Lorega in the News
Publication: Brokers’ Monthly
Author: John Sims
Job Title: Chief Executive Officer
Date: 19/05/08
At some point during the claims process a policyholder will discover if the promise to pay they have bought from their insurer is kept. Sadly in the UK most policyholders approach this moment of truth with trepidation. I would wager that in a survey of how the public felt about making an insurance claim a high proportion would say they expected the equivalent of a Spanish inquisition followed by a mugging.
If the same survey were carried out in mainland Europe, however, I would wager that customer response would be vastly more positive. I don’t know what the Dutch phrase is for treating customers fairly, but the fact is that’s exactly what they’re doing.
This approach to TCF is not just confined to the Netherlands. In many parts of the continent, insurers are providing their customers with a professional advisor to help them through a claim. Back in the UK customers get a much rougher ride because the process here has the insurer and loss adjuster on one side, with just the client and their broker on the other – hardly a level playing field.
European insurers recognise that it is simply not fair for professional advisors to act on their behalf while the policyholder, with exception of some help from their broker, does not have access to the same level of expertise.
Certainly in the Netherlands it is standard practice when customers make a claim to be provided with the services of an independent loss adjuster. This works in much the same way as loss recovery insurance. The client is also entitled to spend the same amount of fees to prepare and submit their claim as the insurer is on the adjustment by their loss adjusters. So if the insurer spends €3,000 on fees that is what the insured is entitled to spend.
All policies in the Netherlands and the majority in France and Belgium contain a contre-expert clause entitling the policyholder to their own adjuster. The fees, or barême, are a tariff set by the insurers, although there is nothing to stop the adjuster setting a higher fee than the tariff. There is a flourishing industry around this in those countries and the system works extremely well. It may seem an obvious and fair thing to do by European insurers but UK insurers have yet to recognise this as a major gap in the claims process; with one exception.
Sterling Insurance has recently taken a lead with its new high net worth offering Executive Plus, by adding a claims concierge service – a contre-expert equivalent. Sterling saw the very clear opportunity from this gap in the market and now places an independent chartered loss adjuster at the broker and clients’ service to prepare and manage the claim on their behalf. Providing a link between the customer and their claims department enables Sterling to pay claims quickly and fairly while negating any need for the customer to do all the running. Which insurer will be the first to pick up the baton for the commercial customer remains to be seen.
While often the complexity of commercial claims is greater than in the mid and HNW market, even so contre-expert assistance is standard on commercial claims in many countries. In my experience, HNW claims are very much a project management, hand holding exercise – doing all the running around as rich people don’t want to be getting estimates for repairs and replacements. The claims concierge service at Sterling fulfills precisely this role.
However it would be wrong to view this as a service that adds value only to customers. HNW insurers do sometimes overpay, in the spirit of wanting to provide exceptional claims service, because they look for ease of repair and replacement. However, as continental experience shows, the contre-expert, or in Sterling’s case the claims concierge, looks to settle a claim with ease but cost effectively. So, by ensuring a fair price via the contre-expert, this also helps insurers to avoid over-paying and therefore keep tight control of claims costs.
It would also be wrong to view this as a threat to brokers who are good advocates for their clients. But there comes a point where brokers just do not have the time. They are not getting paid to do this; it is a drain on their business and on complex claims and they sometimes do not have the expertise to give clients the right advice. In many cases the broker would be perfectly able to assist clients but the analogy I use is that if you feel unwell you visit your doctor. Most of the time your GP can provide the remedy but sometimes, in complex cases they may not have the expertise so would refer you to a specialist.
The fact that the independent expert allows brokers to focus on more profitable activities while keeping their client happy also makes this attractive for brokers. So there are industry benefits all round. The advantage to policyholders is also obvious so, in terms of impact to public perception, this is one continental import that could put a welcome smile on the industry’s public face.
