Reconsidering the claims game

Effective claims management should be fundamental to a broker's role. However, are brokers in danger of being squeezed out by insurers who deal direct with the customer, via loss adjusting firms and supply chain/project managers who directly appoint repairers?

We all hear of claims dissastisfaction but is this not as much down to under-insurance as it is to non-delivery of a service promise? While brokers may struggle to gain ground within the claims management area, the tools to tackle the under-insurance issue are increasingly available. The broad-brush approach currently used for calculating rebuilding costs is increasingly seen as lacking the sensitivity to deal with the continuous improvements and property extensions which are a feature of present day home ownership. Is it not time for some new thinking on the topic?

Given that 25% of UK properties are thought to be underinsured and 10% overinsured, more emphasis should be placed on adequately insuring a property and ensuring the figures used are both accurate and defendable if a broker is called to account.

Providing adequate cover and fairness in agreeing repair costs must be given the same emphasis as risk management. For brokers to act as customer advocates, they need to have access to robust data detailing rebuilding and repair costs. These costs have much in common across the industry and are fundamental to adequate cover and fair claims settlement. Transparency is the name of the game.

The broker has as much entitlement to being able to calculate the settlement figure of a straightforward claim as any other party in the process. With the continuing development of low-cost web-based systems which don't require expert handlers, brokers are increasingly capable of being able to verify simple claims. It is not a question of capability but of attitude.

We are not in uncharted territory. These issues were prevalent in the US a decade ago and resulted in a change of approach towards a more accurate and transparent way of calculating claims and rebuilding costs. The Canadian market, often referred to as broker-led, has already seen the light through the use of MSB solutions and is reaping the rewards.

The right ingredients for a successful customer relationship - adequate cover and fair claims settlements - can now be calculated with better accuracy, using impartial and transparent numbers.

Brokers, particularly the small to medium-sized firms, are under greater pressure than ever before to justify their existence, particularly as the steamroller of direct writers continues to roll on. Brokers who choose to broaden their service offering to the customer inevitably have a better chance of survival. Those who wait and see, may find it too late.