State of the
industry â€œEmerging risks continue to evolve with the advent of new technologies and different and future working demographics. This is changing the way business is conducted, bringing new challenges for our clientsâ€? Alastair Swift, Willis Towers Watson
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Editorial Contributors Andrew Gibbons, ACII Managing Director Mason Owen Financial Services Ltd Chair BIBA of the Industry Claims Working Group
Nigel Teasdale President Forum of Insurance Lawyers (FOIL) Partner DWF
Ben Howarth Senior Policy Adviser, Motor & Liability Association of British Insurers (ABI)
Peter Hamilton Head of Strategic Partnerships Zurich
David Williams Technical Director AXA Insurance
Sarah Roberts Marketing Executive Eclipse Legal Systems
Donna Scully Managing Director Carpenters
Simon Stanfield Chair Motor Accident Solicitors Society (MASS) Partner Simpson Millar
Gary Gallen Founder and CEO rradar Dr. Hugh Koch Clinical Psychologist and Director Hugh Koch Associates James Roberts Business Development Director Europcar UK Group Jason Tripp Operations Director Coplus
Scott Whyte Managing Director Watermans Shirely Woolham COO Minster Law Simon Marsh Managing Director VisionTrack Tim Wallis Mediator and Solicitor Trust Mediation
Keith Tracey Managing Director Aon Risk Solutions
Tony Monnington Head of Commercial Swinton Insurance
Ken Marke Head of Strategic Futures Ageas
Zoe Holland Managing Director ZebraLC
Marc Lafferty Chief Revenue Officer EDAM Group
WELCOME eaders of our sister publication, Modern Law Magazine, may be familiar with a recurring theme that is often discussed; the legal sector is undoubtedly in the midst of a transformation, brought on by advances in technology that can’t be ignored by the traditionally tech-averse profession and impending regulatory and economic shifts. There is a general awareness of these imperatives, and they are discussed with much anticipation and excitement in the pages of each issue.
These challenges might sound familiar to insurance professionals, but when shifting gears from the legal sector to the world of insurance, it is interesting to observe how different these apparent similarities actually are. While tech, risks and regulation are hot topics on the tongues of insurance professionals, these influences are not talked about as if they’re approaching ships on the horizon. Rather, they’re accepted as real, current challenges that are already here and that need to be dealt with. This can be attributed to the necessity for preparedness that the industry is predicated on, but nonetheless I find myself constantly impressed by the matter-of-fact attitude towards the need for change held by many insurance professionals. This is just as well, since, as always, the pace of change is only set to increase, arriving in waves from every direction and not just in one easy-to-spot clump. The incoming GDPR, personal injury reforms, and the rise of Insurtech are all areas that are addressed in this issue, which, as I’m sure you will have noticed, looks a little different. As the insurance industry continues to transform, we’ve seen the opportunity to transform alongside it, and I’m very excited to be able to welcome you to the new-name, new-look, new-feel Modern Insurance Magazine. The new name is going to allow us to feature an even wider array of industry thought leaders in these pages every issue, commenting on all of the changes that are taking place across the spectrum of insurance. One of these is the sponsor of the International Automotive Market Supplement released with this edition, GT Motive. GT Motive is seeking to be the agent of change in the UK market, and we spoke with members of the team from across the globe about their plans to disrupt the UK insurance industry. But the saying that some things never change holds true here, so as always you can expect to see great interviews, unique features and even more columns from our editorial board of industry trailblazers and thought leaders. Whatever your role in the insurance and claims spaces, we hope you’ll find the first issue of Modern Insurance Magazine an interesting and informative read, and, like always, please feel free to get in touch with any thoughts, feedback and suggestions.
Issue 27 ISSN 2515-3803 Editor Brendan Gurrie
Editorial Assistant Poppy Green
Project Manager & Events Sales Rachael Pearson
Modern Insurance Magazine is published by Charlton Grant Ltd ©2017
All material is copyrighted both written and illustrated. Reproduction in part or whole is strictly forbidden without the written permission of the publisher. All images and information is collated from extensive research and along with advertisements is published in good faith. Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.
We are also very excited to tell you all that Modern Insurance will be launching the first ever Customer Service Excellence Awards on 25th April 2018 in London! This brand new event will be celebrating outstanding customer service and innovations throughout the entire industry and will be an amazing opportunity to showcase the way you go the extra mile for your clients, your customers and your staff. It’s free to nominate, and nomination dates and event details will be announced very soon, so keep an eye on our news and the next edition of Modern Insurance Magazine for all the details on the Customer Service Excellence Awards 2018!
Brendan Gurrie, Editor, Modern Insurance Magazine. 01765 600909 | @ModernBrendan | firstname.lastname@example.org
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Issue 27 | ISSN 2515-3803
07 12 27 41
EUROPCAR NEW BRAND BLOCK Color gradient background File: 20151645E Date: 7/10/2015 AC/DC validation : Client validation :
04 Modern Insurance
NEWS 07 Garreth Cameron
As the GDPR is set to change data protection, Garreth Cameron, Information Commissioner’s Office, explains the steps organisations should be taking in order to use this development in their favour and the consequences of non-compliance.
27 Getting Back to What Really Matters
27 The cybermen are coming
12 Alastair Swift
Alastair Swift, Head of Corporate Risk and Broking, considers the way political, economic and attitudinal shifts will necessitate evolution within broking, as he told Modern Insurance about the future landscape of the industry.
16 James Tucker
Technology seems to be rapidly changing the Insurance industry. James Tucker, Manager, Smart Technologies, Allianz Insurance, tells us how technology is altering insurance and the public’s attitudes towards it.
20 Steve Treloar
Steve Treloar, CEO, General Insurance, discusses how customers’ needs and demands are constantly changing and how LV= plans to evolve with them alongside the disruption and reform currently impacting the industry.
02 Interview with Mark Strang
Automation is often touted as one of the most important emerging technologies. Mark Strang, Verisk Analytics, told Modern Insurance about the impact automation and artificial intelligence could have on motor and property insurance.
05 Case Study
How LV= and Verisk Work Together to Improve Service while Lowering Costs.
06 Interview with Martin Milliner
Modern Insurance caught up with Martin Milliner, LV=, one year on from his article outlining his thoughts on the challenges in the industry. He discusses how the perceived compensation industry has changed in the past year, and how technology will play a vital role in combating fraud and improving the claims experience for honest customers.
Gary Gallen, rradar
Keith Tracey, Aon Risk Solutions
29 Exciting times ahead
David Williams, AXA Insurance
Ken Marke, Ageas
31 Are we creating an insurance desert for society’s have-nots? 31 Spirit of co-operation
Zoe Holland, ZebraLC
James Roberts, Europcar UK Group
35 Delivering at every opportunity
Sarah Roberts, Eclipse Legal Systems
Tim Wallis, Trust Mediation
Jason Tripp, Operations Director, Coplus
38 Attitude problem
Peter Hamilton, Zurich
Simon Marsh, VisionTrack
39 Enhancing customer responsiveness: collaboration in problem solving
Matt Churchill, Head of Hiscox Futures, examines the symbiotic relationship between tradition and innovation and shows how reliance on just one is a reckless avenue to take.
52 Will Blockchain take your job?
38 Taking the technology plunge
Simon Downing, TBS UK, provides an insight into marketing strategy and how to use it to your best advantage.
51 Tradition is dead. Long live tradition.
37 Tech is here to stay
37 Getting the timing right
The Industry Collaboration Roundtable, sponsored by Carpenters Solicitors, recently brought together leading figures in the industry to discuss the value of collaboration in relation to the key challenges currently facing the sector.
50 What difference does branding and video marketing online have for insurers, solicitors, lawyers and customers?
Marc Lafferty, EDAM Group
35 Making the most of customer data
Modern Insurance’s panel of resident associations outlines the burning issues facing the claims sector.
46 Industry Collaboration Roundtable
Donna Scully, Carpenters
33 What should ‘best practice’ look like in replacement vehicle hire?
Keith Binley, Lexis Nexis Risk Solutions, reveals how research has shown some policyholders withhold information from their insurance provider and explains the impact this has on the industry.
44 Sector Soapbox
33 Go niche, merge or sell - that is the question…
42 Insurers coming together to drive out hidden risks with policy history
29 Risk, resolution and recovery
Scott Whyte, Watermans
Gary Nuttall, Distlytics Ltd, discusses the emergence of Blockchain technology, the benefits this can have for the insurance industry, and impact Blockchain might have on employment.
54 Digital Ecosystems
Dr Hugh Koch, Hugh Koch Associates
Insurtech investments must be futureproof as emerging digital ecosystems are set to transform the industry, writes Ruth Fisk, Hyland.
40 The transformative power of technology
56 Just a thought from Eddie Longworth
40 The fight against cyber attacks
57 Case Study: Eclipse
Shirley Woolham, Minster Law
Tony Monnington, Swinton Business
Why is my toaster too small?
SNS Solicitors offers high quality service with Eclipse’s Proclaim Case Management Software solution.
10 MINUTES WITH 58 10 minutes with…
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Garreth Cameron TALKS NEWS As the GDPR is set to change data protection, Garreth Cameron, Information Commissioner’s Office, explains the steps organisations should be taking in order to use this development in their favour as well as the consequences of non-compliance. ou might not think so, given the somewhat hysterical scaremongering tone of much recent media coverage, but whilst the General Data Protection Regulation, or GDPR, marks a step change in the importance of data protection, it also represents an evolution of the existing law rather than a total revolution.
The new regime, which applies from 25th May 2018, builds upon existing data protection legislation, and many of the fundamentals remain the same. That includes: • Being transparent and fair about what personal data you are collecting and how you intend to use it • Ensuring it is accurate and up to date • Only processing personal data for specified purposes and not keeping it for longer than is necessary • Keeping it safe and secure • Respecting individuals’ rights So what does this mean for the insurance industry, particularly in regards to its large customer bases and the subsequent volumes of data it handles? Insurers make decisions based on risk, and they use personal data, some of which is especially sensitive, such as medical information or the details of criminal convictions, in order to make those decisions. But risk works both ways. Processing personal data brings its own risks. Where such sensitive information is involved, the stakes will always be higher than in many other sectors. There are real life consequences for individuals if their personal data is not collected and used appropriately in accordance with data protection requirements.
So the volume, and the often sensitive nature of the data that insurers will process, are both risk factors in terms of GDPR compliance and the consequences of a breach. How can this risk be minimised? The answer is surprisingly simple and differs little from the current regime - identifying risks and building in privacy and security to your systems, policies and processes, strictly following the principle of data minimisation (don’t collect what you don’t need), having robust retention policies in place and managing data well. All will help to reduce the chances of things going wrong further down the line. A significant aspect of GDPR is putting onto a statutory footing much of the existing best practice and guidance from the Information Commissioner’s Office (ICO). So GDPR, and the prospect of a strengthened enforcement regime, should bring an increased focus on the importance of data protection across all areas of the business. Across the business there will be a need to ensure that staff are appropriately trained and that internal processes and policies reflect the changes, and that they work in practice. Insurers, in keeping with other financial services industries, already operate
GDPR, and the prospect of a strengthened enforcement regime, should bring an increased focus on the importance of data protection across all areas of the business in a highly regulated environment and should be well placed to identify the gaps between what they are doing now and what they should be doing in the future. Essentially, data protection should be a primary consideration at the start of your product development, processes and procedures, not an afterthought at the end.
Taking practical steps
In terms of data security, what are the risks for insurers, and what practical steps can companies take to mitigate these?
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The ICO’s annual track research on privacy and data protection consistently shows that levels of public trust are low and that people feel that there is a lack of transparency
Again, we have to recognise that GDPR represents a step change from current legal requirements, and not a leap into the dark. The Data Protection Act already requires organisations to take appropriate organisational and technical measures to keep data secure. Data security threats will not change overnight on 25th May 2018. What will change are the requirements to report security breaches to the ICO and to those affected, along with the strengthened enforcement regime. Following the Government’s review of cybersecurity regulation and incentives, the GDPR is viewed as a key lever to improve data security in the UK. The ICO’s guidance document, Protecting Personal Data in Online Services: Learning from the Mistakes of Others, is a good place to start.
Inaction and consequence
And what are the consequences for both insurers and their consumers if companies don’t meet the new regulation? While much of the media and online coverage and discussion around GDPR has focused on the increased financial penalties available to the ICO, we feel that this is missing the point. GDPR is essentially about trust. Failing to get data protection right will ultimately damage your brand reputation and your customer relationships. The impact of ICO enforcement action extends beyond the economic impact of the fine itself. Think about lost customers and the negative impact on a large company’s share price, not to mention the potential personal impact on the individuals concerned. The ICO’s annual track research on privacy and data protection consistently shows that levels of public trust are low and that people feel that there is a lack of transparency. Conversely, it also shows that consumers would be more willing to give up their data if they felt that they could trust businesses to handle it fairly, securely and responsibly. And that provides a major business opportunity for those organisations, which can then demonstrate that they get data protection right. The reputational benefits of treating data protection as a commercial positive and not a burden are clear. And that could translate into commercial benefits.
being accountable and transparent, the Information Commissioner will have a wide range of sanctions available to her, which will be used to change behaviours and protect consumers. In her new series of myth busting blogs, the Information Commissioner explained that heavy fines for serious breaches reflect just how important personal data is in a 21st century world, but that we intend to use those powers proportionately and judiciously.
Demands for access
Information management, knowing what data you have, why you have it and where it is, is key to compliance. Without appropriate attention to good information management, insurers are failing to mitigate risks and will be more exposed. For example, individuals will have strengthened rights to access the data organisations hold about them. Unlike the £10 charge you can make under the current Data Protection Act, subject access requests under the GDPR regime will be free of charge, the data will need to be provided within a month, and the data may need to be provided in an electronic format. This could lead to an increase in demand and more requests being received. If an organisation doesn’t have a good grip on its information management systems, then the time and effort needed to comply could prove much more costly.
GDPR is coming
So will the insurance industry be ready for the GDPR in time? That is essentially down to insurers. Provisions relating to GDPR will be included in the Government’s recently announced Data Protection Bill, along with other measures relating to areas such as law enforcement and national security. Insurers need to remain focused on the fact that GDPR is coming next May, come what may. There is a lot of material already available on our website and elsewhere about the changes to help organisations travel a long way down the road to compliance. There is no grace period. Insurers, like all businesses, have had two years to get their houses in order. While the Data Protection Bill will add some detail and clarification about the new regime, the fundamentals have been known about for a long time. Fairness, transparency, accuracy, security, minimisation and respect for the individual whose data you hold are all things you should already be doing with data, and GDPR seeks only to build on those principles. Garreth Cameron, Group Manager for Private Sector Engagement, ICO.
Where firms fail to take data protection seriously, and are not
08 Modern Insurance
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The London market only captures around five percent of the data that passes through it, but there is a wider bulk of information that could be used to improve the industry as a whole
Alastair Swift Alastair Swift, Head of Corporate Risk and Broking, considers the way political, economic and attitudinal shifts will necessitate evolution within broking as he told Modern Insurance about the future landscape of the industry.
What have been some of the biggest challenges faced by brokers over the last few years, and how has the industry responded?
Emerging risks continue to evolve with the advent of new technologies and different and future working demographics. This is changing the way business is conducted, bringing new challenges for our clients. As a result, the broker landscape is changing at an increasing rate, and the industry is under constant pressure to adapt rapidly in order to keep up. Alternative sources of capital are also changing our marketplace, and it is essential that we embrace reform to ensure the future of our marketplace remains strong and resilient.
Is the broker market seeing an effect from recent legislation and reforms, and which of these do you feel will have the largest influence on brokers?
All companies that have operations in certain geographies face shifting political headwinds, and the unpredictable nature of geopolitical and regulatory issues can amplify their negative consequences. The nature of our industry’s international presence means geopolitical and regulatory risks such as Brexit and the uncertainty presented by global political change cannot be ignored. The Insurance Act of 2015 had a big impact in the UK, and we now await the repercussions of Brexit as well as the changing workplace. Gender pay, the GDPR regulation and the Insurance Distribution Directive will all have an impact on our way of doing business, and questions continue on the exact impact these issues will have.
How has the importance of the insurer-broker relationship evolved in recent years, and how will it continue to do so in the years to come?
The relationship is forever evolving as new and innovative approaches to insurance are developed by both insurer and broker in order to meet the needs of our clients. Insurance providers and brokers are adopting new changing buying habits and distribution and technology platforms, as big data-based decision making and the different workplace expectations of the millennial generation take shape.
Where do you identify improvements for the relationship between brokers and insurers?
Brokers, as they adapt, will find themselves increasingly changing from being product providers to being the management solution specialists, and this is where our expertise can add value to our client relationships. Alternative sources of capital are also entering the market, which means we need to embrace new and improved ways of doing business. In addition, our products are increasingly purchased by an automated process, and our clients are often buying direct. Clients will start to pool their demands and are likely to become more and more global in their outlook. Insurers need to become more flexible and collaborate closely with brokers to mitigate ever-evolving and emerging risks and new technologies.
How is the broker market attracting and utilising the skill sets of a contemporary workforce, and how do these benefit the industry?
At Willis Towers Watson, we know that in order to best serve our clients, we need to be able to relate to and understand both their business and the people they serve, which means continuing to attract and develop the best talent. We truly believe that people from different backgrounds and cultures help us to establish innovative and creative approaches for our clients.
All companies that have operations in certain geographies face shifting political headwinds, and the unpredictable nature of geopolitical and regulatory issues can amplify their negative consequences
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Emerging risks continue to evolve with the advent of new technologies and different and future working demographics. This is changing the way business is conducted, bringing new challenges for our clients
As the industry continues to shift towards digitalisation, what new technologies is Willis Towers Watson seeking to implement?
The insurance sector is fundamentally about data. However, we believe that it has failed to take advantage of the new opportunities available in the field. The London market only captures around five percent of the data that passes through it, but there is a wider bulk of information that could be used to improve the industry as a whole. WTW believes blockchain is a prime example of using new technologies. Transactional efficiency and better data capture is essential for the evolution of the London market. Without embracing the pace of change, the market will no longer keep up with the digital age and will stagnate. Blockchain enables all members of the transaction, client, broker, insurer or risk manager, to view the same piece of information at the same point in time, allowing for effective, simple and transparent ways of doing business.
What do you identify as the biggest areas of emerging risk for the UK insurance market?
Cyber is an obvious one, but the changing demographics of the workplace as well as increasing geopolitical uncertainty across the globe are also of concern to our clients.
What’s on the horizon for Willis Towers Watson in the next twelve months and beyond?
We are excited about the future possibilities for us. Postmerger we have realigned and restructured to best serve the ever-changing needs of our clients across human capital solutions, risk advisory and broking. This unique perspective allows us to see the critical intersections between talent, assets and ideas. It also means we can help our clients manage their own people, capital and technology risks – the dynamic formula that drives business performance.
Alastair Swift, Head of Corporate Risk & Broking – GB, Willis Towers Watson.
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Alastair Swift Alastair Swift is the Head of Corporate Risk and Broking for GB and Head of Transportation Lines for Willis Towers Watson. Alastair has held the position of Global Head of Transportation since October 2013. Previously, Alastair was the Chief Executive Officer of Global Placement for Willis Group, a position he held since 2011, where he was responsible for the group’s placement strategy and insurance market relations. Alastair has over 20 years’ experience; from 2010 to 2011, Alastair was the Chief Placement Officer, Willis North America, where he was responsible for the co-ordination of North American placement and market relationships in New York. Prior to this, from 2009 to 2010 he was Managing Director, Willis North America, London and Bermuda, where he was responsible for all North American property and casualty placement into the European London and Bermudan markets. In 2005, Alastair joined BSK LLP, in conjunction with two other partners, to establish a North American Property practice, which grew under his leadership to handle in excess of $150 million of premium annually prior to its purchase by Willis in 2008. In 1999, he became Partner in charge of the entire North American Wholesale Property Department of Jardine Lloyd Thompson, which focused on large complex property programs. He has previously been appointed to the position of an Associate Director of JLT Risk Solutions. He started his career at Lloyd Thompson in 1990.
We know what’s important, that’s why you and your customers are always at the heart of our business... It’s what we do.
Telematics is a field where there is great potential, but I donâ€™t think anyone is fully exploiting it yet
James Tucker Technology seems to be rapidly changing the Insurance industry. James Tucker, Manager, Smart Technologies, Allianz Insurance, tells us how technology is altering insurance and the public’s attitudes towards it.
Has the pace of technological adoption in the insurance industry matched that of other financial services? Where is insurance ahead of the curve in technology, and where is it behind?
Customers expect to be connected. For example, banks have done well in their efforts to move customer engagement onto apps. However, there is more value for a bank to have frequent interaction with customers and insurance customers don’t have this frequency of interaction in the same way. It is not straightforward for us in terms of digital engagement to have the same or similar apps as there isn’t the same need. However, we have had some good success with our claims app by providing customers with a way to record what has happened in the claim, which then helps us to deal with the claim more quickly and effectively.
I think we will see fewer and fewer solutions where engineers will be sent out to install devices in cars and instead there will be more self-install options. People like to know and work on their own cars
Other areas of technological adoption, like using sensors in cars, or black boxes, have become the norm for young drivers’ insurance. The industry is doing well, but the technology and the adoption of it has to be driven by customer need and demand; there have been a lot of products that have just been thrown out into the market and no one wants them.
How have attitudes to new insurance technologies changed in the 21st century from both insurers and customers?
We obviously have to mention telematics, which has become totally accepted by young drivers; insurers are now becoming a lot clearer on the benefits that it can bring as well. The technology has improved dramatically, even in just the last few years, and it has become much less expensive. At Allianz we are always running numerous trials on how sensor technology can help us in other areas of insurance. On a wider level, customers want to be able to buy products and services with minimal effort, and they expect insurers to use their data to make their life easier. In the purchasing phase, there are fewer underwriting questions and it is a simpler buying process.
What do you identify as the biggest technology disruptor in insurance over the past ten years?
I would use my own field of knowledge, which is smart technology. In that area, the biggest disruptor would be telematics. We are able to write a risk and then improve it during the policy term, which is quite a novel thing for us as insurers. The other key area would be the growth of comparison sites or aggregators, which have been really good from a free market perspective, but they can make it a little bit more difficult for insurers to provide innovative products.
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The utilisation of sensors will become more and more widespread. Obviously we are seeing this in telematics, but we will see them a lot more in the home, in business and in the commercial sector
Are telematics currently being used to their full potential, and where do you foresee further development of this technology?
Telematics is a field where there is great potential, but I don’t think anyone is fully exploiting it yet. Because there is so much you can do in terms of the technology and data that is available from it; the potential is enormous! There are constraints, sometimes bandwidth or technical and sometimes expertise in analysing data, a lack of volume of data or lack of experience in manipulating it. Maybe we haven’t quite mastered how to feed back in the perfect way for each individual customer according to their own profile. Have we got the perfect claims report that gives the claims handler everything they wanted in a glance and in the absolutely perfect format? Probably not. But that is what we are working towards. I also think we will see fewer and fewer solutions where engineers will be sent out to install devices in cars and instead there will be more self-install options. People like to know and work on their own cars. Ultimately, smart phones will be used as a sensor and will use wireless technology somewhere in the vehicle.
for providing insurers access to data from their homes, security or smoke alarms or light detection sensors. It is going to be up to insurers to understand how to do this in the most effective way. The data we get from the smart home will be pretty diverse, and there is a whole range of ways for a smart home to be set up. You may have a number of devices that are not connected in any way and it’s possible that they could be unified within the home (with a product such as an Apple Home Kit or something that would unify them into giving you one app), or they could be unified outside of the home. We would firstly get hold of that data, through various means, and then use that to design, proposition and model the customer benefits, additional services or potentially premium discounts. Based on that data we have to work out all of the different areas in order to create a product that is going to be of value to the customer and of value to us as well.
What are the applications for the data gathered by telematics devices and sensors, and how can these be used to improve services for customers?
How will the connected home continue to evolve, and how will it change the insurance experience for both providers and customers?
We understand that as telematics moves into the mainstream world, we will need to offer customers other services with value beyond pricing. Telematics insurance helps us build a customer’s claim more quickly and effectively, and the data allows us to offer value added services. For example, information on local fuel prices, parking information and assistance or vehicle servicing. All of these services should make the customer’s life easier.
The connected home is a much more complex area for insurers than telematics. There is an enormous range of technological options and operational business models for insurers to exploit, so ideas on how to make them applicable in the home are still being developed. Customers will rightly start to expect benefits
Cyber security will be important for us all in the future as we face more and more threats and disruption to our digital lives
What are the challenges and pitfalls in the implementation of insurtech solutions, and how should these be approached and avoided?
The important aspect is that we always need to make sure that there is a customer need or desire for these solutions. It is not always straightforward because of new technology; the customer may not always be aware of the benefits until they are offered the solution, or even until they start to use it. We trial carefully, use a methodical and considered approach, but for the insurer, innovation is essential, because it is what gives one company a competitive advantage over another.
How will the importance of cyber security continue to grow alongside advances in technology?
Allianz is there to help people in their lives to move on and up; that is one of our core beliefs. Wherever the disruption might occur for a person, we need to be there for them. If you think beyond home and motor insurance, we are looking at options in respect of cyber insurance and cyber security for businesses and individuals, and it is important that we are there for people whatever the disruption is that they encounter. Cyber security has two prongs. First, if we are offering a smart home, for example, we might have a level of cyber security to ensure that the devices that we are using or the customer is using in the home are safe and secure. On another level, cyber security will be important for us all in the future as we face more and more threats and disruption to our digital lives.
18 Modern Insurance
Telematics is a field where there is great potential, but I don’t think anyone is fully exploiting it yet
What new innovations and technologies is Allianz currently seeking to implement, and what will these achieve?
Allianz invests heavily in innovation both locally in the UK and also centrally in Munich. We are a huge company and we have a very strong central infrastructure and shared IP, which allows us to benefit from significant buying power, delivering projects and achieving intelligence from data, which would be impossible for other insurers, and this is how we will continue to deliver exciting products, supported by technology, into the future.
What do you predict will be the ‘next big thing’ in insurtech, and how will it disrupt the industry?
The utilisation of sensors will become more and more widespread. Obviously we are seeing this in telematics, but we will see them a lot more in the home, in business and in the commercial sector. Another ‘big thing’ will be simpler and more intelligent interfaces for customers, both for buying and using insurance. Ultimately, using technology isn’t just about providing data to the insurer, it is about making our customers’ lives easier and better.
James Tucker, Manager, Smart Technologies, Allianz Insurance.
James Tucker James has worked in many fields of technology, both inside and outside the insurance sector, including telematics, smart home and cyber risks. From a background of fraud and crime analytics, he is currently Manager, Smart Technologies for Allianz UK, working to ensure the company is well positioned to exploit new innovations and opportunities in a world of accelerating technological change. The Smart Technologies team at Allianz has two primary functions. The first is to maximise the potential of IoT solutions already in place (such as telematics for young drivers). The team does this by breaking down the areas of benefit (claims, pricing, fraud etc.) and analysing the data to gain a view of how the technology contributes to each area. The second function is to identify, research, trial and evaluate new technologies, which support new and emerging propositions such as smart home, smart technology for commercial lines insurance and cyber insurance.
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Steve Treloar Steve Treloar, CEO, General Insurance, discusses how customers’ needs and demands are constantly changing and how LV= plans to evolve with them alongside the disruption and reform currently impacting the industry.
What would you suggest the public perception of insurance is? What steps can be taken to improve its image in any areas where this might be negative?
Unfortunately, the perception of our industry generally isn’t good. To many customers, insurance is a game of chance in that price is key and cover is secondary, and it’s a stab in the dark as to the possibility of being indemnified in the event of a loss. At the end of the day, our business is all about people, and therefore it’s important that we change this perception and turn it into a more positive one. We’re definitely heading in the right direction, and much of this is being achieved because insurers are being more transparent. With all customer renewal notices, we notify them of last year’s premium so they can make an informed choice of whether they want to renew. Call centre transcripts have been changed to make the conversation more personal and many policies are more upfront about what is and isn’t covered, meaning that customers don’t always feel like we’re hiding anything or relying on the small print.
20 Modern Insurance
The original proposals from Government on tackling whiplash didn’t go as far as we felt was necessary, so we’re pleased that they have now committed to making the changes that we’ve long been asking for
We expect to see challenges by the ever-growing number of Insurtechs who are looking to deliver on customer expectations of a superior digital experience However, while we’re making progress, as an industry we need to take additional steps to improve accessibility, speed, ease and options for ‘access’ as well as ‘ownership’. With generational shifts, value and reward are definitely key components to consider. For example, if we look at Millennials (the most under-insured generation since the war), they are well-known for failing to accept that they should pay thousands of pounds in insurance premiums with very little in return. The key to overcoming this is transparency of the value of insurance and its importance to the consumer.
As expectations and the power of the consumer continue to grow, how can insurers engage more effectively with their customers to make insurance more than just a grudge purchase?
Helping our customers prevent incidents is where insurers can really add value and engage meaningfully. If we move to providing this sort of service, then insurance shouldn’t be perceived as a grudge purchase because our customers will see that we’re generating real value for them and making their lives easier. An example of how this would work in practice is the smart technology we’re seeing emerge in the home. We’re already starting to see insurance services linked to smart home monitoring products whereby sensors are put around the home. If something goes wrong, the sensors then automatically generate an investigation, triggering remedial action to be taken. For example, if a leak is detected, the water will be turned off and a repair will be quickly made. This will minimise damage and reduce the cost of any claim pay-outs, therefore, not only benefitting the insurance industry but having a very positive and significant impact on our customers. This is the direction that insurance is heading in, and we’re confident that it will ensure that our products and services are not seen as grudge purchases.
How important is price for the contemporary insurance customer, and what are the other drivers of choice that providers should be capitalising on?
Given the economic hardships the UK has endured in recent years, I don’t think anyone is surprised by the fact that customers have become increasingly focused on the price they are paying for insurance. Having said that, customers also want the reassurance that, should the worst happen, they are going to be covered. It’s not rocket science to know that if you buy a really cheap policy, then you probably haven’t got the most comprehensive cover, so from a customer perspective it’s really important that they buy a policy that fulfils their needs and requirements. As an insurer, we also have an important role to play, and it’s important that we strike the right balance between offering the best price and quality products. That’s why, as a company, LV= always aims to do what’s in the best interest of our customers, by focusing on providing them with value for money and a great service.
How will brokers be affected by the evolution of the insurance industry, and how will insurer/broker relationships need to adapt as a result?
The world of insurance and technology is constantly evolving, along with the needs and demands of customers. All of this inevitably impacts brokers. The challenge for them lies in ensuring, as one broker recently put to me, that they stay relevant. This is an
excellent way to describe the focus and mindset that brokers need. That relevance needs to relate both to customers and to their business partners, including the insurers that they work with. A company can stay relevant by doing exactly what it has always done, so long as that is what customers want. Let’s be honest though, that’s an unlikely scenario and there will always be a long line of market challengers who will be more than happy to attack incumbent businesses. However, there’s no need for this to generate conflicts between insurers and brokers. Both parts of the chain are there to help customers, and by sharing their knowledge and resources they can drive out inefficiencies and come up with innovative solutions to enable them to maintain their relevance in the future.
What are the biggest challenges for the insurance industry on the road ahead, and how is LV= meeting these? It’s fair to say that we’re not short of challenges facing the industry.
If I was to think of the biggest challenge for 2018, that would be, in my opinion, GDPR, which comes into force in May next year. Like many other companies, we have a large scale change programme to ensure LV= is compliant with GDPR and make sure our customers’ data is protected in line with the new regulations. Looking over the longer term, we expect to see challenges by the ever-growing number of Insurtechs who are looking to deliver on customer expectations of a superior digital experience. However, and I know this is cliché, but where there are challenges, there are also opportunities, and this is true for Insurtechs. These companies provide insurers with the opportunity to partner with innovative start-ups, which are looking to solve problems, not just for the customer but those that are being faced with incumbent insurers as well. And as if all of this wasn’t enough, we’re also dealing with the ever-changing demands and expectations of our customers. Their needs and requirements are changing and we need to evolve with them. To achieve this, LV= has embarked on a digital transformation programme so that we are able to offer our customers the journeys they have come to expect in the age of Amazon and Apple.
Where has the “digital revolution” had the biggest effect in the insurance world, and where are the areas that we are yet to see the full potential of digitalisation?
I’d say that the biggest impact has been the establishment of the aggregators. They fundamentally changed the way insurance was purchased. With regards to what’s next though, I’d say that it’s going to be all about reducing effort and friction for consumers. Data, personalisation, messaging and the Internet of Things with connected cars, home, businesses and individuals will drive the true digital potential in prevention, assistance and value to the consumer. We’ve already seen the benefit of telematics and black box technology, and we’re now seeing this shift towards smart home technology and insurance services. All of us in the industry should expect to see a great deal more of this sort of insurance emerging in the future.
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We’ve already seen the benefit of telematics and black box technology and we’re now seeing this shift towards smart home technology and insurance services
What technologies will LV= adopt in the near future to improve the insurance experience for both the company and its customers? We recognise that the combination of technologies and greater agility is more important than ever if LV= is to be able to respond to rapidly changing customer needs, offer competitive products and reduce operating costs. That’s why we’ve focused on investing in applications and creating an agile framework in three key areas: policy administration; digitisation; and external data. An example of some of the work we’re doing in policy administration is the deployment of the Guidewire PolicyCenter and BillingCenter systems, which we’re advanced in doing. We launched Motorbike and Classic Car in June and we are now rolling out Car with a state of the art rating hub on a phased basis. Not only does the system allow us to rapidly introduce and maintain our products cost effectively, it enables us to streamline our customer journeys. We know this will improve our already impressive customer satisfaction levels further, and it has the added benefit of reducing our operational and training costs. All of this means it’s better for our customers and we can offer more competitive prices. There’s obviously a lot for us to do, but we’re confident that investment into these areas will result in an improved experience for our customers and a more efficient operating model for our business.
What will LV=’s joint venture with Allianz involve, and what will it achieve for both companies, their partners and their customers?
We’re naturally very excited about the creation of this partnership and we genuinely believe that it’s great news for our customers, our people and the wider UK insurance market. Essentially, we’re creating a personal lines insurance powerhouse in the UK – one with around 6 million customers and gross written premiums in excess of £1.7bn. Once formed, we’ll be the UK’s third largest personal lines insurer.
What’s your view of the recent announcement from the Ministry of Justice on reforms to the personal injury discount rate? We’re obviously pleased that the Government is now taking action to address this issue. The new system will not only ensure fair payments for those making claims but it will also help reduce the cost of car insurance for drivers at a time when premiums are at record highs for hard pressed motorists. Ultimately, it’s a more equitable solution for the combination of claimants and policyholders, and it rebalances the amount of compensation to a level we think is more appropriate. We’ve already committed to passing on 100% of the savings once the legislation has passed. The government has a significant legislative agenda around Brexit, but we’re hopeful that they will take these draft proposals forward and we will support them in doing so.
What do you think of the Government’s Civil Liabilities Bill?
The UK is the world capital for whiplash claims, and with fraudulent claims adding around £40 to the average car insurance policy, we have to clamp down on the compensation culture that is rife in this country. The original proposals from Government on tackling whiplash didn’t go as far as we felt was necessary, so we’re pleased that they have now committed to making the changes that we’ve long been asking for. It’s also very encouraging that the Financial Conduct Authority will now also be responsible for regulating claims management companies. For too long they’ve managed to get away with unscrupulous activities, and it’s about time something was done to stop that. Ultimately, we need a fair system that works for everyone and in light of these new plans we’re hopeful of getting that.
The way we see it, this deal represents what a good partnership should be, combining distinct expertise and capabilities to create an even stronger business. From an LV= perspective, we have a strong brand, longstanding reputation in personal insurance and excellent customer service. Meanwhile, Allianz is the leading P&C insurer globally with significant expertise in areas such as digital and data analytics as well as strong financial strength with reinsurance and investment capabilities. From a broker perspective, we’re excited about the possibilities created by combining two personal lines broker portfolios. We will have strong Motor and Van portfolios and we intend to strengthen the Home portfolios with our re-entry into the market. We will also retain the Allianz underwriting footprint from their products to complement our existing market position. As far as we see it, we will be the go-to insurer for all personal brokers and we have a huge appetite for growth.
22 Modern Insurance
To many customers, insurance is a game of chance in that price is key and cover is secondary, and itâ€™s a stab in the dark as to the possibility of being indemnified in the event of a loss
Steve joined LV= in May 2016 as Managing Director of General Insurance. In this role, Steve is responsible for managing LV=â€™s general insurance business, which is the UKâ€™s third largest car insurer with a growing home insurance portfolio. The business provides products and services direct to consumers as well as through brokers and strategic partnerships. Prior to joining LV=, Steve worked at Aviva where he was Managing Director of its Personal Lines business. He led the development of the Aviva UK Digital business, and was an executive member of both the General Insurance and Life businesses. Steve also built the QuoteMeHappy.com business from the ground-up. Before taking responsibility for the personal lines portfolio at Aviva, he held a number of senior roles at Aviva RBS Insurance, spanning a 20-year career. Steve has extensive experience in the core insurance disciplines of pricing, underwriting and claims, and a keen interest in digital developments. At present, Steve is also Chair of the Association of British Insurers Property Committee and is a Director of various LV= General Insurance subsidiary companies.
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Getting back to what really matters think there will be few, if any, people involved in the claims sector who can look back on the last few years with any great feeling of the industry, as a whole, having made positive steps in achieving its true purpose.
The constant battle between Claimant and Defendant, law firms and insurers, and even the government, all create a picture of an industry at war on all fronts. Added to that are the all too regular headlines about massive insurer profits, scams to inflate repair prices being uncovered, fraudulent claimants being caught or getting away with scams and misconduct on the part of claims professionals. I read, and it makes me certain, that many people in this industry forget what it is, or should be, all about. In the midst of all this in-fighting and madness, we have people suffering injuries in accidents every day that weren’t their fault. They don’t care what the legislation is or what battles are going on within the industry, they just want help getting their vehicle fixed and getting them back on their feet. So let’s go back to basics. What is insurance and what does it do? The Oxford definition is: ‘An arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.’ And as for compensate: ‘Give (someone) something, typically money, in recognition of loss, suffering, or injury incurred; recompense.’ So, those are the basics. The idea has been around for thousands of years. Let’s then ask ourselves, honestly, what are we doing as an industry to provide and safeguard those definitions. Do the present PI reform proposals achieve this? No. Does inflating repair costs for profit? No. Does increasing premiums to boost profits rather than reflecting claim levels? No. So, in a nutshell, none of the current ‘big ideas’ do anything to help the people we are all supposed to be acting in the best interest of (that is injured people and not shareholders for all you insurers out there by the way). It is therefore time for new and big ideas, and these should all centre on looking after those genuinely injured and wronged following an accident. Let’s get back to the true meaning of what this industry is all about and start putting people, rather than profits and petty squabbles, at the heart of this industry. Scott Whyte, Managing Director, Watermans.
The cybermen are coming C
ybercrime is a rapidly growing phenomenon. It costs the UK economy about £27 billion per year, the vast majority of which is borne by UK companies.
With 81% of large organisations having experienced a security breach in the past year, a cyber-attack in some shape or form is an inevitability, and yet the prospect of a cyber-attack is not taken seriously by all businesses. Over half of UK SMEs don’t see cyber security as a priority despite high-publicity breaches at HBO, BUPA and GOV.UK this summer alone. Ignoring the cyber threat can lead to financial, reputational and even legal consequences. As a law-tech legal company, we have our eyes open to the digital world and the risks it brings with it. Companies need to ensure that they are covered against the effects of an attack, and that’s why cyber insurance is currently one of the fastest growing areas of commercial insurance in the world. The rise in the frequency and severity of cyber-attacks is affecting insurers, who need to adjust their strategies accordingly, working with the insured to reduce the risk of a cyber-attack occurring. An in-depth assessment of the insured’s systems, policies and procedures will give both the insurer and the insured an accurate picture of risk and potential vulnerabilities. The insured can then take action before a cyber-attack happens. We advise insurance partners and their clients to look at all aspects of their cyber security practices and procedures, including systems, infrastructure and networks. Issues to be examined and assessed will include: • Security controls and risk reviews • Assistance to improve security • Encryption measures for portable media/computing devices • A response plan to a potential or actual breach • Network vulnerability testing, including the use of firewalls and password security • Identification and screening of visitors • Trained personnel to protect the insured’s systems and data and respond to incidents • Background screening of employees and handling of terminations • Measures to prevent unauthorised physical access to facilities • Back-up and recovery practices • Protocols on the installation of software • Management of risk from new software or hardware • Regular, independent internal audits of information security practices The insurer can institute a process of reassessment whenever changes occur, including system changes, regulatory changes or innovations in the IT security industry. In this way, policyholders can continue to protect themselves against known vulnerabilities, with such vigilance hopefully reducing financial liability for the insurer and even the cost of the premiums themselves. The cybermen are coming; it’s essential that businesses are prepared. Gary Gallen, Founder and CEO, rradar.
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Risk, resolution and recovery As insurers are bracing themselves for a rise in cyber claims and estimates of attacks continue to rise, what are they doing to help prevent and aid in the recovery from cyber-attacks? n addition to traditional measures of risk assessment, the concept of velocity has gained ground. This is, in short, how quickly a risk develops and the consequences flow. Cyber incidents are a current manifestation of risk velocity.
How can organisations prepare for an incident and how can insurers help? The unique features of cyber risk require cross disciplinary co-operation and outside resource to manage it. The inherent uncertainty means that a lack of integrated thinking and experience under crisis conditions would be very damaging. A crisis induced by a cyber-incident has unique features and requires special expertise. In that regard, insurance can provide significant assistance. Cyber insurers have constructed breach response capabilities that have two important features; immediate availability and response with access to a wide range of required expertise. Incident response falls into two phases, the resolution and the recovery. The services offered are extremely valuable in both spheres. The speed and quality of the response is vitally important to the insurers themselves. They, therefore, offer very high quality breach response services. The services manage the vital first response to an incident including technical aspects, legal and regulatory implications, public relations and crisis management. Actual details may vary between insurers, but generically these services provide for immediate access to expertise upon notification. That expertise will include immediate legal advice that will seek to cloak the response within privilege. There is an element of project management so that the required services are available in a coherent and efficient manner. The forensics will provide monitoring and detection services to isolate the threat and attempt to contain and eradicate it. This would of course encompass the response to ransomware attacks. Specialist crisis management services will importantly assist with the immediate conundrum of what to say and when. They will provide assistance for the recovery phase, where an organisation seeks to contain the secondary effects of a breach and restore confidence in the organisation. Some insurers also offer pre-event risk management advice. This might include how to understand and protect against new types of attack and evolving threats. The value of insurance is thus enhanced well beyond the payment of an indemnity. This assistance can help to avoid a loss of future revenue and facilitate difficult management decisions that will be faced during a cyber-incident. The conventional wisdom is that, especially with limited budgets, organisations cannot avoid cyber threats, and so preparation is vital. Insurers can offer considerable assistance.
Exciting times ahead What changes are needed in insurance where premiums are linked to vehicle safety? here is an argument that motor insurance premiums have always been linked to vehicle safety, as that should feed through into accident costs. What we are about to see, however, is a seismic shift away from the ‘traditional’ key rating factors, which have always been about the driver. Age of driver is probably the most impactful factor affecting premiums, but the driver’s occupation and where they live are factors that have dominated. Even with the advent of telematics, the core rating elements remained; how, when and where you drive has an impact, but the base rating models looking at the individual customer remained.
With the advent of autonomous vehicles, we can largely forget about all that. We stop underwriting the driver and begin underwriting the machine. Yes, if you live in a high crime area then the theft risk might attract a loading, but these vehicles should be much harder to steal (that’s the theory anyway). So rather than trying to understand the vagaries of a human being, we need to start understanding, in detail, the differing performance characteristics of autonomous vehicles and the components that make them up, some of which we are already seeing in Advanced Driver Assistance Systems (ADAS). We know that Automated Emergency Braking reduces accidents by 15% and injuries by 18%. That’s a headline figure, as what we also know is that some systems offer better protection at lower speeds, whilst others perform better in high speed situations. Insurers need to start understanding that detail now, and fortunately with the UK Insurance Industry owning the motor vehicle research institute ‘Thatcham’, we have an obvious good place to start. Insurers will obviously be looking for their own ‘edge’, however. Allianz have their own crash centre in Germany, and AXA have one in Switzerland. This is also one of the reasons why AXA, RSA and Direct Line are all involved in governmentbacked consortia looking at an autonomous future. One big issue is that we don’t currently know what safety features are fitted to what vehicles, as they are usually ‘optional extras’. Maybe a new database needs to be set up, linking these to VIN, or a few extra questions on the price comparison sites could help. Cover should remain the same, but as for rating, it looks like we are pretty much starting again – exciting times ahead for underwriters and pricing actuaries! David Williams, Technical Director, AXA Insurance.
Keith Tracey, Managing Director, Aon Risk Solutions.
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Are we creating an insurance desert for society’s have-nots? C
ould someone you know be uninsurable by 2025 because they’ve no desire, access nor confidence to use technology?
We no longer blink at the thought of autonomous cars, connected homes or personal assistants like Amazon Alexa. The problem is, not everyone can use these devices or has the disposable income to afford them. This trend could ultimately drive a wedge between the tech ‘haves’ and ‘have-nots’. When combined with the industry’s unceasing appetite for data to accurately price risk, we’re creating the perfect conditions for disenfranchising a significant segment of our customers.
Challenging the point of pooling risk
Thanks to our love of data, every risk is highly individualised, and the best risk customers (the haves) get the lowest prices. Without intending to, this cherry-picking is making the riskiest customers (the have-nots) uninsurable. This is unravelling the original point of insurance: to pool risks, so the misfortunes of the few are shared among the many. As more services move to the Internet of Things, where everything from mobile phones to washing machines connect to the Net, there could be even less available for the ‘have-nots’. Without a connected home device or car technology to improve their risk rating, they’ll pay more for their insurance. So how far should we take personalisation or pricing risks? If the ‘have-nots’ slide towards marginalisation, one consequence is the regulator stepping in to ensure, somehow, the disenfranchised are not excluded from buying insurance. The challenges posed by this rapidly changing environment should be spurring our industry into action.
Coping with shifting sands
Another trend affecting us and our customers is automation through chatbots, robotics, artificial intelligence or non-human interaction. There’s a real possibility that every link between the insurer or reinsurer and the customer could be replaced by a slicker process for them and more efficiencies for the risk carrier. How will the industry deal with a future that’s more volatile than ever before? A good starting point is to understand the shape of things to come. The more we know about technology like AI, the more we can visualise what the future landscape looks like. The good news is we have time to rehearse strategic responses to scenarios like these and to communicate openly about what we see and how these could change over time. Because looking out for tsunamis is the best place to start planning for them.
Spirit of co-operation Where are there currently opportunities for collaboration in the claims sector, and can this be achieved? nyone in business knows that effective collaboration is essential to performance. Working together to achieve shared goals is valuable and important. The question is whether we can do that in the claims sector? Can we generally agree on a set of shared goals? I think so. We can all agree about combatting fraud and making the process of making claims as efficient as possible for genuine customers. Agreement on ensuring the process should be fair, balanced and independent would probably be more challenging. A joint effort to put the customer first.
We know that collaboration is generally difficult. Collaboration requires commitment, particularly at a senior level. It should be in the interests of everyone to reach an agreement on many thorny issues so that the commitment to find common ground might be found. Collaboration requires good communication. The debate on the proposed whiplash reforms has certainly been heated at times, but for the most part, the individuals and organisations that matter have been combative but remained professional without getting personal. Lines of communication between individuals and organisations have always remained open. The ability to reach agreement is directly impacted by the quality of the relationships. As previously negotiated agreements in the sector have shown, it does take time to build trust, openness and mutual respect for differing opinions. Although the pace of the reforms has slowed and implementation looks increasingly distant, the clock is ticking on the time available to genuinely develop a spirit of co-operation and shape these reforms positively. The more people or organisations involved, the harder it is to achieve collaboration. This is certainly true across the sector, with differing views and priorities on both ‘sides’. So, what could we agree on? Fraud and ID checks and verifying legitimate claims. The development and integration of Claims Portal and MedCo as part of the new claims environment. Working to ensure that high quality medical reports are available in a timely and efficient manner. Agreement on better sharing of intelligence, information and data. Also, working together to change the culture around illegitimate claims, whilst agreeing that most claims are legitimate. Much could be done and I am convinced that collaboration is possible, although it will require time, patience and a commitment to find some solutions. The proposed reforms currently have too many loopholes and the consequences are too serious. Some genuine and practical solutions could be agreed, but it is not a genuine collaboration when a gun is being held to the head of one side. The Ministry of Justice should think on that. I live in hope. Donna Scully, Managing Director, Carpenters.
Ken Marke, Head of Strategic Futures, Ageas.
Modern Insurance 31
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Go niche, merge or sell - that is the question… With the tsunami of changes on the legal sector, the time is now for some law firms to consider their strategic future. emaining niche, or choosing to go niche as a law firm, can bring certain advantages. For example, specialist expertise and clients of a particular type enables firms to introduce efficiency into the process. We have seen a plethora of niche firms in the personal injury sector. The challenge within areas such as clinical negligence and catastrophic injury is the potential cash pull on the firm at a time when fixed costs are looming. This work can be long tail and disbursement hungry. Hikes in court fees also impact on cash flow.
A place in the sector will always exist for niche firms. The dilemma they may face is that while they offer clients in-depth expertise, they cannot offer services outside their specialist expertise such as private client, which for a niche clinical negligence firm can offer much needed cash flow. A primary motive behind a merger for a niche firm can often be the opportunity to bring in work outside their expertise and for a mid-sized firm to gain a niche specialism. I believe that we will see some interesting acquisitions of niche firms, whether that is acquisition by mid-sized firms or large national players. The decision, whether a niche practice should go it alone or join a larger firm, depends on the owner’s personal and professional aspirations. It may not be a decision around being viable any more as a small firm. Expansion plans and the timescale of growth is often an important factor, as well as succession planning considerations. The following questions are often asked within the business: • Does the firm have a clear succession plan from within the business? • Would a merger assist in cash flow difficulties to ensure stability of niche areas? • Does the strategic direction of the firm require economies of scale? • Can the business expand and expand quickly enough without a merger? • Does the firm have sufficient funds to invest in technology to meet client demands? Full service firms can have financial advantages over niche firms. This could be in relation to cash flow or ability to raise capital. This is of particular relevance if there is demand for growth and investment in technology to seize market opportunities. Zoe Holland, Managing Director, ZebraLC.
What should ‘best practice’ look like in replacement vehicle hire? nsurers need to focus on customer service and satisfaction, therefore they need a supply chain that shares the same values and ethos as their own brand. Getting the experience right at the point of claim is crucial, but elements of that process can let the experience down, and the replacement vehicle experience can often be a particular area of weakness.
A lack of transparency by some replacement vehicle providers can result in policyholders facing additional costs. Plus, when firms engage directly with the policyholder, the insurer can lose control of the customer experience. And the customer will not necessarily distinguish between the insurer and their suppliers, with the result that any poor experience will reflect badly on the insurer brand. ‘Best practice’ in replacement vehicle hire should therefore mean: • Complete transparency in how the customer is treated – the vehicle hire company reports on all customer experiences, satisfaction, etc. • Transparent MI to help insurers understand what their customers need. • The vehicle supplied is the vehicle booked. • The customer should experience the least inconvenience – delivery and collection to their door should be part of the service. • Wider mobility solutions should be part of the replacement vehicle offering – another car isn’t always what’s needed. The replacement car experience should also mirror the insurer brand experience. And that means delivering convenience through the use of app-technology, empowering the customer to control the claims process. Self-service apps are already being adopted for the arrangement of repairs and replacement vehicle hire, putting the customer in the driving seat rather than waiting for busy contact centres to do the organising for them. Replacement vehicles can be organised in the same way. For example, we are working with a number of insurers to support the provision of a replacement vehicle while repairs are taking place, using tailor made portals to tap into our network of more than 200 locations across the UK, and the choice that comes from a peak fleet of 60,000 cars and vans. And we are not only offering standard daily rental options, but fully multi-modal solutions that give customers complete flexibility on the form of transport that works for them whilst their own vehicle is off the road, including car use by the hour, taxis and even public transport. Achieving best practice throughout the supply chain is fundamental to delivering a high quality customer experience. Of course, vital to that goal is finding the right partners to provide the services that match the same quality and values of the insurer brand. James Roberts, Business Development Director, Insurance, Europcar UK Group.
Modern Insurance 33
Delivering at every opportunity
Making the most of customer data
With most customers having very few, if any, interactions with their insurer between starting and renewing a policy, how can the industry ensure customer loyalty?
How can insurers better present information to customers to help their understanding and engagement?
he very nature of the insurance industry, as an essential, yet often reluctant purchase, means that companies operating within the sector are in a difficult position. The provider has little opportunity to demonstrate good service during the policy, so may struggle to harness brand loyalty with a customer that has had limited need for them.
It’s vital that exemplary levels of customer service are delivered at every opportunity. This must extend beyond the insurer to partners, as any interaction with the customer, no matter how small, is a key opportunity to exceed expectations and retain their custom.
The proof is in the NPS
It’s common for companies working in the service industry to boast of ‘strong customer service’, but a company talking about themselves is always going to be biased. That’s where Net Promoter Scores are a key differentiator, because they are independent, objective and can be benchmarked. By taking customer satisfaction scores at every stage of the journey, a company can really demonstrate strong customer service. Insurers should also consider their partners’ service levels when entering an agreement, as those touchpoints are the difference between a customer being reassured after an accident, or reconsidering their options.
The give and take of partnerships
It is impossible to avoid the inherent give and take between companies in the insurance sector, with liability claims and cost recovery a necessary element of every incident. If not managed carefully, cost recovery delays a claim and creates friction between the insurer and its partners. By taking an open and honest approach, with two-way communication at every stage, companies can build trust and keep the cost recovery stage efficient and fair. Drastic improvements in the speed of service, and the cost of a claim, can be made by establishing strong relationship and protocols with all vested parties. This means less friction overall and less time bartering over standard clauses. This fosters a joinedup approach, ensuring all work to a common goal – the swift resolution of a claim, at a fair price.
he insurance industry is renowned for struggling when it comes to customer engagement and forging long-term, meaningful relationships.
Traditionally, insurers have far fewer opportunities to interact with their customers than, for example, banks or retailers, therefore putting them at a disadvantage. This is further strained by the fact that many people only require communication from their insurance company at stressful times, therefore eliminating the opportunity to build a strong customer relationship. Additionally, following the rise of comparison sites, interactions are dwindling even further, and so as a result, it’s crucial that these opportunities for interaction are valued and managed as efficiently as possible. The most effective step to engaging customers is providing personalised communication. Rather than sending out blanket statements, renewals or cover letters, insurers should utilise the reams of data available to them and input this into customerspecific documents. Similarly, insurers can use the data to provide appropriate special offers, such as free reviews of a pension plan in advance of a forthcoming retirement date. Data can also be used for preventative measures by reaching out to those customers who have perhaps enquired or searched the company website for information on cancelling a policy, and such pro-activeness may save a policyholder who is leaning towards switching providers. Prior to sending out this personalised information however, insurers first need to make use of the data they hold on customers and ensure it’s integrated into one centralised claims management system, serving to provide a holistic view of the customer. Implementing a comprehensive software platform with the ability to cleanse, validate and eliminate duplicate data entry will increase the quality of service to customers by streamlining processes and providing intelligent, contextually sensitive documentation. Further, drilling down into this data to gain deeper analysis and insights into customers will enable insurers to identify trends that can then be turned into product development and tailored services, as well as analysing individual customers in order to create new opportunities to build meaningful relationships.
The power of the people
Ultimately, it’s the people on the phone that leave the customer with a lasting impression. Working relationships and processes support the overall ethos and subsequent delivery, but a reliable, highly trained workforce will make the difference. Whether the call comes in first thing in the morning or late at night, the individual needs to treat each customer identically, delivering the kind of service, with a friendly, empathetic approach, they deserve.
Taking into account the above, the key is to have the data, systems and cultural commitment across all levels of an organisation. By taking advantage of readily available case management software solutions and integrated analytical capabilities, insurers have the chance to identify what their customers want, and use this to share meaningful, engaging content, serving to increase loyalty, and start the process of building richer and more focused consumer-centric relationships.
Marc Lafferty, Chief Revenue Officer at EDAM Group.
Sarah Roberts, Marketing Executive, Eclipse Legal Systems.
Modern Insurance 35
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Tech is here to stay
Getting the timing right
Are there technologies or practices being utilised in international markets that the UK sector could seek to adopt?
How are you preparing for the effects of reforms to personal injury?
y answer is yes, but…
The technologies that are being developed and used in the insurance and claims space have their own label, “Insurtech”, and there are numerous international examples. Search “Lemonade” in Google and you get, “Maya, our charming artificial intelligence bot will craft the perfect insurance for you. It couldn’t be easier, or faster.”1 The impact of the claims made by this start-up is such that its name is now recognised in many countries. “Gavin” may seem an unlikely name for an insurer, but there is an Amsterdam based start-up, self-described as “the world’s first risksharing service”, which offers “Same coverage. Better service. Half the price.”2 For more evidence of the application of potentially disruptive technology in this space, look at Startupbootcamp3. This global network of start-up accelerators focuses on a range of industries, including insurance. On delving into this area you come across reports, for example, that nearly $1bn was invested in insurtech in the second quarter of 2017.4 The ultimate destination of many insurance claims is the court system, and “tech” is on the move here, both in terms of court processes going online and the development of online dispute resolution (ODR). US examples from the USA are Tyler5 and Matterhorn.6 As to the practices being utilised in international markets, I would argue that the most important practice is that of taking technology seriously, getting involved in its development and rigorously implementing change management. Changing the way an organisation works, so as to provide the efficiency and improvements that are necessary to fend off challenges from disruptors, depends on a change mindset just as much as it does on the latest tech. So, could the UK adopt these technologies and practices? To amplify my “Yes, but...” above I say that it is imperative that we should, but we are already doing so. “Aviva opens ‘digital garage’ in technology push”7 is now old news. The Startupbootcamp programme referred to above was based in London. At international ODR conferences8 there has been keen interest in this jurisdiction’s online court. To conclude, in case any reader is hoping that all this tech stuff might just go away, a recent survey reported that almost 20% of millennials would buy insurance from Google because they are easier to reach.9
ver the last twenty years there have been many changes to the legislation that governs personal injury claims. Considering the revolution of the Woolf reforms, the advent of ‘no-win no-fee’ from the Access to Justice Act 1999, through the introduction of the MOJ portal in 2010 to LASPO in 2013 and Medco in 2015, our industry is well practised at adapting to a changing regulatory landscape. However, the whiplash reforms the present government intends to introduce in this parliament have a different impact and consequence for the insurance industry than we have previously experienced.
Since Access to Justice, the majority of changes which have followed, including LASPO and Medco, were related to the conduct of claims and governed how the parties involved in personal injury claims work together, and whilst disruptive to the industry, they had limited negative impact on the customer. The proposed whiplash reforms are different in that regard; the reforms will directly and adversely affect access to justice, the cost of legal services and the value of compensation that may be awarded. Understandably, brokers are apprehensive because of the uncertainty surrounding the proposed changes. They understand the implications for treating customers fairly and the potential for customers to feel they have been ‘left high and dry’ if the legal assistance they expected is not available post reforms. Because of the continuing lack of detail or timeline it’s hard for a broker to plan how they respond and how they can continue to support their customers. The role of the legal expenses specialists is to provide brokers with products that are future proofed. Our own preparations for the PI reforms are in product development, creating a range of Motor Legal Expenses solutions that are “whiplash ready”, to support brokers making the transition. A comprehensive Motor Legal Expenses policy will ensure customers have legal support should they need it. so this is going to be the primary solution for many. There also needs to be marketing and PR support to help brokers articulate the benefits to customers who are generally unaware of what this will mean to them. One of the key concerns we’re hoping to address is that of timing. Because of the annual purchase cycle of insurance, all of these steps need to be put in place well in advance of the changes. It’s unlikely there’ll be an eighteen month window from the government, so getting the right MLEI product in place now will ensure brokers are ready pre, post and during the transition. Jason Tripp, Operations Director, Coplus.
Tim Wallis, Mediator and Solicitor with Trust Mediation. www.lemonade.com https://meetgavin.com/ www.startupbootcamp.org/accelerator/insurtech-london/ 4 https://www.willistowerswatson.com/en/insights/2017/07/quarterly-insurtechbriefing-Q2-2017 5 www.tylertech.com 6 https://getmatterhorn.com/ 7 https://www.ft.com/content/7c384fd0-bdd1-11e5-846f-79b0e3d20eaf 8 For example: https://iccwbo.org/event/equal-access-information-justice-online-disputeresolution/ 9 IBM Institute of Business Value study: https://www-935.ibm.com/services/us/gbs/ thoughtleadership/insuranceretention/?cm_mmc=OSocial_Linkedin-_-Insurance_ Insurance-_-GB_GB-_-UKI+Insurance+first+fold&cm_mmca1=000024PO&cm_ mmca2=10002410& 1
Modern Insurance 37
Attitude problem illennials. What are they like? The millennials, simplistically those born in the twenty years or so after 1980, must be one of the most researched generations of all. Studies have variously suggested that they are socially conscious and socially connected online, but not to organised politics or religion, burdened by debt, largely distrustful, but loyal to certain brands. That said, it’s a moving target, and these are always hard to hit, and there’s a separate question as to the value of an age based rather than attitudinal segmentation of customers.
From an insurance perspective, the challenge is both being clear on the need and then how best to create the right level of engagement (so no different to any other group). They may not yet (or possibly ever) be in a position to buy their own home (so some differences here to earlier generations), but are likely to be paying rent out of income that also supports a broader lifestyle. Social welfare provides less and less support. They may have an employer providing some kind of income protection, but many won’t. Some will have families of their own to protect. So for many there will be a protection need, though disposable income needs to be understood and managed. For many, their financial time horizon will often not stretch much beyond the next few months, and so it can be hard to position the idea of a life insurance or income protection plan with a 25 year plus term. So we need to think shorter term. At the risk of stating the obvious, engagement and fulfilment need to have a strong social and mobile core. Research will frequently be done via blogs rather than papers or magazines. There are still plenty of financial websites out there that are not optimised for mobile traffic. We need to learn from the simplicity of apps they value in other parts of their lives, apps which don’t require huge effort to engage with and which provide clear and easily achieved value. Millennials generate vast amounts of data about themselves, which, if used appropriately and with relevant permissions, could be harnessed to craft personalised products, processes and communications. Trust has always been important to our industry, and never more so than with this generation. Tone and authenticity will be important, and maybe we need to find a way to inject the kind of humour into our connections that will be responsible for much of the social sharing done by millennials. More importantly though, we need to understand attitudinal differences and how far these genuinely differ from other generations. Peter Hamilton, Head of Strategic Partnerships, Zurich.
Taking the technology plunge Where are there currently opportunities for collaboration in the claims sector, and can this be achieved? here is no question that the claims sector is evolving faster than ever before. It’s an exciting time, with investment in technology being a key component to the claims process and an integral factor when considering reducing timescales and costs. Naturally, this will have a knock on effect on both the industry’s bottom line and, ultimately, the customer’s experience and associated costs. Done right, it’s a win-win for those who have taken the plunge and invested in the correct opportunities through third party platforms and suppliers.
In my opinion, the difficulty for insurers lies in integrating this technology into their existing, historic and often Dark Age systems. Beginning from scratch is a costly move, but there is a common theme being peddled in the industry that without this venture into the world of AI, insurers will be left far behind those who take the plunge and revolutionise the way they are able to assess claims. There are a number of collaborative solutions available that do not require this knee jerk multi-million pound outlay that can be equally effective in transforming the claims sector as we know it. The first is partnering with companies who have the solutions available to utilise the technology without having to build it yourself. IoT has been a buzzword for a few years now, but the nuts and bolts of this technology is a system that offers the opportunity to accurately predict risk. Add telematics and dash cams into the equation and you not only have the likely risk at the touch of a button, but can also observe incidents in real time and confirm liability, without the need for any witnesses or even the testimony of the driver. This is where I see the real immediate opportunity for insurers in terms of cost saving. Telematics and dash cams have been around for years and are becoming ever more prevalent in the inclusions of motor policies due to the clear financial benefits, particularly for fleets and young drivers. But we are finally getting to a point where these devices can provide so much more in terms of ground-breaking improvements to claims handling such as FNOL. AI has many benefits, and I’m interested in seeing where this technology will develop in the next couple of years. But, for now, in my opinion it can’t compete with the ability to view live footage of incidents as they happen. Our IoT platform that can tell if a driver has had an incident, in some cases, before the crash has even ended. This is the real game changer for me. Simon Marsh, Managing Director, VisionTrack.
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Enhancing customer responsiveness: collaboration in problem solving hanges in the claims landscape for the 21st century in the UK make it necessary for claims professionals in all areas to enhance and develop their business models to highlight and reinforce good practice. But where do we identify areas for improvement in relationships at any part of the claims supply chain? Each of us will have our own methods for assuring and improving quality, and managing this through systems and quality improvement strategies. However, I would like to encourage enhanced use of advanced communication skills based on personalising collaboration with colleagues and clients when problem solving and conflict/disagreement resolution is required.
hidden benefit once the issue has been resolved by both parties attempting a win-win approach.
Conflicts typically occur through mixed messages, lack of clarity and misunderstanding. Responsibility for this will often be on each side and unintentional. Recognition and acceptance of this is half the battle, the other half rests with rapid and human contact, which reflects a wish to sort the problem out.
This does not suggest that one should aim to ‘make a mistake’ and then ‘put it right’, but good practice is, I believe, to try to make contact with frustrated or annoyed customers or colleagues as quickly/easily as possible, with the intention of resolving problems or misunderstanding. Letters too often delay or exacerbate conflicts and make ‘positions’ more entrenched.
There is a tendency, well known to all of us, of putting pen to paper (digital or otherwise) when a conflict arises, as this allows a ‘one-way, no immediate response/rebuttal’ from the other party. However, frequently, a timely telephone call plus a conciliatory tone is more successful and actually has a significant
This hidden benefit comes from research within the NHS, which illustrates that the person who is or becomes the most loyal ‘customer’ is the one which follows a problem or conflict that the other party has attempted in good faith, and successfully, to put right and resolve. This customer then, having had this emotional and ultimately positive experience with your business, has a considerable level of good will towards you.
If you don’t agree, ring me, don’t write! Dr Hugh Koch, Clinical Psychologist and Director, Hugh Koch Associates and Visiting Professor to Faculty of Law, University of Stockholm.
The transformative power of technology famous advertisement from Greenpeace, the environmental group, showed the history of the Earth in a 24-hour clock. The ad was designed to highlight the (catastrophic) impact of human beings on the planet. The ‘clock’ had the Earth beginning at midnight. By 4.00am the simplest cellular life forms originate. The first plants, seaweed, appear at 8.28pm. Dinosaurs? They don’t arrive until just before 11.00pm. As for humans, we grace the Earth at 11.58.43pm. We’ve been here for just over a minute.
The clock neatly illustrates how humans have been catalysts for super-fast change in a very short space of time. Today, technology threatens to have the same impact on human beings as humans have done for the planet. In our business of the law, the talk is also about change, and how technology may well make lawyers obsolete altogether. I don’t share this pessimistic view. In fact, used properly, technology will be the saviour of the legal industry, not its destroyer. As COO in a law firm that works closely with insurers, I have seen first-hand how technology can transform an industry, for the benefit of customers and employees too. One insurance provider, Lemonade, can now settle claims in just three seconds. Black boxes provide insurers with data to determine how their customers are driving in real time. Insurtech is the sector buzzword. At Minster Law, I want to engineer a similar transformation in how customers interact with us. Technology is the methodology: ‘Law Tech,’ if you like. For example, we should implement the same workflow management systems used by Lemonade and other tech-savvy businesses for low value claims, such as whiplash and other minor injuries. Our customers are involved in a road traffic accident on average once every seven years. They expect minor claims to be dealt with efficiently, quickly and transparently. Accessing justice should be as easy as buying kit from Amazon, or a flight from Skyscanner. At Minster, we want to measure our customer satisfaction, digital experiences and NPS (net promoter scores) against Marks and Spencer or First Direct, not Lyons Davidson or Slater & Gordon. The government is also determined to bring in online courts to save money and free up the judicial system to manage complex cases. For sure, HMG’s track record of delivering successful technology projects is questionable, but I fully support the intent. The rule of law is the mark of a civilised society, and should be nurtured, but our legal system will become as fossilised as the dinosaurs if we continue to eschew the transformative power of technology. Shirley Woolham, COO, Minster Law.
The fight against cyber attacks Insurers are bracing themselves for a rise in cyber claims, as estimates of attacks continue to rise. What is the insurance industry doing to help UK businesses prevent and recover from cyber-attacks? he cyber threat facing UK businesses is increasing. The Department for Culture, Media and Sport recently found that 55 per cent of companies have identified a cyber breach in the last 12 months1.
It is imperative for firms to be insured against the risks, but robust insurance cover is not all the industry can provide. Insurers and brokers are ideally positioned to deliver added value to clients by using their insight and expertise to offer more than just a policy. Our experience of identifying risk can help minimise the potential for breaches and guide clients through damage limitation should an attack occur. This is especially true for the insurers and brokers working with SMEs, which are less likely to have an in–house resource to face cyber threats compared to large businesses. Cyber security may also be lower priority, with SMEs lulled into a false sense of security that they are too small to be targeted. However, figures from the Federation of Small Business suggest the opposite. Seven million cyber-crimes are committed annually against UK SMEs and on average, each incident costs nearly £3,000 and takes more than two days to recover from2. Insurers and brokers can help by highlighting the potential vulnerabilities, recommending methods to bolster security and guidance about the most appropriate products needed to protect against a threat. Swinton Business, for example, offers a business continuity add-on to its cyber insurance policy. This can be a lifeline for smaller companies, where disruption could have severe, lasting financial implications. However, cyber-attacks can’t always be prevented, so insurers and brokers must also guide their clients through the aftermath. By sharing knowledge and experience, we can help businesses resume trading as soon as possible and ensure they understand their obligations to customers and, where applicable, to regulators. Our Swinton Business helpline puts clients in touch with our experts to help them to learn which elements of the business need to work together to resolve issues. Often, the requirement goes beyond IT to include customer communications, marketing and HR. This has proved invaluable to our clients, relieving stress and helping to get businesses back on their feet. Prevention and cure should play equal roles in providing the necessary support when clients are at their most vulnerable. As well as improving customer loyalty and retention, adopting this approach also ensures the industry remains at the forefront of the fight against the rising challenge of cyber-attacks. 1 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/609187/ Cyber_Security_Breaches_Survey_2017_infographic_general_business_findings.pdf
Tony Monnington, Head of Commercial, Swinton Business.
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Insurers coming together to drive out hidden risks with policy history Keith Binley, Lexis Nexis Risk Solutions, reveals how research has found that some policyholders withhold information from their insurance provider and explains the impact this has on the industry. nsurers are facing an increasing challenge when it comes to accurate risk assessment, dynamic pricing and quoting on price comparison sites. Whether it is in the form of a misstated no claims discount or customers not having the correct information to hand or outright fraud, several studies we’ve conducted at LexisNexis show that a rising number of customers think it is acceptable to submit incorrect information when applying for insurance.
When we polled motor insurance customers in 2013 the results were quite surprising: one in four people believed it’s acceptable to omit information at the point of quotation. In an identical survey in 2015, this number had increased to one in three people.* Unacceptable behaviours in claims can range from changing places with the driver at the scene of an accident, purposefully abandoning a vehicle to claim total loss and/or giving the wrong name and address whilst applying for a policy. However, it’s clear that a large number of consumers feel they’re in a battle to keep their insurance costs down, and they’re unhappy about the number of questions they have to answer and about the application process in general.* We could go so far as to call it a disconnect, between the reality of insurance as viewed by the consumer, and the insurer. Some 57% of people in our survey said they won’t report an incident or small accident to their insurer, preferring nondisclosure to keep their premiums low. Even more worrying for the insurer, 57% of them feel their claim should still be paid even if they have supplied inaccurate information. Part of this could, of course, be down to not knowing what information they should be disclosing at the point of quotation rather than deliberate misrepresentation. In another LexisNexis consumer survey from 2016 a similar number of homeowners (68%) said that some omissions or adjustments are acceptable in the application process, to keep their insurance costs low. Only 23% of home insurance customers said that omitting any form of personal information or adjustment is unacceptable. However, non-disclosure of past claims is somewhat less acceptable: 59% of consumers feel it’s not acceptable to withhold any claims information, regardless of the size or number of claims. This still leaves 41% of people who feel it is acceptable to omit some degree of claims information.** Against this backdrop, it’s no surprise there’s a need for more externally-verified data for underwriting and pricing purposes.
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The reported cost of insurance fraud in motor insurance alone – from ‘crash for cash’ and whiplash to minor cases of non-disclosure – is nearly £3.6 million a day Correlation in claims and costs
Our analysis suggests a significant number of consumers understate or misreport some elements of their policy history. There also appears to be more likelihood of a correlation between consumers who understate claims information, and the cost of their claims being higher than those who do not misstate. From the viewpoint of the industry, a majority of insurers see the insights into a customer’s policy history through digitisation as being useful to improve the customer journey, price more accurately, reduce application fraud, and attract better risk. In our survey of motor, home property and commercial property insurers, 91% of them said more information on a customer’s policy history would be extremely, very or somewhat useful for improving the customer journey. Another 88% of insurers said it would be useful for more accurate pricing.***
Usefulness of a customer’s policy history***
• 61% of insurers said a customer’s policy history is extremely/ very valuable for improving the customer journey (29% said somewhat useful) • 60% of insurers said a customer’s policy history is extremely/ very valuable for more accurate pricing (27% said somewhat useful) • 58% of insurers said a customer’s policy history is extremely/ very valuable for reducing application fraud (31% said somewhat useful) • 55% of insurers said a customer’s policy history is extremely/ very valuable for attracting a better risk (28% said somewhat useful)
It’s clear that a large number of consumers feel they’re in a battle to keep their insurance costs down, and they’re unhappy about the number of questions they have to answer and about the application process in general There were some differing views between property and motor insurers in terms of how they would like to apply policy history data. Whereas more accurate risk pricing was considered most important by commercial property insurers, improving the customer journey/reducing application fraud were considered the most important factors by motor insurers. For home property insurers, attracting better risk/reducing application fraud were considered most important. We carried out the research to understand what our insurance clients need, in order to improve and support their businesses in the future. The results give us confidence that our investments in policy history data have been well placed, and in tune with our customers’ needs, as we move ahead with launching the Policy Insights service, which is based on pooled data from across the industry.
* LexisNexis Risk Solutions Consumer Insights Study 2015 was a consumer panel of 1,314 adults, insured drivers and policy decision makers, interviewed. ** LexisNexis Risk Solutions carried out an anonymous survey, the UK Home Insurance Consumer Study, 25 January–1 February 2017. The sample was 1,500 residential homeowners in the UK, who owned their current residence for two years or more, home insurance covering their primary residence, equally or solely responsible for home insurance decisions. ***LexisNexis Risk Solutions carried out an anonymous survey, the UK Insurance Underwriting Digitization Study, 8 December 2016–9 January 2017. Mixed mode of data collection: online panel and telephone interviewing. The sample was 170 insurance professionals, 55 personal motor, 52 personal home and 63 commercial property. The respondent must spend 30% of their time in underwriting-related activities for a given line to be assigned to answer questions specific to that insurance line.
The reported cost of insurance fraud in motor insurance alone – from ‘crash for cash’ and whiplash to minor cases of nondisclosure – is nearly £3.6 million a day. Worrying statistics such as these highlight the increasing importance of verified data in insurance application and claims assessment processes. The business risk and potential loss from incorrect information introduced at any point, from the application through to claims, highlight just how important it is to check that the insured person and their presented identify information is real, while reducing customer friction. Simultaneously there is a need to build a fuller and better picture of the customer in case the need occurs to breakdown an insurance fraudster’s fabricated story. New data sources are coming into the insurance world, but they come with many data management challenges for cleaning, normalising and accessing the data, making it usable to insurance companies at speed, and precisely where they need it, close to the customer. Keith Binley is Managing Director at Lexis Nexis Risk Solutions.
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Modern Claims’s panel of resident associations outlines the burning issues
The Government’s CMC regulation he brief period between June’s general election and Parliament’s summer recess saw the introduction of the Financial Guidance and Claims Bill into House of Lords. The introduction of the Bill could hardly have been timelier, as the explosion of holiday sickness claims gave a stark and unwelcome illustration of how quick CMCs can be to exploit legislative loopholes and target successful industries. The legislation contains the long expected provisions to transfer responsibility for regulating Claims Management Companies (CMCs) to the FCA. This is something the ABI called for in its response to Carol Brady’s 2015 review of Claims Management regulation, and we strongly support the Government’s recognition that the problems in the CMC sector demand the attention of an experienced financial regulator. Consumers have a right to be represented by whoever they see fit. However, Carol Brady’s review demonstrated clear evidence that too often CMCs mislead their customers about the services they provide and the fees they charge. The problems have not gone away; the Claims Management Regulator’s recently published annual report showed that it had to sanction one fifth of the sector in the past year. Once the Financial Guidance and Claims Bill becomes law, the FCA will be tasked with re-authorising every CMC. It will need to use its econometric modelling capability to understand the business models of these firms, ensuring it can establish which firms rely heavily on direct marketing (and therefore need to demonstrate that they are not party to illegal cold calling), and which derive their income
from taking high percentages of damages (and therefore need to demonstrate that they are transparent about the fees they charge). Once the Bill becomes law, the FCA will need to consult on the detail of the rulebook that will apply to CMCs. For CMCs, they will need to be able to prove they can meet these objectives before being re-authorised. Senior managers within CMCs will also, for the first time, be held personally accountable for their behaviour; if they lose their license, they will no longer be able to re-emerge, phoenix-like, under the banner of a supposedly new CMC. The existing Claims Management Regulatory Unit has had increasing success in cracking down on this sector, despite not being equipped with all the powers a regulator needs. We would encourage the FCA to ensure none of this expertise is lost in transition, because with such a varied and volatile sector, pro-active enforcement will continue to be needed alongside expert supervision. The transfer of CMC regulation to the FCA is a change that cannot come soon enough, as consumers and businesses need protection from these unscrupulous organisations. Ben Howarth, Senior Policy Adviser, Motor & Liability, Association of British Insurers (ABI).
Insurtech - Improvement or Hindrance? f, like me, you are increasingly encouraged to use online facilities for companies with whom you deal, whether that be my bank, utility provider or Insurer, this means an endless list of passwords, differing functionality and systems that are often not joined up in their thinking and customer experience.
As an insurance broker, we face similar challenges in this area, as the number of Insurers with whom we deal with and the differing systems with which we are faced with, provided by insurers and software houses, often detracts from the service provided to the client. However, this is not always the case, and we are now seeing the advent of some innovative ideas that are now increasingly involved in the claims space, which, in my opinion, has previously lagged behind developments in the distribution space. The fact that disruptors who concentrated upon front end development to generate income is no surprise, though I believe that developers are now recognising the fact that there is still the opportunity to increase revenue from claims through their innovation. It is good to see that brokers and stakeholders are now utilising tools to shorten the claims process and using technology to be able to view damage via live streaming, either by using a client’s own mobile telephone or alternatively drones for more difficult investigations. The resolution of the images that can be derived from this technology
44 Modern Insurance
now allows a claims handler to measure and also price up claims remotely, thus reducing the validation process considerably. The ability to reduce fraud at the roadside by using reporting tools to assist drivers at the roadside and putting the power of fraud reduction into the hands of the insured and their representatives, means that insurers can assess claims at the point of damage and at the time of damage, rather than days, weeks or even months later. These are truly innovations that will revolutionise the way that claims are paid and this cannot be better highlighted than a travel insurance product that tracks live flight times, so that in the event of flight delays, compensation is paid into the policyholder’s account automatically, without the policyholder having to formally make a claim. This is not something that is due to happen in the future, these are things that are happening now, and the British Insurance Brokers Association is looking to assist brokers to develop further in the insuretech space and is committed to do so through promises provided in the 2017 Manifesto. Claims are the primary reason why people buy insurance, and it is imperative that technological developments enhance the customer experience in whatever way it can. Andrew Gibbons, ACII, Managing Director, Mason Owen Financial Services Ltd and Chair on behalf of BIBA of the Industry Claims Working Group.
Outdated changes learly a great deal has happened in the claims sector, and the wider political landscape, since the Insurance Fraud Taskforce published its twenty-six recommendations back in January 2016. Only the publication of the Part 1 consultation is mentioned in a hopelessly outdated 2016 update report on progress on implementing the IFT’s recommendations that for some reason has finally been published, in August 2017. The document does though, unintentionally, illustrate a couple of points worth highlighting.
to have moved on to fresh abuses in the area of holiday sickness claims. We are approaching near record high levels of motor premiums, fueled by successive increases in the IPT, higher repair costs and the changes in the discount rate. Fraudulent behavior, arguably never at a level suggested by the headlines, appears to be on the wane as public awareness of the possible consequences of getting caught increases and cash-for-crash gangs are busted by the combined efforts of the various intelligence and investigative bodies.
First, some good progress has undoubtedly been made on many of the sensible recommendations from the IFT, although whether a reliance on a combination of self-regulation and ‘best practice’ advice by the insurance sector is sufficiently tough enough is debatable in some areas. The Government may be proceeding with its planned changes to the whiplash claims process, the most contentious area of the IFT recommendations always disputed by claimant lawyers, but in other areas it has been painfully slow to act: the transfer of CMC regulation to the FCA, tougher regulatory action against CMCs, strengthened powers for the SRA, a ban on cold calling (?) and Part 2 of the Government’s proposals.
All of this begs the question, what are the current proposed changes to the claims environment really for? In 2015 the purpose was at least clear. It was to tackle and change fraudulent behaviour. Since then, tackling fraud has all but dropped off the Governments stated justifications for the potentially disastrous changes to the whiplash process. To be clear, fraudulent behaviour does remain a problem, and it will only be tackled collaboratively by the whole industry across many fronts, but the programme proposed by the Government is not the solution. Like the recent IFT report, it is looking increasingly out of date.
Second, it is clear how much the sector has changed since the landscape was surveyed by the IFT back in 2015. The number of whiplash claims has continued to fall as the post-LASPO and reformed MedCo/medical reporting regulatory environment kicks in. The number of CMCs and the revenue they make from encouraging personal injury claims has fallen, with many appearing
Simon Stanfield is Chair of the Motor Accident Solicitors Society (MASS) and a Partner of Simpson Millar.
Jackson’s legacy extends upwards… e now have Lord Justice Jackson’s latest report into the thorny issue of fixed costs, and it is an evolution of his earlier reports. Space restricts me from repeating details here, but the headline is that he proposes new fixed recoverable costs (FRCs) for the remaining cases worth up to £25,000 as well as the majority of claims worth up to £100,000.
He recommends that both values of claim should fall into four bands of complexity with, as you would expect, higher levels of FRCs for the more complex bands. As with the current process, the actual level of FRCs depend on the stage reached, with four stages being used for claims worth up to £25,000 and six above that level, both with a trial stage in addition. For claims up to £25,000, Jackson largely builds on the existing regime, while over that level he relies on data from existing cases in trying to set the right level as well as a subjective view. We also have proposals for fixed costs for cost only proceedings, which comes down on the side of replacing the entitlement to hourly rates in a ‘Broadhurst v Tan’ situation, to a percentage increase on the FRCs. As Jackson went through his series of seminars engaging with practitioners, it became clear to him that it perhaps wasn’t as simple as he may have thought back in his January 2016 paper,
hence the increased stages and complexity bands. He also noted that practitioners had largely come to terms with cost budgeting since that time, although he lamented the inability to control costs at the pre-litigation stage and notes that that probably would require primary legislation. Generally speaking, his proposals will not be seen as draconian as some feared at the outset, demonstrating his ability to listen to the industry. This may well be his swansong, and given he took this task on at the request of both the Lord Chancellor and the Master of the Rolls, it is likely that the new Lord Chancellor will share the intention to implement his conclusions. The next step will be a consultation, on the terms that will give everyone a chance to respond to the figures proposed, but it is difficult to see at the present time when the MOJ will find the time to produce that consultation. Thereafter, however, primary legislation is unlikely to be required, and so the changes should be achievable without Parliamentary involvement at what is a very busy and difficult time for the government. Even so, it is unlikely implementation will take place before October 2018 and possibly April 2019. Nigel Teasdale, President of the Forum of Insurance Lawyers (FOIL), and Partner at DWF.
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Industry Collaboration Roundtable The Industry Collaboration Roundtable, sponsored by Carpenters Solicitors, recently brought together leading figures in the industry to discuss the value of collaboration in relation to the key challenges currently facing the sector. DS. The main components of the reforms are the introduction of a tariff system for general damages for whiplash claims, banning offers to settle such claims without a medical report and raising the small claims limit to £5,000 for road traffic accident related personal injury claims and to £2,000 for all other personal injury claims. We all have an interest in ensuring the reforms create a regulated market that deals with claims in an orderly and efficient manner, and that works in the interest of genuine customers. There’s certainly scope for us to work together to guide the government and the MoJ on the wider elements of the new reforms package. It’s good to see a transfer of Claims Management Company regulation to the Financial Conduct Authority is going to take place. I’m worried some smaller CMCs will stay unregulated and go underground. But reform is going to happen, and we have to try and make it work. DM. The industry needs to come together at a time of much movement and focus on what is important – the customer. SB. Since this might be thrown at PortalCo to implement quickly, we started thinking about how it could be made to work. The objective would be to create a seamless process to court.
attendees Donna Scully (DS) (Chair) - Director, Carpenters Solicitors Caroline Johnson (CJ) - Head of Third Party Claims, LV= Dominic Murphy (DM) – North West Regional Claims Manager, Gallagher and British Insurance Brokers Association (BIBA) Don Clarke (DC) - Partner/Director of Strategy, Keoghs Graham Gibson (GG) - Director of Claims, Allianz Javier Gonzalez (JG) - Head of Third Party Motor Claims, Covéa Lizzie Checkley - Head of Whiplash Reform Policy Team, Ministry of Justice Martin Ward (MW) - Founder & Director, Green Circle Consulting Ltd, Director of Claims Portal Ltd Matthew Currie (MC) - Partner, Irwin Mitchell Natalie Larnder (NL) - Policy Advisor for Civil Justice, Association of British Insurers (ABI) Nigel Teasdale (NT) - Partner, Head of Motor & Fraud, DWF and President, Forum of Insurance Lawyers (FOIL) Susan Brown (SB) - Director, Claims Portal Ltd
DS. Portal is not the beginning of the case, there’s a big chunk of work that comes first - ID, fraud checks and more.
MW. Better data is key to fighting fraud.
SB. And there’s still a lot the litigant in person will have to go through to know if they are able to make a claim.
DS. Portal data is good, but the numbers are not 100% accurate. MedCo might be more accurate because it’s newer.
DS. Does that deter the person from making the claim, or does it bring in CMCs to the market that offer to do it for them, like in PPI?
NL. At the moment you’re reliant on MROs putting data in, and MedCo is fighting a continual battle to ensure that data is uploaded.
JG. Making sure that portal is as accessible and as easy to use as possible has to be imperative. We simply can’t allow claimants to fall through the cracks.
SB. It’s a beautiful opportunity to sort out some of the issues we’ve got with MedCo by ensuring when data is uploaded to the Portal it’s also extracted to MedCo.
NL. We’ve got to build something really straightforward that’s doing a lot behind the scenes to talk to other systems, but that appears to the claimant to be one easy to use system.
MW. The caveat around data is that it’s only as good as people make it; the most commonly selected options are “Other” or “Prefer not to say”.
GG. We’re hung up on the technology, but that’s actually very simple, it’s just about how you knit it together.
DS. A LIP might go on multiple times if they think they’ve got it wrong too.
SB: I’m more worried how LIPs will find our portal if there are fifty CMCs spending vast amounts of money on appearing first on Google.
GG. If you collect data it’s incredibly valuable, so you get into a debate about who owns it, and it becomes very complex.
DS. If the client is going straight on the Portal, more people are going to go on and then the insurers would have to sift out those claims with fraud or liability issues at their end.
NT. We need to think about where we’ll be in April 2019, when going to court might be an online process.
NT. If you were to reject someone’s claim, they’ll come back in different ways, just not through a reputable claimant company. DS. Customer journey is everything to us, but so is fighting fraud, so I don’t want people who are fraudsters being able to more easily make claims on the portal.
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DS. If the online courts aren’t built, will the LIP have to go through the current courts system themselves? MW. There will have to be engagement with HMCTS, but as yet, there is no joined up solution or implementation timeline. JG. Technology should allow these things to come to be, as long as we’re not too short sighted in the first instance.
Reform is going to happen, and we have to try and make it work Donna Scully NL. Time is a key issue. There were political pressures on the timelines for the introduction of Portal and MedCo, which will hopefully not be the case with these reforms.
JG. There were some good recommendations, but it feels like the momentum wasn’t kept up because a legacy vehicle didn’t establish itself from the outset.
SB. Our objective is to keep as much as we can in the Portal, but there will inevitably be a court at the end of it.
DS. There was a bad feeling in the industry when a report was released about a meeting in November 2016 only a couple months ago. As the days go by, everything is getting out of date.
DS. There’s a fear of a David versus Goliath dynamic, because once you get to court as a LIP, you have a represented opponent. It’s going to cause major disruption in court because judges have to take more time with them. And McKenzie friends are growing as access to justice is reducing; you might convince people to have a go on a portal, but not many will want to go to court on their own. Even a small claims court is very intimidating. Following a reversal of the discount rate reduction, is there a danger of wider PI reforms being overlooked or rushed through? DC. The claimant market has a different reaction to whiplash reforms than they have to discount rate. Why put the two together, unless there’s not enough legislative time? The Discount Rate legislation could proceed by way of a standalone bill or possibly in the Finance Bill in November. JG. A standalone bill might be a better option for this, because of the different levels of controversy around the different items. If included as one bill, then there’s a huge amount of scope between the lowest and highest levels of injury. DS. Where are there cross-industry areas of agreement about changes that need to occur in the claims sector? The top of my list is the recommendations of the Fraud Taskforce. I think that was a good report with some easy-win recommendations, and the biggest one I’ve seen is that the SRA has got tougher and become more accountable. MC. They’re knocking on doors a lot more. Even if the fine isn’t big, just turning up and doing an audit can be quite bothersome for some of the unscrupulous outfits. DS. Trying to frighten them is good, but a bigger fine could put them out of business.
DC. You do have to be realistic given the legislative programme ahead. A joint claimant/defendant body making recommendations is a really good idea. DS. So can we as an industry do something? If you leave people out and just have one voice, it’s never going to be rounded. Is anybody else frustrated that a ban on cold calling isn’t going ahead? NT. There seems to be a misunderstanding as to what’s banned already. Bringing claims on the back of cold calling is already illegal, it’s just the cold calling itself isn’t. An outright ban might affect unintended targets, like charities. There is subtle distinction between cold calls and nuisance calls. DS. You can ban anything, but you need regulation to enforce it. 3% of the fines CMCs receive are collected, because they just go bust then reopen the next day. Will the FCA deal with cold calling better? SB. Or should the SRA be doing it, because those cold calls would be pointless if the lawyer wasn’t taking the cases? DS. CMCs are predominantly getting their work from data mining and cold calling. It’s still rife, and if they do see an opening in the new reforms to look after LIPs, it’s going to go through the roof. JG. They’re entrepreneurs, and they’re not going to go away unless all incentives are removed. GG. Our customers don’t draw the distinction between CMCs and solicitors; how do solicitors feel about their brand being destroyed by CMCs?
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The industry needs to come together at a time of much movement and focus on what is important – the customer Dominic Murphy DS. We lobby the Claims Management Regulator to regulate better and we try to report bad behaviour in the market, but the SRA do nothing. If people don’t handle PPI themselves, they’re not going to handle injury claims themselves. If you allow a LIP onto the portal, how do we know it’s not a CMC behind them? SB. It could be worse than that. We could potentially have to give CMCs A2A access to the portal. If there’s no costs shifting, how are we going to stop them? GG. What surprises me is when customers come to us because they think we’ve given their data away. Some of the abusive calls I’ve heard about have been horrific. It’s not just cold calling, it’s aggressive marketing. So for me, proper regulation with the FCA is the way forward, and I do mean proper regulation. Our regulator is much tougher, with much more power and diligence, and it’s much harder to operate as an insurer than a solicitor in the regulatory environment. DS. We’re big businesses with a profile, so we can’t hide, but if I’m a high street CMC I’ll go underground. Regulation hasn’t been good enough in the CMC space and they’ve had a field day. JG. Regulation is just one tool. We talk about how we have to share and use data to combat fraud, but will the incentives still be there after reform? Tackling these things in isolation won’t be the solution but rather a sum of all the parts will be the difference maker, if we collectively pursue them. DS. We’re reducing damages for whiplash, but we’re not dealing with credit hire, credit repair and rehab, so it’s still a lucrative claim. CJ. Insurers deal with claimants directly now, offer support, arrange treatment and medical reports (through MedCo) and then value and settle. The reforms would simply put this on a larger scale. We also need to know how to identify those CMCs that are underground and develop a vehicle for dealing with them. DS. If you have to put down the introducer of your case, that introducer then could be passed on to the Insurance Fraud Bureau so that they could keep a list of good and bad CMCs, but the people taking work from bad CMCs are not going to put that information down. DC. The other issue is timing. We don’t know when the FCA will become an effective regulator of CMCs, and we don’t know when the whiplash reforms will happen. The latter happening before the former would not be attractive to insurers. DS. We fight CMCs everyday and tell clients not to go near them. In the new world the client is vulnerable and ready for the taking. GG. It’s about getting balance back. CMCs don’t have to act within the law and often don’t, and lawyers and insurers do. MC. We find genuine, honest individuals phoning up to say they’ve been called by Irwin Mitchell about a claim, and we haven’t phoned them at all; it’s been a CMC ghosting as us. We’ll find out which law firm is connected to them and we’ll report that, and nothing happens. It’s an open goal and they still miss. DS. It looks like there will effectively be more deregulation, as you’ll be taking work from the regulated part of the market and giving it to the unregulated part. Give me a bad lawyer over a bad CMC any day – however bad a lawyer is, they’re at least regulated, whereas a CMC could be a drug dealer or a gunrunner!
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NT. The SRA are going to relax the rules on how long you need to be qualified before you can open your own law firm. CMCs could just put someone through a training contract and open their own law firm. DS. We do need some regulation, and we need it to be effective, otherwise it’s not a deterrent. DM. Insurers are working together far more than they used to but there is still much to be done. With the onset of GDPR they need to ensure that this does not move them to an area of non-co-operation and sharing of data. MC. We could get out there to publicise GDPR more. A lot of reputable businesses collect data and sell it on, so if we can establish the knowledge that if they are careless with that data and breach GDPR, they can face a heavy fine going forward that the ICO is ready to give, we could get a solid message out there. DS. Their hands shouldn’t be clean. When you get the cold call, your first question is where they got your details. I’ve heard from some insurers that people wait outside coffee shops for them to come out in order to try and obtain data. GG. We have been regularly approached outside our offices, and we’ve even had police involved. But some of the people who do this are on the criminal fringe, so they just go to another office and do the same. We tell our fleet managers about it, because cafes and pubs next to big operational depots are high-risk areas. They’ll befriend the driver for two reasons: to see if there’s anything in their load worth stealing, or to stage an accident. NT. The rewards are too great compared to the punishment, and the reforms aim to take the rewards out of the system. DS. But we’re only reducing damages in these reforms, so we’re not dealing with the more lucrative rewards. The industry has dealt with some things well, like NIHL claims. We’ve had other issues along the way, like PTSD post-whiplash, which went through the roof. If the industry did have good data you could see those spikes. SB. As we’re starting to look at the individual in MedCo we’re starting to see those people who are recommending psych treatment in every case. DS. What do you do when you find them? Who do you report them to?
The other issue is timing. We don’t know when the FCA will become an effective regulator of CMCs, and we don’t know when the whiplash reforms will happen Don Clarke
SB. Ultimately we have the right to suspend them, although we haven’t got to that point yet with any individual experts for this type of behaviour. However, for example, for abuse of the search and selection process we just suspend law firms, and they come back and apologise and ask to come back on. DS. That’s a very powerful tool, because they have to go on to the Portal. CJ. Is that widely known as a deterrent? SB. We do publicise that we have suspended MROs and solicitors. DS. The feedback is that MedCo is doing better. With LIPs, how do you pay the client? Where does the money for credit hire go, for example? NT. Will they just claim for all kinds of things they think they can? We need something that explains the things you can claim for. Every claimant is going to claim an uplift for exceptional circumstances as well, even though it’s not exceptional in the general field. DS. The major issue is that the people with the CMCs behind them won’t need you to tell them what to claim. The good news is that claims are falling, and some bad law firms have gone to the wall. NL. If overall claims figures for personal injury have fallen, they have only done so by a small and insignificant volume, and action still needs to be taken to combat the compensation culture in England and Wales. MC. I would like there to be more publicity around those bad agencies and more appreciation of the good ones. DM. There is also much more to be done in terms of sharing information within the industry. Knowledge is key to the battle against fraud. DS. How about bringing aggregators into the fight against fraud? They are capable of making a big contribution, and they are also capable of giving us some very good data.
DS. What frustrates me is how many of those people are paid the £1000 and weren’t actually injured, and then they go into the numbers, which impacts the reforms. I also don’t think we can ignore McKenzie Friends. No-one should be representing people if they are not insured. What are some of the other factors that will influence the claims sector over the next few years, and what can be done to prepare for these? GG. I am a Director at Thatcham, and we get sight of what is coming on the track, i.e. autonomous vehicles. Manufacturers would already say that they have the technology, but they need the laws and the roads to adapt first.
GG. They’re data organisations with a slick service sales team. That’s not all they are, but their strengths are in their sales capability and having really good data.
DS. Automation is what everyone is talking about now, and it is okay to cut overheads and be efficient, but you have to teach your staff well and look after your customers. We did touch on Part 2 of the reforms as we spoke about credit hire and rehab, and for me it always needed to be a package.
DS. That is where my frustration with aggregators is; I know you want to sell, you sell all day and all night, but you could still help with fraud.
NT. Twenty years on we are still having the same arguments about credit hire, so let’s not being having the same battles about rehab in another twenty years.
NL. We are working with external consultants to look at a strategy to change public attitudes about fraud. There are a lot of people who don’t think that making those few little ‘white lies’ on their application is fraud.
JG. We all talk about the anticipation and the unintended consequences, but are we brave enough to act on that anticipation rather than wait and see where these things all tie together.
DS. We tell clients we’re doing a search on the askCUE PI database to see if they have had previous accidents, and they don’t know how big that database is, so that is another potential deterrent. If you want to run a good business, you don’t want to be trading in fraud. We are prepared to share data, and we’re prepared to have all the checks.
DS: Everyone wants that whole package, and knows that is the ideal situation. Maybe it will make it worse because the CMCs may see it as an opening. CMCs have to pass to lawyers now, but in the new system they don’t. The reality of this market is that we have a big claims management presence and this is the situation that will make it grow. I don’t think any of us want any customer in the hands of CMC.
CJ. A lot of education is around organised fraud, and not so much around opportunistic fraud, which is a huge cost to the industry and consumers.
JG. With pre-meds, as soon as someone has an accident there is £1000 waiting for them, so it’s no wonder people feel like that is norm. But it shouldn’t be, and that is what has got to change.
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What difference does branding and video marketing online have for insurers, solicitors, lawyers and customers? Simon Downing, TBS UK, provides an insight into marketing strategy and how to use it to your best advantage. t’s true to say that time is the enemy of business. And that a business needs the right marketing partner to be successful. No question. Yet the same questions become ever more frequent within the meeting rooms across the country. How familiar does this sound: “business constraints constantly pull us from pillar to post, all ideas and plans that make up our wish list never seem to take off as quickly or as exactly as we’d like them to”. Married with a back catalogue of: ”how do we attract new clients, stay ahead of our competitors, gain a commercial advantage in the market place, launch new products, engage with a new audience and demonstrate that we are best in class?”
It may sound obvious and simple, but the answer to that question is “Marketing Strategy”. By implementing a solid marketing strategy, you’ve started to answer your questions. And marketing comes with a powerful hinge pin partner - Business Development. I’ll explain: without having the right marketing tools, branding, message, campaigns, strategy, goals, targets and objectives in place, the business development sales team, and the business itself, simply can’t win or attract new business and clients as they simply don’t have the right tools in place. It’s a scary thought to think that nobody’s heard of you and is unaware of exactly what benefits you can bring. And that’s just for starters. Rewind the clock back five years, and the way consumers shopped was completely different to today. Having a strong online presence with a strong and well-respected brand is a key ingredient to the success of your marketing strategy, business and ROI. When you start to break down what makes a good marketing strategy, how do you reach out, and where’s the right starting point? The below demonstrates that video, which is only one successful ingredient, is leading the way as it continues to play a huge role in business growth. Quick insight into video stats: • Businesses that use video grew revenue 49% faster than nonvideo users. • 71% of marketing professionals name video as the type of content with best ROI. • Video on a web landing page can increase conversion by 80% or more. • 82% of Twitter users watch video content on Twitter. • YouTube has over a billion users, almost one-third of the total internet users. • 45% of people watch more than an hour of Facebook or YouTube a week. • 87% of online marketers use video content.
Having a strong online presence, a strong and well respected brand is a key ingredient to the success of your marketing strategy, business and ROI. together we identify the target audience and the best route to deliver the right message whilst implementing an action plan and campaign strategy. Married within our offering, TBS UK also have a full marketing infrastructure in place, enabling clients who require more than individual campaigns to have a cost effective whitelabelled outsourced marketing department should they require it. So why not kick start planning your 2018 marketing strategy today by contacting TBS UK to find out more and see what we can do for you? Simon Downing, Commercial Operations Manager, Total Bodyshop Solutions UK.
Here at TBS UK, a leading marketing, website, digital marketing and video production company, we consistently think outside the box and add value to each and every marketing campaign. Combined with getting a true understanding of our clients’ objectives by using our highly skilled team of marketers, brand experts, industry knowledge, website and digital designers. Each project, regardless of size, starts off with a gap analysis where
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Tradition is dead. Long live tradition. Matt Churchill, Head of Hiscox Futures, examines the symbiotic relationship between tradition and innovation and shows how reliance on just one is a reckless avenue to take.
hen Winston Churchill spoke those words back in 1953 he was addressing the Royal Academy of Art. More than sixty years later, the sentiment is no less relevant to insurance.
We work in an industry that has traditions dating back hundreds of years and can be found in the fabric of what we do and how we do it. It can be seen in the way we underwrite and price risks, how we meet the needs of our customers and most importantly how we earn the trust of those we promise to protect. So what of innovation? Is our industry in danger of becoming a corpse?
There are hundreds of start-ups appearing who believe “traditional insurers” are slipping behind in innovation
There are hundreds of start-ups appearing who believe “traditional insurers” are slipping behind in innovation; that we cling far too much to tradition and have failed to change and innovate. On a daily basis we read of the next exciting entrant, and the range of technology they are deploying, from chatbots and sophisticated ID verification tools to smart new apps, connecting a customer with their insurance at any time of day or night. They can access risk information from a million different sources in milliseconds and are engaging new audiences with radical new business models. No tradition is safe from being questioned, challenged and toppled.
An innovating industry
Perhaps unlike our neighbours in banking, insurance has made a swifter and, more importantly, earlier attempt to engage, to partner and support the new wave. The creation of Hiscox Futures, a multi-skilled, multi-region innovation team, is our own effort to understand the changes occurring, to partner with startups, pilot new technologies and embed the resulting knowledge into our business. One of our core values is to challenge convention, so with tradition all around us, we strive to put our values into practice and try new things. We are very fortunate to witness things that were not possible five years ago and have the opportunity to work with some of the brightest and best in improving the experience of our customers and the satisfaction of our colleagues. One area of focus has been exploring the applications of artificial intelligence across the business. The opportunity to digitise customer journeys, to have the purchase process, coverage queries, claims, MTAs and renewals all handled by an automated system was and remains an appealing one. But during our research, amongst the whirlwind of innovation and the seduction of automation, we caught a glimpse of tradition and the necessary function it plays. Working with one of our skilled Hiscox claims handlers, we were reminded of one of the most important traditions of all; one that is not specific to our industry but is one of our core values: Being human.
The human touch
To have the ability to truly empathise with someone who feels violated
because their house was broken in to, or who has lost something of sentimental value that far outstrips the replacement cost, is something we do not believe a machine can ever replicate. The lights may well be on but the heart and the humanity simply aren’t there. The recent news of a doorstep lender’s catastrophic decline and fall is a good example of this, albeit from a neighbouring industry. The loss of the traditional, familiar and human interaction to manage repayments and maintain strong relationships, replaced by a digital solution, was flagged as the key factor in the lender’s troubles. It is reminder enough of the role that certain traditions play in any business that wishes to be successful down the ages. So who will be successful? We believe it is those who understand being human is something that can never be truly imitated. It is those that combine innovation with tradition and core values. The ones who know that to build an artificial intelligence to deal with customers’ claims you first need to understand those times when only a human touch will do. It is also those that believe that, whilst digital offers many benefits, the real value can be found in offering customers a choice. We live in a digital world, but we must always be aware of the role that tradition plays in any true innovation or risk becoming a Sunday roast. Matt Churchill is Head of Hiscox Futures.
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Will Blockchain take your job? Gary Nuttall, Distlytics Ltd, discusses the emergence of blockchain technology, the benefits this can have for the insurance industry, and the impact that blockchain might have on employment. Some background
There are so many headlines of late about how technology is going to take insurance people’s jobs: Digitisation, Robotics, Artificial Intelligence, Drones, VR/AR, the list grows ever longer. But for this article we’re going to focus on the ‘B-Word’, more commonly known as Blockchain. Many articles on the subject start with a history of blockchain, how it’s the foundation of a cryptocurrency called Bitcoin which can quickly descend into techno-babble about Merkle Trees and Byzantine Fault Tolerance. My advice here is: forget what you have been told so far! The great news is that you don’t need to understand the inner workings of the technology to see how to use it. By comparison, most readers probably haven’t heard of TCP/IP or HTTP but are more than able to use the Internet and World Wide Web. To help, I’ll start by dispelling a few misnomers. There is no one blockchain (although some techie evangelists may argue that the Bitcoin Blockchain is ‘the’ blockchain). There are in fact many blockchain protocols (of which Bitcoin, Ethereum, Monax and Hyperledger are some of the better known ones). Some are deployed as public (which means anyone can have access) whereas others are deployed as private/permissioned, which means they’re accessible only to approved organisations (rather like an insurance syndicate). Blockchains are not just about cryptocurrencies; they offer the potential to record asset ownership, transfers, document links, provide identity management and so much more. A blockchain implementation is, if well designed, very secure; people talk about hacks of exchanges as evidence that blockchains aren’t secure. That’s a bit like saying that a break-in at a bank branch is proof that the entire banking system is insecure. Blockchains and cryptocurrencies aren’t all about illegal activities such as drug dealing on Silk Road, ransomware, etc. Whilst the likes of Bitcoin are connected with payment for nefarious activities, so too are the British Pound and US Dollar.
Blockchains are not just about cryptocurrencies; they offer the potential to record asset ownership, transfers, document links, provide identity management and so much more Distributed: All participants in a transaction have an exact copy of the data, and the system ensures it’s exactly the same. If your existing job is involved in reconciling outputs and inputs between systems then beware; in future there will be much less need for your expertise! Decentralised: The system is highly resilient as it’s not based on the traditional architecture of a monolithic system that everyone connects to. With participants (known as nodes) keeping synchronised copies of data, if individual organisations connections fail the overall system keeps running. This makes it far more resilient than the traditional data centre-based approach, which has led to some serious system outages. Cryptographically secured: The protocols deploy cryptography and encryption to secure data and access to data. This makes it highly resilient to ransomware attacks. Programmable platform: Blockchains are programmable through something called ‘Smart Contracts’. These are computer programs that reside on a blockchain and are designed to automatically execute when triggered by external events.
How does it work?
The short answer is that it is a protocol used to provide an immutable, distributed, decentralised, cryptographically secured, programmable platform. Ok, so that’s quite geeky, so let’s break it down a bit further:
The terms Blockchain and Distributed Ledger Technology are sometimes used, albeit incorrectly, interchangeably. I wouldn’t get too hung up about this as it’s quite like using the term ‘Hoover’ when we actually mean Vacuum Cleaner. The analogy works well because quite often people talk about their Dyson, which is neither a hoover nor a vacuum cleaner. The important thing is that all three are used for cleaning dust!
Immutable: It is a write-only database. This means that you cannot delete or amend a record after it has been saved. If a mistake is made with data entry, a new record has to be written to provide the correct details and the old record is retained. It is therefore very easy to extract a complete audit trail. If you are an auditor, this may mean that your job will change as auditing will be much easier.
When two organisations transact a piece of business, each party maintains a record of the transaction (for example, Party A paid £20 to Party B in exchange for 1 unit of goods). These details are recorded in a Ledger. In fact, each party maintains its own copy of the ledger. This means that there are accounting and system processes needed to make sure both parties have the same data
What is a blockchain?
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If you work for an intermediary, then there is a chance that blockchain will provide a disruptive platform that will facilitate disintermediation as there is a risk of data corruption, loss, etc., as copies of data are transferred. This keeps accountants busy and auditors happy. Imagine that rather than everyone having their own ledger, we all agree to put all the data in a single, Mutual Ledger. Just imagine, no more reconciliation between systems! Now, take this a step further and provide a mechanism where everyone gets an identical copy of the ledger - a Distributed Ledger. It behaves like it’s the single source of truth, removes the need for reconciliation and, because everyone has an identical copy, it means that it is decentralised (no single point of failure).
investment in companies wishing to exploit blockchain in the insurance sector.
In a nutshell, that’s Distributed Ledger Technology. Now, what’s blockchain? Let’s go back to our ledger (think of an old fashioned paper one if you like, so probably quite familiar to some insurers!). Imagine at the bottom of the page of the ledger (or Block), we perform some clever maths (known as a hashing algorithm), which produces a unique electronic fingerprint generated from that page, so that if any change was made on the page, the fingerprint (the hash), would change. Now, at the beginning of the next page, we take the hash of the previous page and use it as the first entry on the next page. We then fill in that page with transactions, and at the bottom of that page we perform a hash function again (this now includes both the data and the hash of the previous page). So each page (or Block) is linked (or Chained) to the previous block, and that’s a blockchain.
Will it really affect my job?
General examples of blockchain use include tracking assets (Everledger is what I consider the poster child in this respect, with their platform that tracks diamonds – right the way from extraction, preparation, cutting, polishing, distribution and sale). Other examples of supply chain tracking range from Provenance, which tracks high quality goods back to origin, through to Maersk shipping, which is trialling the technology to track shipping containers. Then there’s charity donation tracking, conveyancing, identity management, vehicle ownership, trade finance, media tracking, performing rights payments, and much, much more.
Blockchain will result in existing roles changing, but this is going to be a slow-burn activity, as convincing insurers to shift their investments away from existing legacy applications and towards emerging technologies will take time. Some industry commentators suggest three to five years, and others believe that it will be even longer. We’re therefore a few years away from seeing job losses as a result of blockchain. Whether the same can be said about Robotics, Process Automation and Artificial Intelligence is a subject for another day!
There are a number of major consortia (e.g. B3I, A group of 15 Reinsurance companies, and R3CEV, a sizeable ‘blockchain inspired’ financial services consortia, which includes insurance companies) who are developing Proofs of Concepts (PoCs) and Pilots and who are likely to soon be moving to production platforms. Watch the news for announcements soon.
This is a new technology; the first protocol was published less than ten years ago, and concepts such as smart contracts have only started to be used in the last two to three years. This makes it an interesting emerging risk in its own right, for which insurance products could be developed to both take advantage of the technology and to insure it!
If you work for an intermediary, then there is a chance that blockchain will provide a disruptive platform that will facilitate disintermediation. If you look back at the impact that the aggregator market has had on the motor broking business, then this could have similar consequences. If you work in a role that involves shuffling data around between systems, or reconciling or auditing the system that moves the data around, then yes, your role is at risk. Smart Contracts could speed up many processes by automating manual activities, for example, handling claims bordereaux files. The major consultancies are suggesting cost savings in the market of in excess of $10Bn p.a.
Gary Nuttall is a well-known evangelist and thought leader on blockchain, and particularly its adoption in insurance. He provides bespoke education and consultancy through his own practice Distlytics Ltd (www. distlytics.com).
The insurance startup (or ‘Insurtech’) community is developing platforms ranging from very specific solutions (e.g. mobile phone cover and flight delay insurance) through to full stack platforms such as ChainThat and Blocksure (of which the author is an advisor). The Insurtech scene, particularly fuelled by a recent phenomenon known as Initial Coin Offerings, an alternative way of raising funding very quickly, using blockchain, is seeing significant
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Digital Ecosystems Insurtech investments must be future-proof as emerging digital ecosystems are set to transform the industry, writes Ruth Fisk, Hyland. he latest reports show that the insurance industry has embraced technology and is investing heavily in insurtech, which is now seen less as a disruptive challenge and more as a transformative force. However, to ensure those investments pay dividends for years to come, it is crucial to consider the vast changes technology is bringing about in all walks of life and the way those changes will affect insurance.
Smart homes, driverless cars, automated farming and intelligent healthcare are all set to revolutionise the insurance industry in the coming years, and these are merely some of the areas where the digital transformation is currently most advanced and therefore predictable. Undoubtedly, great changes are afoot in all industries powered by the advent of digital ecosystems or, as it is often simplistically referred to, the Internet of Things. Despite what the term suggests, these complex infrastructures are not yet entirely interconnected as they are being developed at the company or, at best, industry level. However, each one provides either an exciting new market for insurance, or a step-change in an existing market that insurers canâ€™t afford to miss. To exploit these emerging and future markets, connectivity and inter-operability will be crucial, so todayâ€™s digital strategies need to be devised with that in mind. To a large extent, digital inter-operability is already a highly valuable attribute. It allows new consumer technologies and interfaces to be seamlessly added to an insurerâ€™s back-office systems, insurtech acquisitions to be quickly integrated and partners along the supply chain vetted for regulatory and security risk.
Connecting digital ecosystems
But while partner networks of insurance companies so far have been well-defined and understood, typically an established network of distribution partners, another set of partners for claims, and a range of organisations and institutions they interacted with for regulations, industry education, and technology solutions, firms will increasingly need the ability to connect to a whole new set of digital ecosystems being created outside of the sector. Smart homes and buildings, for example, will be packed with sensors, as well as a whole range of Internet-enabled consumer devices that can all play a significant role in improving safety and reducing accidents related to residential or commercial property. With these buildings even able to report any damage they or their contents have sustained, they could even talk directly to the insurer, providing an almost fully automated claims process with inbuilt proofs of purchase, condition and damage. Changes in the automotive sector, whether fully autonomous vehicles become the norm or not, are also moving towards connected tech, which both improves safety and provides new
54 Modern Insurance
The development of digital ecosystems not only has cost benefits but will help insurers to build their brand on outstanding customer service ways to communicate with outside interests such as insurers. And smart agriculture, where farm machinery is highly automated and relies on big data and satellites to operate at maximum efficiency, will affect both the insurance of farms and machines and the use of crop yield hedging and insurance products. As leading companies in these sectors build their own interoperable intelligent platforms, the data being accumulated in these new digital ecosystems is becoming ever more precise and useful for insurers looking to enhance their customer offering. Against the backdrop of transformational change, information management must remain at the heart of the process. In healthcare in particular, interoperability of electronic patient records is an important part of future-proofing IT systems. Insurers are ideally placed to play a leading role in taking that interoperability further, ensuring that data can be used securely beyond frontline healthcare. As insurers use this information to ensure efficiency in the healthcare journey of their client, the benefits will spread to areas such as speedier rehabilitation. Beyond patient records, smart medical devices, wearables and other connected technologies are already transforming healthcare, and medicine looks set to become much more personalised to the individual, using big data to extrapolate best outcomes and understand risks. This is not only familiar territory to insurers, but also highly relevant both to the pricing of premiums and driving efficiencies in treatments. However, regulation is likely to play a major role in how this aspect of healthcare develops.
User-friendly claims systems
In all these cases, the development of digital ecosystems not only has cost benefits, but will help insurers to build their brand on outstanding customer service. This aspect will be enhanced by the consumer-facing insurtech interfaces currently being developed in order to provide easy communication channels for customers. Thus, a provider with a user-friendly claims system, available on
Against the backdrop of transformational change, information management must remain at the heart of the process a range of different devices, will be trusted by the customer to make a bad situation as easy to cope with as is possible, which is precisely why they took out insurance, and to bring about the least costly solution by getting the optimum care for their injured worker or sick family member, or indeed rapid reconstruction of a home or repair of a complex and expensive car. Therefore, great service will differentiate a brand in a market where many lines could otherwise become highly commoditised, price competitive and ultimately unprofitable.
by a strong enterprise content platform will be essential. This will also allow a degree of automation in compliance processes, which can otherwise become prohibitively expensive. In order to ensure they can adapt these functions, insurers must choose platforms that are flexible enough to be tailored to meet a company’s changing needs. IT upgrades can then be built from the ground up, with suitable input from users and affected stakeholders.
This correlates closely with the approach the industry is currently taking to insurtech. PwC’s Global Insurtech Report 2017 found that 94% of companies are prioritising better risk insights and customer engagement as the prime targets for their digital strategy. They are investing in key technologies such as data analytics and mobile that will support this transformation.
With insurtech and the emerging smart digital systems in other industries set to be the key to driving automation and efficiency, building brand loyalty and capturing shares in new insurance niches and sales channels as they emerge, the robustness of a company’s digital strategy will be key to success. To build these strategies, ambitious firms must take a holistic view encompassing the industries they work with and the customers they serve, and ensure that their systems are open and compatible with all emerging interfaces. Those who can rapidly get to this stage will be able to play key roles in developing multi-partner ecosystems with widespread commercial and social benefits.
The old and the new
But although insurtech has been enthusiastically adopted, many firms are still struggling to link their newer systems, whether that be an app for customers or a data engine for risk management, with the older IT infrastructure that underpins their operations. Enterprise information platforms are emerging as the preferred option to link these disparate systems because of the flexibility they provide in accommodating different protocols and document formats, and the unparalleled management control and overview they provide. These information hubs will also be an ideal way to ensure that data from across many companies and industries can be meaningfully interchanged. Enterprise information hubs that give case workers access to x-rays, doctor’s notes and feedback from apps all at once will also be able to allow staff to access any necessary insurance documentation from within the company, even when it is held in outdated formats. Naturally, it will also tie the many different channels of customer interaction to the insurer’s back office functions. Crucially, these enterprise content hubs can also provide a connection to the powerful data engines that will analyse data generated, and which are already proving a popular target for insurers’ tech investment strategies. AI and advanced business intelligence functions will eventually supersede this relatively simple data use, but will still require a platform or hub that links them to the wider company systems and makes them a driver for a highly automated and efficient workflow.
The key to success
All manner of data will be flowing among ecosystem partners to serve the customer: structured data, e-mail and text messages, document images, video, and data in many other formats. Insurers must be able to capture, route, and manage this information to effectively add value, and this includes the requirement to manage unstructured data with speed and cost efficiency. Success, the ability to profitably capture market share and respond quickly to new insurtech innovations, will increasingly be driven by the robustness of each firm’s digital strategy. Now is, therefore, the time for insurance companies to start building systems that can connect beyond one industry or sector; designed to improve efficiency and cut costs wherever unexpected events occur. This is a complex undertaking, and one that requires considerable expertise in risk management and underwriting. It is, therefore, an area that the large established insurance firms should excel in, and it will be difficult for digital challengers to compete. Ruth Fisk is Global Director for Insurance at Hyland.
As an added complication, future change will be taking place against a fast-moving and increasingly complex regulatory backdrop. With insurers potentially dealing with highly-regulated industries, such as healthcare, as well as financial watchdogs with strict rules on data security, the management overview provided
Modern Insurance 55
Just a thought
Just a thought
from Eddie Longworth Why is my toaster too small? recently bought a new toaster. Bright, shiny, plenty of buttons to press and an ejection mechanism that launches the toasted slice of bread into the air at a speed to rival the best efforts of a North Korean missile test.
Only one problem. A standard sized slice of white loaf is too large for the toaster. There is an annoying inch or so at the top of the slice that sticks out above the machine – never to be grilled to a crisp and juicy pale brown where butter will melt and marmalade will play lasciviously with my taste buds. Always destined to be pale and limp this annoying and now very distracting sliver of bread is fit only for the bin or the birds. Admittedly, it makes for happy pigeons, but I didn’t honestly buy the toaster for them – I bought it for me! So I have to ask myself, why is my toaster too small? Or perhaps (as any good consultant must consider) the bread is too large? In a world that is dominated by talk of everything being ‘customercentric’, it is clear that something has gone seriously wrong. The manufacturer has failed to consider the size requirements of the standard white loaf as sold in Tesco (and other leading stores) whilst no doubt proclaiming to all those willing to listen that the ‘customer is at the heart of everything that we do’. Sadly for them, this particular customer does not want extraordinary service, I do not especially want competitive pricing (within reason), or a branding campaign to make me marvel at the creativity of the TV advertising. The after-sales product guarantee proffered by the store salesforce, desperate to earn commission, falls on deaf ears, and the so-called ‘free’ delivery options had I bought it online fail to win my undying loyalty as a customer. What I want is a product that does the job it is designed to do – brown the entire slice of my slice of bread, on both sides. A product that is lovingly crafted by purpose-built machinery that never goes wrong. A product that sits nicely in the corner of my kitchen, often forgotten but always there when I need it. A product that sings with joy at the opportunity to perform the task for which it was designed. You may be wondering why it matters so much and, in truth, with a local pigeon population destined to grow fat on the discarded remains of my breakfast repast perhaps I should be grateful for this unexpected functionality.
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Demands for a customer-centric approach dominate the agenda and to such an extent that people who should know better lose sight of the main goal However, as I wander around the insurance claims and supply chain sectors where I choose to ply my trade, I often hear the phrase ‘customer centricity’ peppering the conversation. Demands for a customer-centric approach dominate the agenda and to such an extent that people who should know better lose sight of the main goal – which is surely to deliver a core service that meets real and genuine customer need. So my advice to any claims or supply chain manager out there that is looking to improve their operation is actually very simple (and, in this instance only, completely free of charge). Make sure the toaster fits the bread! Eddie Longworth is Director at JEL Consulting.
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10 MINUTES WITH
Jonathan Hewett Q A
Has the industry changed drastically since you started working in it?
Yes and no. In the mid nineties when I started my marketing career, it was all about data and about how data could be used to make better or more informed decisions in a timely way for the benefit of customers. In many ways, nothing much has changed; in 2017, it’s still very much about using data, there’s just far more of it and it’s more accurate. That’s especially true in regards to driver behavior score, crash detection algorithms or being able to reconstruct a crash. We just have much more data upon which to make ever more informed decisions. The drastic change has been about speed, availability and the tools with which to interrogate the data, but the theme of data is something that has been with us now for twenty-five years.
What has been the key positive or negative change in your area of the market?
The positive change has been the absolute focus and imperative around consumers. We’ve heard about customercentricity, and from my perspective that means making things simpler, easier and cheaper for customers. The industry actually understanding what it takes to reward customers and have more positive interactions over a longer period of time for mutual gain has been a big positive. The negative change in the insurance space has really been about the compensation culture and the high proportion of fraud that we see. What upsets me about that is that it’s based on inherent mistrust between consumers and providers, and that’s the thing that has to change. We have many more powerful tools to assess and understand fraud, both at the point at which a new customer
The drastic change has been about speed, availability and the tools with which to interrogate the data, but the theme of data is something that has been with us now for twenty-five years
There are no winners in fraud, and everybody suffers is taken on board or through specific events in their lives, and we need to use those for the benefits of all. There are no winners in fraud, and everybody suffers.
Who inspires you and why?
I don’t have one person that inspires me; what I always look for and admire most in people is a real force of will to change things, fierce determination to achieve results, and real focus, persistence and resilience. I find those traits and behaviours very inspirational, and I find people who demonstrate those types of traits very easy to work with and exciting to follow.
Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you?
I’ve been very fortunate in my career and I’ve worked with some great people. During my time at Royal Mail, I heard Allan Leighton provide the advice to us on a number of occasions that three things matter in business: execution, execution and execution. For a marketing guy like myself, always awash with lots of good ideas and a desire to change the universe, it’s important to balance these things against the need to execute and turn things from slogan or powerpoint into products or services that make customers’ lives better or improve returns for the shareholders.
If you were not in your current position, what would you be doing?
What I’d like to be doing is playing golf. What I would more likely be doing is working in a consumer orientated business, whether that’s in financial services or insurance. That would really interest me, given that we’re currently at this once in a lifetime stage, certainly from an insurance perspective. What is now available in terms of technology or data analytics tools can radically transform products and services for the benefit of customers and the stakeholders and shareholders. So focusing on the customer is what I’d be doing, if it wasn’t possible for me to play golf each and every day.
Jonathan Hewett is Group CMO of Octo Telematics.
SAVE THE DATE Customer Service Excellence Awards Wednesday 25th April 2018 London CONTACT Event enquiries | email@example.com | 01765 600909 Sponsorship enquiries | firstname.lastname@example.org | 01765 600909
58 Modern Insurance
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Published on Nov 10, 2017