FCA thematic reviews of insurance claims John Parker Technical - - PowerPoint PPT Presentation

– FCA thematic reviews of insurance

claims

–

John Parker – Technical Specialist, General Insurance & Protection

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IFAA conference

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12 November 2015

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Agenda

• FCA overview
• Sector Overview
• What is a thematic review
• Household and travel claims
• First party SME claims
• Where is UK GI industry now

2

The Financial Conduct Authority (FCA)

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4

Sector Overview

Thematic reviews

• Enables the FCA to look at practices across a number of

firms

• In-depth study of an issue with a report being published on

findings and actions required

• Customer research can provide empirical evidence of the

customers’ experiences

• General insurance thematic projects include;

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• Mobile phones

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• Price comparison websites

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• Premium finance

5

Claims reviews

• Moment of truth
• Does the industry deliver against what the policyholder

thought they had purchased

• Raises questions about sales and purchase of products
• Not looked in detail at sales in the claims reviews
• SMEs asked about what is important in purchasing;

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• Right cover more important than price

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• Get right cover at lowest price

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• Did not scrutinise detailed terms and conditions

6

Household and travel claims

• Review to assess whether consumers as claimants at the

heart of insurers’ businesses

• Quantitative consumer research showed reasonably high

satisfaction levels:

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• 82% for successful claimants

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• 64% across successful, rejected and withdrawn
• More innovation and customer focus in household than travel

because more profitable line of business

• In household some insurers demonstrated desire to own

claims outcomes for policyholders

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• Articulate vision of one in-bound call from claimant with

all subsequent communication outbound

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Household and travel claims

• Variation in degree to which insurers actively challenging

themselves to improve

• Drive to obtaining consumer feedback and using it to

enhance products and service

• Areas for improvement:

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• Frequent problems in delivery through supply chain

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• Treatment of consumers with pre-existing medical conditions in travel

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• Clearer explanation of why claims rejected

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• High dissatisfaction with complaints handling, even among successful

complainants (52%)

8

SME claims

• More complicated claims landscape than in travel and

household

• Wanted to look at role insurers, MGAs, brokers and loss

assessors played; and behind them loss adjusters and TPAs.

• Focus on claims >£5k as more critical to the SME and not

desktop handled. Loss adjuster generally involved

• Qualitative customer research to understand:

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• Customer experience, 100 SMEs were interviewed

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• 20 in-depth case studies
• FCA thematic team interviewed management, visited claims
• perations and reviewed 100 claims files

9

SME claims - key findings

• Gap between SME expectations and what was delivered
• Considerable variation in how well claims were handled;

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• Number of claims handled well

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• Evidence of difficult, traumatic, and unduly prolonged experience for

SME struggling to recover its business

• Little or no admission of liability being unfairly delayed
• Where non-disclosure the materiality of this carefully

assessed and proportionate stance taken

• High incidence (20%) of some form of under-insurance;

instances of > 50% under-insurance 10

Delivering what is important to consumers

• Consistent view across the two claims reviews
• FNOL process that is easy and provides reassurance; understanding of

claimant’s circumstances and advise given early

• Where required presence of adjuster on-site with appropriate speed
• Co-ordination of parties/suppliers involved
• Clearly setting out next steps and who will do what – and delivering against

this

• Ownership to drive the claim forward and proactive communication
• Fair and prompt settlement with clear explanation of basis of settlement

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Part loss adjusters play

• Adjuster is the on-site face of the insurer
• Expertise and behaviour critically influence the policyholders’

claims experience

• SME review businesses reported very variable experiences;

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• Adjuster was helpful and fair; and

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• Adjuster was hostile and seeking every opportunity to reduce the claim

cost

• Examples of adjusters out of their depth, for example did not

understand cover

• Positive experience when claims handled by major loss

teams 12

Current Position – Claims handling

• Position more positive in household than SME

claims journey;

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• Demands of high street retail brands on insurers

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• Less complex landscape than SME

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• Claims less complicated, for example, no BI
• SME claims journey has a number of areas of

improvements

• Considerable way to go to:

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• Achieve true focus on customers as claimants

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• Deliver what is important to them

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Current Position - Policy coverage

• Need to significantly reduce the incidence of under-insurance
• BIBA due to publish guidance for its members on avoiding

under-insurance

• BIBA and FCA working with Federation of Small Businesses

to increase SMEs understanding of insurance

• FCA will reflect on what else needs to be done

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– Q&As

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