In search of service

Insurers’ competence in claims handling can have a heavy impact on clients. So it matters hugely to commercial brokers. A bad record here can quickly strangle valuable broker-insurer relationships – or force costly compensatory falls in premiums. So which insurers are doing well, which badly, and what can the whole industry learn about how to handle claims better?

Last summer, Newsquest Specialist Media Business Intelligence (the research unit owned by the publisher of Insurance Times) conducted a large study of commercial insurers’ service to their brokers. Our 468 respondents were a cross-section of the commercial broker market, by size, type of firm and region.

Insurers’ claims handling emerged as one of their chief concerns. Offered a list of 11 different aspects of insurer service, we asked brokers to grade their importance: 57% rated fairness of claims handling “absolutely vital” and a further 39% as “of great importance”. Forty-two per cent rated the speed of insurers’ claims handling as “absolutely vital” and 52% said it was “of great importance”.

We also asked brokers to explain what single factor – other than cost and commission –most influenced buying decisions. “Claims service,” answered one manager, “closely followed by claims service, with claims service a close third.”

The league table

How well, then, are Britain’s insurers performing? We asked each broker to grade, from “A” to “E”, each insurer he or she dealt with on speed and fairness in claims handling – but only where they had direct experience of claims with that insurer within the previous 10 months. Grades were translated into percentage scores (see “The scoring system”, right, to find out how).

The results ranged from a creditable 81% down to 30%. Only a fraction separated Chubb and Hiscox at the top of the table, but there was a nine-percentage-point gulf between them and the best of the rest – Ecclesiastical and QBE, two of six insurers to make it into the 70s. Twelve more landed in the 60s, while seven – including Towergate and three major composites – scored in the 50s. AXA, Quinn and Tradex scored less than 50%.

Brokers, it seems, are not that happy with claims handling standards. On average, insurers scored just 62% for claims handling – a significantly lower score than they gave for underwriting, quality of cover and access to decision-makers. Hiscox was the only insurer whose score for claims handling exceeded its score for service overall. Beazley, Catlin, DAS, Fusion, AIG, ACE, Primary and Tradex all recorded scores that lagged their overall service performance by 8 to 10 percentage points.

Spilling the beans

We also asked brokers to give their opinion on which of the insurers they used performed best and which performed worst – and to explain their answers. As we shall see, this frank commentary provides at least as much insight as the table.

Let’s look first at the lower half of the table. Allianz, Ace, RSA and Norwich Union scored from 62% to 57% and attracted a pretty even balance of broker praise and criticism. Allianz, for instance, received 28 positive comments related to claims and 30 negative ones. Some feedback described an efficient, fair-minded, communicative insurer with “informed and knowledgeable staff” and an easy claims procedure. Staff at Allianz, many believed, “deal promptly and professionally”, “listen to the client and always try to help”, “pay quickly and have good contact … throughout the claims cycle”. One manager said: “If there is a grey area, Allianz will go with the client.”

Yet 30 of the comments described an “abject” service. The first problem was communication:

“it takes forever to get through”; “you can never speak to any decision-makers”. Outsourcing of claims authority did not help. “Consequently the Allianz claims department have no power, and often not much interest, in the claim,” said one account executive. “The loss adjusters mostly just don’t respond.”

The second problem was the staff: “rude, arrogant”; “unsympathetic, arrogant and just plain difficult”; “no sense of urgency and no empathy”; totally ignore our requests and client needs”; “use every delaying tactic in the book”; “rude, difficult to understand and look for every possible way to exclude payment” were some of the opinions expressed. One broker felt that on one of his major risks, Allianz “seems intent on causing problems on every claim. The client is emailing weekly with complaints”.

Some brokers thought Allianz’s claims handling was a “nightmare” or “a battle every time”.

Similarly, Norwich Union received 44 positive comments and 44 negative ones, one half describing a fairly helpful, experienced and fast-moving claims team with a sensible attitude.

The other, however, described poor communication and inexperienced, “someone else’s problem” staff. “I have often had to deal with three different people to get anything resolved,” said one manager. Others thought NU’s service was “abject”, with “problems on every claim”.

One senior manager felt outsourcing of claims management had been a disaster for NU’s customer service – and had probably increased its costs. Others agreed. NU’s third-party contractors were “rubbish, had no insurance knowledge and generally don’t seem to care”. One manager complained of subcontracting by NU contractor Asprea. “To keep things moving, we constantly have to get involved in what should be straightforward claims.”

Blood out of a stone

Yet NU came out far better than some. NIG, which had an overall score of 51%, received 13 positive comments and 34 negative ones. There was praise from some, but most gave the impression that NIG claims administration seemed to have almost collapsed under its backlogs. Brokers berated NIG’s inefficiency, slowness, failure to take ownership and habit of asking “ridiculous questions irrelevant to the claim”. Several recounted specific bad experiences. “It took six months and a lot of hard work to finally get NIG to pay,” said one broker. “All our property owners’ business has gone from them now.” Another criticised NIG’s loss adjusting contractor, CATS. “The service is slow and there is no communication between CATS, us or NIG.”

AXA (44%) received 12 positive comments from brokers who found the insurer quick and efficient. However, it received 73 negative comments from those who felt its claims staff were hard to reach, “nitpicking” and indifferent to impact on clients. “They are slow, uncooperative, uncommunicative, uncompromising and seek out ways to reject claims,” said a senior manager at a medium-sized Scottish firm. “We’ve had constant customer complaints in the past 12 months.” Again, some blamed outsourcing. One manager in the South East said: “We dread any remaining customers having a claim with AXA.”

Quinn (44%) received four positive comments and 14 negative ones. It was seen as hard-nosed and keen to use small print to repudiate claims. But Tradex was clearly bottom with 30%. It got no positive comments and 12 negative ones. These included: “don’t want to settle anything”; “will get out of any claim if they can”; “look to repudiate first thing”; “always seek reasons not to pay”.

Fast and fair

Contrast this with Hiscox, which received 27 positive comments and no negative feedback. Brokers cited a “proactive”, “straightforward” and “common sense” approach that “always gives clients the benefit of the doubt”. Hiscox, they said, looked to settle as quickly as possible, with “no quibble, no fuss” – “very often on the basis of estimates provided”. Hiscox showed client empathy. “They understand the significance to the policyholder first and foremost,” said a Scottish senior manager, “but also the potential negative impact on the client-broker relationship.” Hiscox claims investigators carry chequebooks, brokers reported, to enable them to make interim payments direct to the insured.

Similarly, Chubb received 38 positive comments and just two negative ones, highlighting its policy of open-handedness and speed. Several reported the company settling claims the same day and delivering a cheque within 48 hours. “Chubb is responsive and takes ownership of issues” on complex cases, according to a South West broker. A middle manager in the North West said: “Claims are dealt with in a straightforward, common-sense approach, with the commercial connection always in mind.”

Lessons to learn

What can insurers learn here? When dealing with business of any value, brokers will weigh up an insurer’s claims payment reputation.

Partly it is a question of culture. When a claim arises, is that insurer’s standard reaction to pay – or to look for a loophole? If the latter, it will be reserved for low value, cost-fixated clients and distressed business. Well-designed policies, clear documentation and properly trained staff can, of course, help avoid misunderstandings.

But it’s also about organisational efficiency. There were hundreds of comments criticising insurers for couldn’t-care-less staff, crummy outsourced service providers, failure to communicate, poor resourcing and unacceptable delay. In consequence, many brokers wasted hours of their working week hanging on the phone. They bitterly resented it. A senior manager at a large firm in the North West said: “There is nothing worse than chasing round call centres trying to find out what is going on.”

There is probably a market for cheap small and medium-sized enterprise insurance that’s designed not to pay out. For some clients, price will always trump a broker’s advice – at least until a claim arises. For a long-term, high-value commercial relationship, however, insurers need to make their brokers’ clients happy when a claim arises by paying up fairly and fast. It’s logical to assume most insurers would like to do so, particularly when delays can incur additional advisers’ bills as well as ill-will.

If you scored less than 70%, you should review your products and documentation for robustness and clarity. As much as possible, simplify claims handling – and treat it as an integral part of your relationship with brokers. Resource claims properly, using good-quality people. Assign a named “owner” for each claim who actively keeps the client and the broker in the loop. Make regular checks on the performance of any outsourced service providers. Above all, get out and talk with your brokers – and listen to what they tell you.