Loss adjusters fight downturn

Loss adjusting is feeling the heat. In an already cutthroat market, insurers are looking to hammer fees and, with fewer major disasters and benign weather to date, big-ticket business is thin on the ground. News that RSA is also seeking to expand into the wider market with its loss adjusting services team (see p.10) could also ruffle a few feathers.

Meanwhile, Cunningham Lindsey has reformed its subsidence team with the announcement of 59 redundancies - 50 administrative and nine technical - after a downturn in claims. From 1 October, the company will expand remote working in this area and is making every effort to redeploy staff.

The current adjusting market mirrors the insurance market in that there are a few giants and numerous niche players. However, whereas insurers' results are available, with adjusters it can be difficult to find out which firms are most profitable.

This is because firms either have US parents and bury UK numbers within international results, or the smaller firms are private companies and so are under no compulsion to publish figures.

Claims specialist Fitzgerald Consulting is carrying out an increasing number of audits for insurers to assess the performance of adjusters and to advise on more indemnity spend efficiency.

Managing director Bev Fitzgerald commented: "It has to be questioned if all the adjusters are making money and it's notable that many firms now offer a range of additional services to boost income, as well as offering more for less when tendering."

Fitzgerald is a passionate believer in the need for technical expertise and says that he has concerns about adjusters becoming claims management companies. He remarked: "It can be as much about having the right arrangements with building companies and other suppliers as the technical side. If an adjuster is adding value then that's fine but there must be independence and transparency."

Market move

Earlier in the year, US-owned GAB Robins sold its international subsidiaries to Cunningham Lindsey and subsequently agreed a management buyout for its UK operation in January. Chief operating officer Mike Jones said that the smaller and more focused operation has been good news in terms of winning business and he claims that there has been a rethink on supply chains. Jones highlighted: "Insurers are now questioning this area. Offerings have not always been the best solutions and have alienated customers as well as not providing value. In some cases, cash settlements have been making a return."

He added: "Claims volumes may be down across the market but we are up. We've recently had some big wins with QBE's property business and are now on the Allianz panel for domestic and commercial."

While the industry has seen some redundancies, GAB Robins is not letting anyone go. He added: "I think there is greater appetite for outsourcing among insurers, evidenced by Groupama deciding to no longer have an in-house claims inspector team. There is also more work available from brokers with delegated authority schemes."

Meanwhile, Alistair Steward, business development director at QuestGates, agreed that brokers are a vital source of business. The firm recently launched a service aimed at brokers to advise on business interruption; it also sees this channel as being vital for future growth. Steward said: "Following our year-end in June we've had our most successful year and a lot has been down to working with brokers."

Steward said that brokers are keenly aware of "a safe pair of hands being more important than going for the lowest fee and [that], for VIP clients in particular, the claims service is crucial, potentially making the difference between retaining a client or not." He commented that there have been occasions on which a broker has insisted on working with QuestGates rather than a panel adjuster and that the insurer has capitulated.

Close to clients

The big firms argue that they can provide it all, from the deskbound first notification of loss services to handling the biggest and most complex claims.

Phil McNeilage, chief executive at Cunningham Lindsey UK, said: "What matters is being close to your clients whether they are insurers, brokers or those that self-insure. You need to provide best value and I think a key issue is making sure you evidence what you do. This helps insurers manage their indemnity spend and, in terms of brokers, that often means ensuring they know exactly what is happening with a claim. We offer this through an intranet service, BrokerLink."

McNeilage said that Cunningham Lindsey is also able to provide brokers with a number of white-labelled helplines for schemes and says that his firm "has an increased appetite for broker nominations."

Clive Nicholls, vice-president at Crawford Global Markets, told PB that adjusters can provide complete claims capabilities and he sees growth for the recently launched Broadspire, which offers a range of third-party administration services

Nicholls is also a firm believer in adjusters investing in their people: "People talk about employees being their biggest asset but without investment this is just words. Any adjuster that cuts back on training and qualifications will crumble. No matter how tough the climate, this has to be a priority for everyone from those that are focused on volume business to a growing number within Crawford that are on our MBA programme."

McNeilage added that his firm is also putting forward increasing numbers of people to take the Chartered Institute of Loss Adjusting examinations. He said: "You must have good succession planning and we want to do more to promote adjusting. Our colleagues in Holland tantalise graduates by simply talking about 'the best job in the world' on their website: we have to raise understanding of the work and the opportunities as well."

There may be a recession in effect - and mild weather - but loss adjusters are a hardy bunch. Even if further consolidation is expected, this is a sector that is going to stick around.