The challenge ahead

Following a relatively benign winter forecast, the beginning of 2007 saw many loss-adjusting practices in bullish mood and poised to deal with what was forecast to be one of the worst Caribbean Cat seasons in recent memory. Little did we know that the January gales were only a portend of things to come and that, just when we should have been reviewing airline timetables for flights to the beleaguered Caribbean islands, we would be juggling resources to cope with similar issues much closer to home.

The July floods, which devastated huge tracts of Yorkshire and the West Country, were the first weather events in almost 20 years to remind us that such things can, and will happen. Many of us would have needed reminding that, even when combined, this year's two flooding incidents were not on the scale of the cataclysmic storms that swept the south of England in 1987.

Ironically, yet thankfully, we have been spared the consequences of a major Caribbean Cat event this year. This was despite two of the predicted seven category five hurricanes materialising and meandering their way across the entire Caribbean, contriving to miss all of the major islands on both occasions before making an innocuous landfall in sparsely populated parts of Mexico.

In such times of stress and strain, brokers come under the spotlight. They are set the ultimate test when faced with a multitude of stricken clients that are finding out for the first time what the unthinkable really feels like at first hand. This is when the product - the policy that is sometimes so difficult to sell to clients that think it will never happen - suddenly becomes the most important service contract clients have ever owned.

Spike

For Loss Adjusting UK, apart from regulation and continuous consolidation of the insurer and intermediary markets, the major issues of 2007 were the rigours caused by two dramatic, sudden and widespread incidents. For the first time, these events caused spikes in demand of sufficient size to test loss adjusters' UK catastrophe plans: those that were borne out of panel arrangements that were brought about in turn by supply chain procurement methodology and the primacy guarantees imposed by the majority of major insurer composites.

Despite appearances, loss adjusters have many qualities and skills acquired and honed from a lifetime of dealing with insurance claims and their associated issues. We strive to connect companies that instruct us and claimants that receive the end-user service, albeit more often than not with the assistance of a specialist broker claims service.

What adjusters are very good at is managing crises. The situation will be manageable in the normal course of events where the number of claims arising in a given emergency is in line with the number of adjusters on the ground that are able to flex the capacity they create by a factor of as much as four to five times over a given period.

Various factors contribute to the success or otherwise of managing a crisis situation. In a storm situation for example, the nature of the damage is such that the adjuster response can be managed well in terms of inspections, as can management of claimant expectations. Flood claims are very different though, causing large numbers of similarly serious losses that, in the main, have a knock-on effect that creates serious occupancy issues and a requirement for an equally uniform, immediate and high-quality response.

When we hear that two relatively short-lived incidents of flooding in two UK regional centres created in excess of 75,000 claims, the majority of which carried either a need of expectation of immediate care and attention, the question that comes to mind is one of whether adjusters can cope or not. On this occasion the question is modified by the decision of some insurers to limit their resources to that determined by their panel members.

Good adjusters have to be attuned to the needs of brokers at all times as part of the claims process, especially in times of crisis when they are likely to have a mass of clients to satisfy simultaneously after the problem strikes.

The important lesson to learn from the trials of 2007 is also the challenge for 2008 and beyond. We must ensure that we strive jointly to convince insurers that, in times of extreme need, they will mobilise all available resources.

- Trevor Latimer, Executive director, MYI Chartered Loss Adjusters.