Two Steps to Improve the Insurance Claims Process
Insurance buyers deserve certainty regarding policy performance at critical times; yet about 45% of major commercial claims are disputed, according to research by insurance governance firm Mactavish. Such a situation is bad for clients, the overall business community, and the insurance industry. But there are approaches that can facilitate better claims outcomes.
Broadly, claims fall into three categories.
- Small, straightforward claims, settled efficiently and generally with good customer experience. This represents the majority of claims.
- Large straightforward claims, settled quickly. This, unfortunately, is rather rare.
- Large, complex claims where insurers can be slow, cumbersome, and, at times, adversarial.
Increasingly, we see a lawyer- and expert-led approach to handling large claims, characterised in part by experts opining on what should have been done to minimise the loss, along with their views of the extent of the loss. This approach can encroach on the traditional space of the chartered loss adjuster whose job is to project manage the claim and oversee a fair and equitable settlement.
Toward More Efficient Claims
There are, however, two areas that can help larger, complex claims run more efficiently:
Ensure policy efficacy. One step toward more effective and less troubling claim management is to ensure that policies are free from terms that cannot be complied with, or, worse still, of which the insurance buyer is unaware. Policies should be free from ambiguity. This is a constantly evolving process; as case law changes and clarifies the meaning of words — policy drafters should incorporate changes into wordings.
Buyers should look to regularly “stress test” their policies to ensure they will perform as expected. A well-run test involves brokers, underwriters, and, where necessary, external experts. Tests can identify cover gaps, allowing for clarification or cover amendments before an incident occurs. Such tests can also help buyers establish procedures with experts and understand what to expect in the event of a claim.
Manage claims effectively. Another key to the claim process is to understand that successful claims do not happen by accident; they are managed professionally and proactively from start to finish. As claims become more complex and insurer expert-led, brokers are investing in more claims advocacy services to assist their clients and differentiate their service.
A well-run claim, through the customer’s lens, delivers a quick affirmation of coverage, interim payments ahead of expenditure, quick identification and socialisation of issues with all stakeholders, and appropriate paths to resolution. The insurance buyer should experience no surprises and be able to keep its leadership team fully briefed as they focus on business recovery.
Although there is usually no language in a policy detailing what a buyer can expect from its insurer in the event of a claim, brokers and buyers can negotiate such wording. Marsh Resilience wordings are a case in point. Developing the approach involved collaboration from wording technicians, underwriters, brokers, claims professionals, and lawyers. The result is a policy that strips away ambiguity enabling clearer cover interpretation and brings clarity for buyers, underwriters, and brokers by setting out clearly the actions and timescales the insurer must adhere to in the event of a claim.