Can you handle it?

Andrew Tjaardstra: There are sometimes disputes between the broker and insurers over the appointment of loss adjusters. What are your thoughts on the ownership of the claim?

Peter Staddon: The broker is the intermediary between the insured and the insurer, and it needs to add value and should be involved in claims. When you are looking at adjusters, you need to make sure that the adjuster is competent and understands the problem of the sum insured. What should happen is that the egos of the broker and the insurer should be taken out of the equation so that the interest of the client is paramount.

Andrew Tjaardstra: Do you often see disputes between the insurer and the broker over adjusters?

Dominic Clayden: In terms of the total number of times that we use adjusters, very rarely do we have disputes over who should be appointed. What we get occasionally though, is a situation where a particular adjuster may arrive on site and something does not go well with the first touch that happens with the policyholder and the customer. That is where I see the broker adding a huge amount of value. Because certainly, from my position as a claims person, a policyholder and a customer may not have had a claim for 10 years and may have had a policy with us for that long. I won't have met them but the broker will know them well. The broker coming on board and helping resolve some of those problems adds a huge amount of value and avoids problems later.

Andrew Tjaardstra: Mark, have you seen any disputes?

Mark George: In my experience insurers are very flexible about utilising a non-panel adjuster where there is a business case. But there has to be a business reason for that relationship to exist and it will flow into the looking after of the customer and it is going to be in the best interests of the claim.

Peter Staddon: And that is the advantage isn't it? At the very beginning of the contract, build into the contract the capability of the loss adjuster to be involved. As a broker, I can remember doing this on some of my larger small to medium-sized enterprise clients so that the loss adjuster would know the business and, if there was a claim, they could get in very quickly.

Andrew Tjaardstra: On the subject of acting quickly, there have been some complaints from brokers that insurers are sometimes handling their claims too slowly. Is this a fair comment and do you recognise that there are things and processes that do need to be speeded up and can be improved upon?

Dominic Clayden: I think you can look at the volume of claims and most claims go through - they get settled quickly and broadly everybody is happy with them. However, I accept that there is a volume of claims out there in the insurance industry which can and should be handled quicker.

Peter Staddon: We have got to look at the class of business. I heard recently of a particular whiplash injury that was settled by the insurer within weeks. How can you settle something within weeks when you actually can't see what the long-term injury is? As we know, the larger claims have the capability of the interim payment, so we can start assisting the clients going forward. But the smaller claims, yes, if it is a theft, maybe we can turn that around. But there are a few things that we need to do.

Andrew Tjaardstra: Would you agree that brokers have been moving away from micro-managing their claims to more macro-managing them, as costs increasingly need to be controlled by brokers? Is it in the broker's interest to handle claims and where can brokers add real value to the claims process?

Peter Staddon: Should brokers handle claims? Yes. It is as simple as that. If a broker is in a chain, they need to add value. If they are not adding value, why are they there? The claim is the shop front so, therefore, the broker needs to be there, holding the client's hand. We have anecdotal evidence that when a piece of business is placed via a direct writer, a like-for-like claim from the broking channel to a direct channel is less through the direct channel than it is the broker. Simply because the broker will say no, that is not right.

Dominic Clayden: I see the role of the broker that, if the customer feels they are not getting what they are comfortable with from the insurance company, they should be absolutely engaged there. The other thing, from a point of view of brokers dealing with claims, is that some brokers do it better than others. A broker may have had a relationship with a customer - a SME, for example - and the claims department may never have seen them or had any contact with them. We don't know whether there are any unusual features here. What really helps us is when a broker, if there is something unusual, they get in touch with us early.

Andrew Tjaardstra: But obviously that is quite time consuming for the broker?

Dominic Clayden: I get examples of some great interventions by brokers, and it is not necessarily labour intensive to contact us. It is that quality intervention that you get that says actually can I speak to somebody on this claim. They know about how a policy of insurance works, they know how a claim probably should be handled, and say, guys, this is the situation, we have got this claim, this is the customer we have got. I don't want to tell you how to do your job but here is a suggestion.

Mark George: The first call on a commercial claim that a loss adjuster makes should be to the broker. This is because the broker knows the intricacies of that client and they should call to find out: any peculiar circumstances; find out more about the risk; find out if the broker wants to be involved; do they want to come out to site; do they see that as adding value? Some say no. However, a lot increasingly want to be involved for their customer. That is to be welcomed and the clients welcome it.

Andrew Tjaardstra: Moving on to brokers handling claims, there is a growing trend in the industry for delegated authority schemes. Do you expect this trend to continue? And, if a broker is considering taking on a delegated authority scheme, how much time and investment is involved?

Peter Staddon: I think it is an interesting trend and they are beginning to take back control of their client base. What they need to do first of all is think about conflict management at boardroom level to make sure that they can actually manage the conflict.

Andrew Tjaardstra: So if there is a big investment, it needs more staff.

Peter Staddon: That's not to say that brokers cannot be successful. If you look at some of the business models that are around that are successful, what they are doing is taking this away from the insurance companies, and the insurance companies become a virtual back up. They are doing the policy production, the broking, the placement and they are doing the claims administration.

Dominic Clayden: The delegated authority claims are ones that the insurance company would normally deal with, where the authority to settle them and deal with them is delegated back to the broker. And, in that situation, if the broker is acting as the agent of the insurance company. Because the way the Financial Services Authority looks at this situation is, at Norwich Union as a company, anybody that handles your claims, you are accountable for them. Overall as well, we have to remember as an insurance company, the big driver of what a premium make up is going to be is what the claims cost.

Andrew Tjaardstra: Do you think the possibility of loss adjusters being regulated by the Financial Services Authority is a good idea?

Mark George: Well, we thought it was a good idea when regulation was coming in, because our representative body asked whether we could be regulated. The reason for that is it holds no fears. What is enshrined in ICOB7 and treating the customer fairly in practice that has been codified is what we would like to think we were doing. So it held no fears for our industry. I would welcome it.

Dominic Clayden: Overall, providing that the regulation was not just over-burdensome, there are some real advantages to it. One of the advantages, as an insurer, is where an adjuster comes on board who we may not have dealt with before, we would not have had any experience of or, quite honestly, we have just never heard of. Actually, if they are regulated, that would give you some comfort because sometimes when we get into those little push and pull situations, it is simply because our lack of confidence comes from lack of knowledge and lack of authentication from a regulatory body. We shouldn't have over-burdensome regulation and we really need to make sure that it does not conflict with the way that the FSA regulates insurers, because our necks are on the block.

Mark George: And, of course, some of our activities are directly regulated anyway. Some things we do set us on the other side of the regulation fence. So, a broker outsourcing the sub-delegation for their own clients taking the notification of claims, and then passing it on, which we sometimes do, is on the right-hand side of the fence in a regulated activity's business. And many companies do that.

Andrew Tjaardstra: What are the advantages of outsourcing claims? Is that a good alternative for a broker?

Peter Staddon: Obviously, with outsourcing, what may fit one may not fit another. Outsourcing will of course give you 24/7 cover and that is quite beneficial.

Mark George: There is a slight conflict between saying that you want to be in the process and really add value for the client and then giving it away.

Dominic Clayden: When it is done well, it is seamless. Sometimes we see some problems because somebody comes into the process that we were not expecting. And they sometimes dip in and out and it can create a bit of a problem if it is done badly, because sometimes we will get people from the brokers phoning us, we will then get an outsource agent phoning us, and the customer will ring us. And as soon as you get too many people in the communication chain, things get lost in the cracks. However, when it is done well, it works seamlessly and we don't notice the difference.

- Hear the full debate by visiting: www.brokermanagementforum.com

This includes an archive of all Broker Management Forums.

And register now for the next programme on 12 July at 2pm, when we will be discussing the challenges of regulation.

Listen to the LIVE Broker Management Forum debates, suggest topics for future programmes, vote in polls and send questions to panelists during the event and join fellow broker managers from the comfort of your own office.

THE PANEL

Andrew Tjaardstra, Editor, Professional Broking magazine

Dominic Clayden, Director of claims, Norwich Union

Mark George, Director of client development, Cunningham Lindsey

Peter Staddon, Head of technical services, British Insurance Brokers' Association.