ‘client executives’ who turn up and say this is what you can and can't have, not how does your business run, what do you need?”
“A big issue is systems integration and the need for integration across the market. When we’re working with third parties, loss adjusters and general TPAs, getting more consistent information across the board is a challenge.”
“I think we have an issue around our core skillset and how can we insure that the business still values claims people. There is a danger that an organisation takes all of the claims people out of London, losing that market face of claims, that negotiation face, and that presence that makes our market unique.”
In summary we can say that things are moving forward in terms of claims modernisation both at a market wide level and individual organisation level. But it’s also clear we need to increase the pace of change and become more innovative in our thinking. The challenge, as always, is how to achieve that…the key theme for this years London Market Claims conference on October 9th.
LMG (2018) ‘Claims / DLT Project Update’
Available at: https://tomsupports.london/claims
Accessed July 2018