An increasingly bespoke relationship

The need to handle claims quickly, effectively and professionally has always existed, yet the profession's views on how best to do this have altered dramatically with the passage of time.

In recent years, there has been a move by adjusters to court the broker market actively and seek its support in gaining nominations as the preferred firm to deal with specific clients and their claims.

It is not that the adjusting profession wants to move away completely from the volume agreements that many firms have put in place with insurers, there is a feeling that many merit a slightly different, bespoke approach.

Graham Smart, executive director at adjuster MYI, comments: "The claims process is very automated and the insurer will be on a direct claims reporting process and the broker will not play a part in that. However, we are finding that there is an increasing degree of awareness about the importance of the claims process and brokers see it as something they can use it to differentiate themselves."

The point is not that automated volume adjusting is the wrong way to go about handling many of the everyday claims that flow through the insurance industry's pipelines but rather that it should not be the only way.

Smart feels that, where a client merits special attention, they should be able to find it, even if that means using an off-panel adjuster. By working with the broking community, he says that this is exactly what his firm is trying to achieve along with many others in the profession.

"For us, the broker is a big part of the claims process and we see brokers having a very important role. This is not just at the time of a claim but also pre-loss," says Smart.

Synergy

There is a degree of self-interest for any loss adjuster to have itself nominated as the firm that will be called up in the event of a claim, though what is in it for everybody else?

In the first instance, if a broker and a loss adjuster have an established relationship then it should be easier for the two parties to work together.

David Lee, a partner at broker Lucas Fettes, remarks: "It is easier if you have a relationship with a loss adjuster to make sure the claim is handled properly and in the way that best suits your client."

Where a good relationship exists between broker and adjuster, it should also be simple enough to introduce the loss adjuster to the particular clients that it will be dealing with, give it a chance to learn about the business and enable it to ready itself for all eventualities. In turn, this should mean that the reaction to a claim is faster and more effective and that interested parties are prepared to deal with any specific issues thrown up.

Smart highlights one case in which a client's business was reliant on a particular part of machinery. By meeting the client pre-loss, establishing lines of communication and placing a restoration specialist on standby, he says that MYI was able to deal quickly and effectively with the claim when it did arise, ensuring business interruption costs were minimised.

By catering for the client efficiently, the broker is shown in a good light while costs are also kept to a minimum for the insurer: it would seem that there is something in this type of arrangement for all parties.

Although the broker-insurer-adjuster triangle should work as effectively in every situation, there are many that feel the volume panel arrangements that have become the norm do not allow for this to happen in too many cases. This is the view of John Sims, chief executive at Lorega, which is working hard to introduce a continental model of contra-adjusters to the UK. By working with a range of qualified, independent adjusters that act for the insured and not the insurer, Sims says that it is possible for clients to receive the service that they want and need.

Bundle

Clients buy a loss-recovery insurance policy as part of their packages and, should a claim arise, this gives them cover to pay for all of the associated costs in dealing with that claim; this includes an adjuster to act on their behalf.

Sims says that, for a commercial customer with a £10,000 insurance policy, adding the loss-recovery insurance might cost in the region of £250. Some have criticised the approach as simply complicating what already exists by adding in another layer and claim that it is an old-fashioned case of too many cooks spoiling the broth.

However, Sims argues: "We exist because of the model that exists." If there were no need for the service then Lorega says that it would not be able to sell it. Sims also believes that having a professional adjuster acting on behalf of the insured takes a lot of emotion out of the claims process and turns it into a more professional and fast-moving transactional process.

For brokers, there is a degree of caution to exercise when selling such loss-recovery insurance because clients might question why they need it in the first place. Surely it is up to the insurer to appoint an appropriate adjuster that can take care of the claim. If the insurer is not capable of doing that then why not move to another provider that can?

So far as Sims is concerned, it is about clients protecting their interests for a modest sum and making sure that their affairs are handled correctly in the event of a claim. In many cases, the insurance industry has lost the ability to do this and Sims claims: "The fee scales are so low that it is difficult for loss adjusters to give customers the traditional service."

Whether brokers want to use the facility provided by Lorega and brand it with their own names as an extension of their own claims services, or simply sell the loss-recovery insurance policy, it seems that there are a couple of advantages for brokers.

In the first instance, there is the sale of an extra policy, though more importantly they are offering clients security that their claims will be handled effectively and professionally, as well as providing somebody that acts in their interests.

Whether or not the model takes off remains to be seen but, in order to work, the contra-adjusters will have to prove that they make the claims process better for the insured or they will not be able to move away from the criticism that they simply complicate it.

In the past, brokers and adjusters have always worked together; they may have acted for different parties traditionally but they have nonetheless worked together. Now it seems that there is a move towards brokers actually becoming clients of loss adjusters and seeking their services for certain aspects of their work.

New way

Alistair Steward, business development director at QuestGates, explains: "Since the advent of Financial Services Authority regulation, brokers are coming to us as direct clients."

Initially, this has been to secure property valuations and ensure that any estimates being given are arrived at professionally. However, Steward says that QuestGates is now offering business interruption valuations and helping brokers to put an accurate figure on potential client losses.

He comments: "Brokers have to make sure that they are doing the job correctly; there is no room for any sort of guestimate work." By calling on the services of an adjuster, Steward says that it is possible for brokers to be completely confident in the potential loss sums that are quoted and to ensure that the client receives the correct level of cover. Not only does this protect the broker should anything go awry, it also makes sure that clients are buying the correct policies.

Whether it is securing the nomination of a particular adjuster for a client, selling a loss-recovery policy or turning to an adjuster to help with valuation work, there is no doubt that the adjuster-broker relationship has evolved significantly over recent years.

Increasingly, the two parties are actually doing business together rather than simply working alongside each other and, for those that can mine the relationship effectively, there are rewards to be won.

By catering for the client efficiently, the broker is shown in a good light while costs are also kept to a minimum for the insurer: it would seem that there is something in this type of arrangement for all parties.

Although the broker-insurer-adjuster triangle should work as effectively in every situation, there are many that feel the volume panel arrangements that have become the norm do not allow for this to happen in too many cases. This is the view of John Sims, chief executive at Lorega, which is working hard to introduce a continental model of contra-adjusters to the UK. By working with a range of qualified, independent adjusters that act for the insured and not the insurer, Sims says that it is possible for clients to receive the service that they want and need.