Adjusting to loss in the Covid-19 world

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While large parts of the economy fall silent, loss adjusters strive to maintain business as usual

The coronavirus crisis has posed challenges to the claims world like the rest of society.

The shut-down of most workplaces means that both the volume of employers and public liability claims has fallen.

“A lot of businesses are mothballed so are not in a position to submit or pursue claims,” Alister Jupp, UK head of Crawford Global Technical Services told Insurance Times.

The same applies to domestic escape of water claims with such problems likely be picked up immediately because people are likely to be at home.

For understandable reasons, business interruption claims have soared.

But for run-of-the-mill claims, insurance companies are asking them to be handled like normal. “Nobody has actually has suggested to us that we drag our feet,” said Phil Scarrett, managing director of loss adjuster Woodgate and Clark, which also supplies claims management services.

Adjusters have struggled less with the transition to home-based working than many other professions due to the field-based nature of much of what they do, said Malcolm Hyde, executive director of The Chartered Institute of Loss Adjusters (CILA).

“Loss adjusters are out of the office more than in the office: they have always been geared up technically.”

Site investigations

However, restrictions on visits means that much of the bread and butter work of site investigation has been severely curtailed.

Chris Hall, managing director of adjusters QuestGates, said some of his firm’s adjusters have been stopped by the police to check whether their journeys are essential.

This problem should be mitigated by the Financial Conduct Authority’s decision to include adjusters in its list of key workers so that the vital work of processing claims can carry on.

Meanwhile, CILA has been in dialogue with the Home Office and the Treasury about ensuring that loss adjusters can secure access to sites where they need to carry out investigative work, said Hyde.

Companies can issue letters of authority so that adjusters can explain why they are on the road if challenged. This authorisation extends to key partners like specialist contractors that dealing with oil claims, said Scarrett.

But this authorisation doesn’t extend to all staff. In addition, adjusting firms are generally only arranging visits in exceptional circumstances and where appropriate controls are in place, such as checking that it does not involve coming into contact with vulnerable customers.

Hall said “We can send people out but under very controlled conditions such as having to have PPE [personal protective equipment].

“Only with major loss scenarios are we persisting with visits now. Most policyholders are receptive to that,” said Scarrett. An example would be a major fire loss where the firm would send a surveyor out to inspect the damage.

Claims legal work

Claims legal work is largely carrying on business as usual with with courts still issuing claims, said Paul Holmes, insurance partner at solicitors DWF.

However there has been a “significant cut down” in face to face hearings with some cases being stayed cases for a few months, he added.

And technological solutions are reducing the need for physical contact in the claims arena like elsewhere.

In the courts, parties are being encouraged to conduct hearings over Skype to cut out the need for physical proximity, said Holmes.

Loss adjusters meanwhile are generally making greater use of video streaming technology to cut down the need to conduct site visits.

Hall said Questgate has rolled out its Cube Expert proprietary software. The policy holder download the Cube Expert app and is then guided around their property to film the extent of damage. The app can also be used to sign statements.

Alister Jupp, UK head of Crawford Global Technical Services, said the current crisis has prompted a much more rapid roll out across his firm of its smartphone app, YouGoLook, which can guide users step-by-step as they document their own claims.

“Whereas people talked about technology you are now seeing the implementation of that technology in a much shorter period.

“You can walk into every nook and cranny and capture the information.”

But while his firm is using video technology there are limits to what it can achieve, said Scarrett. “It has proved acceptable to get things moving, but it’s not ideal.”

These limitations can include the quality of the imagery and lighting, he said. “When somebody is guiding you round their premises using a mobile phone, you see what they show you.”

One of the biggest headaches is getting work carried out to repair damage to properties caused by water or fire.

“Contractors would love to do the work but the government has decided that contractors can’t work safely and it’s not essential works so building work has ground to a halt,” said Jupp,

Even if the building contractors themselves can carry on working, they may find their own supply chains are collapsing as builders merchants and the factories that provide materials shut down.

“Policyholders are being understanding. They accept that major building works and repairs is not going to happen until the shut down ends,” said Jupp.

What is the FCA’s expectations of insurance firms?

As the wider coronavirus crisis intensified, the FCA published its expectation about how insurance firms should respond on 19 March.^.

This stated that firms should have ‘sufficiently robust systems and controls’ and business continuity plans, including a responsible senior manager, in place so that they can continue to operate.

If staff sickness absences or an inability to use premises raise the risk of harm to customers, they should flag this up with the regulator.

With many having to work and keep equipment at home, the FCA said that motor and home insurers will be expected not to reject claims because of an ’understandable temporary change’ in how customers use their vehicle and their domestic address.

It also said motor insurers should relax their normal requirements that customer should have a valid MOT certificate in order to maintain or renew vehicle cover.

And when renewing policies, firms should make it ‘very clear, in a prominent position’ if they are excluding coronavirus. If firms wish to make mid-term changes to existing policies, they ask whether the written term in the contract say this is possible and to observe regulations around Treating Customers Fairly.

Jonathan Cavill, senior financial services associate at lawyers Pinsent Masons, said that the regulator’s coronavirus expectations should be “no surprise” in the context of its wider TCF framework.

Winter floods

The current logjams will be felt most acutely in those parts of the country hit by the winter floods, which the insurance industry was already grappling with when Covid-19 struck.

Jupp’s heart goes out to those households who have been hit by this double whammy of disasters.

“To suffer a flood claim in the first place is bad enough but then to run into a virtual lockdown. You can only have sympathy.”

Many households, who were forced to evacuate their flood damaged properties, are still stuck in the emergency accommodation that they were rehoused into.

In some instances, Insurance Times has learnt that households had been rehoused into hotels which themselves had to shut due to the coronavirus pandemic.

Thankfully, this is a limited problem, said Hall: “People in hotels are few and far between, they are mostly in rented accommodation.”

However he has seen examples of where repair work was close to completion and people were just about to move back into their homes but cannot now because of the government’s restrictions on home moves during the pandemic.

“Now of course the removal companies won’t move and you can’t get carpets laid,” he said.

Scarrett said: “Work has stopped on some of those claims where it was not felt that work can be carried out safely in line with government advice.

”Where it is essential, work is still going where there is a particularly urgent need. Where contractors can get into a property they are still doing that.”

An example of where contractors would pull out the stops would be where a family is living in alternative accommodation, he said: “Everyone is very keen that they get back home.”

This isn’t just a headache for the uprooted household but for the insurer, which faces having to fork out for the costs of this extended accommodation period.

While the coronavirus may not be the reason that people are having to stay longer in the temporary accommodation, they would not have been there in the first place if they had not been flooded out, prompting debates with insurers over whether the pandemic should be treated as an ‘intervening cause’ in such instances.

But while the coronavirus crisis has made the claims process more complex, at least it is carrying on, said Hall: “I would rather be running an adjusting business than a chain of pubs.”