The insurance sector is changing faster than British summertime weather – staying ahead of evolving claims trends, therefore, becomes a business imperative
By Editor Katie Scott
Speaking to Sabre Insurance’s chief executive Geoff Carter earlier this week – following the firm’s publication of its half year financial results – he told me the level of change within the general insurance market at the moment is “astonishing”.
Alone, the FCA’s pricing reforms within the home and motor sectors, or the Motor Insurers’ Bureau (MIB) and Ministry of Justice’s (MoJ) Official Injury Claim portal launch would have each created a landslide of change respectively, requiring insurance firms to knuckle down and make adjustments.
However, insurers, brokers and suppliers are not only having to navigate and implement a hefty stack of regulatory changes all at one time, but they are also having to do so amid the fluctuations of an unprecedented global pandemic and – to quote the now well-hated phrase – a ‘new normal’.
And – to top it all off – claims trends are evolving and adapting at pace, meaning that insurance firms must stay on their toes in order to both survive and successfully serve customers.
Chatting to Gallagher Bassett’s UK technical director Andy Sewell on the topic of non-motor claims trends, he raised a red flag around employers’ and public liability cases, for example.
He explained: “At this moment in time, the small claims track for employers’ liability and public liability cases remains at £1,000.
“It was originally intended for those claims for the limit to rise to £2,000 at the same time as the motor limit for applicable claims, outside of vulnerable [customers’] and children’s cases, [increased] to £5,000.
“That was supposed to happen at the same time but because it hasn’t, there is now a real incentive for organisations to look to hunt and potentially farm claims.”
He also predicted a “bubbling of Covid-related claims” due to “the largest claimant pot of all time of people that have been infected with Covid, with organisations set up to look to try and claim compensation for that”.
A trend that Gallagher Bassett is “particularly wary of”, however, is “the law of unintended consequences with the rise in homeworking” brought about by the onset of the Covid-19 pandemic and social distancing measures.
Sewell is concerned here around the “health and safety aspect - repetitive strain injuries and other posture-based injury”.
He added that because these types of claims “are not subject to the increase in the small track claim limit, [they] become an attractive proposition for law firms to go after”.
Lastly, Sewell joined the dots between economic recessions, financial hardship and fraud.
The Covid-19 pandemic has undoubtedly taken a battering ram to the bank balances of many individuals and business alike, meaning fraud risks are an ever-present danger for the insurance sector – perhaps more so in today’s digital, post-pandemic landscape than ever before.
“Historically, you always see an uptick in fraudulent activity around property loss, arson, theft – both motor and non-motor – and that’s certainly something that we’ve seen an increase in,” he told me.
After ‘Freedom Day’ got the go ahead from prime minster Boris Johnson on 19 July 2021, these claims trends may all change again – Carter, for example, was keeping understandably tight-lipped about claims predictions for the second half of the year as realistically, we all now know how swiftly things can change.
Regardless, insurance businesses will need to keep their fingers on the pulse of claims activity – with all eyes currently on regulation requirements, the last thing the industry needs is an unexpected claims risk to slip through the net.
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