Walk the line

While loss adjusters are not regulated by the Financial Services Authority, the insurer and broker clients for whom they act are, and it is incumbent upon adjusters to ensure that they provide a service in such a way that ensures clients remain fully compliant with the regulations.

Much has been written and debated about the FSA guidelines for treating customers fairly. Arguably, the time of claim is when adherence to TCF guidelines will come under closest scrutiny. Couple this with the increasingly sophisticated expectations and demands of the customer, set against the backdrop of a growing compensation culture within the UK, and it becomes clear that embracing TCF is essential to maintain a successful business.

Regardless of regulatory guidelines, those organisations currently thriving in our highly competitive industry have placed customer care at the heart of their business models, using it to differentiate, retain and win customers, enhancing their overall reputations. There can be no doubt that displaying a passion for customer care and innovation, and living up to these values at both strategic and operational level throughout the business, leads to commercial advantage.

When applied to the claims environment, the principles of TCF require the prompt, efficient, fair and consistent handling of claims.

TCF is a continuous process, rather than a quick fix, and requires commitment at the most senior level and throughout the business. It is essential to periodically review business practices and develop an understanding of areas where the obligation to treat customers fairly may not be being met adequately. At this point, prioritised procedures can be put in place to address any shortfall in performance, with clearly defined targets to track progress. The whole business should be involved in the drive.

Clear, business wide communication with regard to TCF and customer care principles should be regular, inspiring and ensure understanding and buy-in at all levels. Simple feedback mechanisms should be put in place to allow staff to contribute and influence the process. Employees who understand the part they play in living up to the customer service values are empowered, have a clear sense of direction and become a powerful team of ambassadors for the business in they way they individually communicate and perform their roles.

Principles and practice

New recruits can be provided with training to enable them to understand what the principles of TCF look like in practice. Providing case studies of good examples of TCF helps to cement the fundamentals and keep them front of mind with employees. A clear understanding of TCF and the organisation's relative customer service principles must permeate the entire business, at every level, from the receptionist, through to claims handling personnel and senior management. It must be embedded in the culture of the business, so that the practice of treating customers fairly and delivering excellent customer care is the norm.

It stands to reason that despite following the above processes, there will be occasions when things do not go according to plan, and nowhere is this more keenly recognised than in the claims process. It is essential, therefore, that there is an effective process in place for the accurate recording and administration of complaints and complaint handlers are trained in how best to deliver sympathetic, prompt and fair handling of complaints. The use of management information to enable root cause analysis of complaints to be carried out on a regular basis is fundamental. Involving claims handling teams in action planning to address any identified shortfall in performance is highly effective, particularly when they are provided with feedback on the success or otherwise of the initiatives taken.

AMG's TCF programme has also entailed developing closer working relations with the broker market. Liaison pre-loss between the broker, policyholder and loss adjuster can help to ensure that at the time of a claim the response is both speedy and appropriate. The following aspects are particularly beneficial: nominated adjusters with known contact details, including out-of-hours telephone numbers; pre-loss meetings to develop an understanding of the policyholder's business and processes and to build a rapport in advance of a possible claim; identification of key processes, suppliers and customers; identification of potential consultants, contractors, letting agents; and a clear understanding, in advance, of procedures to be followed in the event of a weather surge.

When a loss occurs, swift liaison with the broker and policyholder to agree immediate procedures is crucial, as is managing expectations from the very outset and the provision of regular and meaningful updates throughout the life of the claim. The loss adjuster's role is to facilitate prompt, fair and flexible claims solutions and this can be achieved rapidly and cost effectively by working in partnership with the broker.

Case study

The following case study illustrates TCF in practice and the value of consultation and consideration of flexible and innovative claims solutions when the need arises.

Servite is a large housing association that operates from Merseyside to London and the South coast, and specialises in the provision of social housing and student accommodation. Servite manages a number of halls of residence in Colindale, North London, near the Hendon police training college, on behalf of a subsidiary company named Middlesex First, which own the buildings and which are co-insured with the funder and the university. The area was being redeveloped and, on 12 July, a serious fire broke out on the building site in an adjacent building.

The insured's building, which forms the subject of the claim, is four stories high and suffered extensive heat and smoke damage. The fire also spread to its roof and mechanical and electrical services within, all of which were destroyed. Extensive water damage was sustained, not only from the fire brigade but also from mains fed water escaping from the destroyed water tanks in the roof. Consequently, while the fire damage was confined to the roof and rear elevation, the entire four storey block was saturated throughout.

The incident was widely reported in the national and local media and the repair cost estimated to be between £1.5m and £2.0m with the loss of rent and alternative accommodation costs perhaps running to £0.5m. The likely timescale to complete building repairs once the property was certified to be dry was around six months.

Following notification of the loss, AMG liaised immediately with the broker and the insured. The block accommodated 144 students attending the university. Fortunately, the fire occurred shortly after the start of the summer break when the majority of the UK students had gone home. Those foreign students who had chosen to remain over the summer were promptly re-housed in other blocks on the campus where there was temporary capacity.

Speed of response was vital and there were two overriding priorities: sourcing suitable, alternative accommodation for the students in time for their return to university on 14 September; and reinstating the halls of residence as rapidly as possible, while allowing appropriate drying time in order that repairs remained robust over the longer term.

Ideally, all 144 students needed to be re-housed in alternative premises near the campus. This was difficult to accomplish in the area in question and it was necessary to look further afield. Several locations were identified all with varied minimum rental periods. As the alternative premises were located some distance away from the university it was necessary to arrange hire coaches to bring in the students.

Further costs would be incurred through upgrading the rented accommodation to meet the university's contractual requirements such as wardens and emergency response to call outs. Hotel accommodation was prohibitively expensive, renting houses less so, but still a significant cost given the numbers that would be involved. The possibility of buying houses for cash for immediate occupation was also considered but it was felt preferable to keep the students together.

Working closely with the insured, AMG carried out a detailed cost benefit analysis and, having identified what the insured's contractual obligations to the university were, the needs of the students and the practicality of the various available solutions, it applied the TCF principles to the mix. As a result, it arrived at the most practical and cost-effective solution for all parties concerned, which involved the insured securing a six month let on a block in London and making available a second premises of their own.

Coaches were organised to transfer the students to and from the temporary accommodation and they were also offered the alternative of travelcard passes if they would prefer them. The insured were able to fulfil their obligations and deliver true reputation-enhancing customer care. A total of 144 students had suitable alternative accommodation in time for the start of the autumn term.

With respect to reinstating the building, working very closely with the insured's management team in the days immediately following the fire meant it was possible to arrange prompt removal of saturated contents and internal features, such as kitchen units. Surveyors and a structural engineer were nominated to act and instructions given for a 'tin hat' to be erected - a temporary roof structure of corrugated sheets laid over scaffolding poles to prevent any further saturation from rainwater.

The next challenge was to dry the building out, in order to begin repairs. If traditional drying techniques were used this would involve hacking off wall plaster and stripping out other saturated features before deploying drying and dehumidification equipment. The process is slow, expensive and requires a substantial electricity supply to run the equipment. Quotations obtained were in excess of £100,000 with an estimated drying period of at least eight weeks.

Alternative methods

AMG was aware of an alternative drying method that would deliver a dry building in half the time and at half the cost of the traditional method. Additionally, there would be no need to hack off wall plaster and the stripping out of features could be minimised. The system would run on a bottled-gas-fired plant and could be used without electricity.

AMG had first trialled this new process following the Carlisle floods. The system works by introducing hot air with a very low relative humidity into a saturated building and monitoring the incoming and outgoing air flows. The air acts like a sponge and draws the moisture out rapidly. Given the need to get the building dry and repairs underway with the minimum of delay, a decision was taken to embrace innovation.

At the time of writing, drying was well under way and it was anticipated that it will be possible to commence building repairs shortly, well in advance of when it would have been possible had traditional drying methods been used. Working in tandem with the insured and broker, AMG has devised a repair process which will facilitate a programmed return of students in stages.

This case effectively demonstrates the principles of TCF in practice. By working closely with the insured and the broker, understanding their needs and devising innovative solutions to address the particular problems associated with this loss, the insured was delighted. Prompt action had been taken and the solutions proposed demonstrated a fair and cost effective solution for all parties. For a short period, AMG's adjuster will effectively act as counsel and guide to the insured and broker, providing ongoing support so that the insured can meet its contractual obligations, delight their customer and control their costs.

- Garry Lloyd is Director of customer service, AMG.