The Society of Claims Professionals - Summer 2019

The Society of

CLAIMS PROFESSIONALS

Issue 2 Summer 2019

Changing lanes The evolving world of motor telematics

Future Minds Supporting the mental health of Generation Z

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A fine time?

Reflecting on GDPR a year later

Further insight Expanding your knowledge beyond claims

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INTRODUCTION

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elcome to the second edition of your Society of Claims Professionals ezine.

Since the launch in January, your board have been working hard to embed structure and look at how we best shape and grow your Society.

There have been a number of appointments within the board, covering areas requiring greater focus, to include membership; the New Generation Group; local institute liaison; marketing; and content. We have also looked at the board renewal process and will ensure there is a fair process when re-election takes place in January 2020, with the new positions being advertised publicly.

We have met with a number of organisations with a claims focus, looking at how we can develop a more collaborative approach to include the Financial Conduct Authority; the British Insurance Brokers Association; the Chartered Institute

of Loss Adjusters; the Association of Personal Injury Lawyers; the Forum of Insurance Lawyers; the Association of Customer Support Organisations; and new CII president, Nick Turner.

Our efforts continue here, with further meetings planned.

OUR DIRECTION There is better structure around content, with James Moorhouse, content manager at the CII, producing some excellent material covering good practice guides, news articles and videos on what we believe to be key areas. We welcome your feedback here, as without it, we are very much led by the direction of the board and the CII. If there are any claims topics you would like covered, please do get in touch via our contact email.

We have been involved in a number of judging panels, including the CII Awards and the D&I Awards and will be representing your Society at the upcoming Claims and Fraud Summit in a panel discussion on customer vulnerability.

We currently have close to 9000 members, but want to extend our reach and to do this we want to understand what you want from your Society. We believe our approach and content to be relevant and that our board is a good representation of the claims market. Only with your regular feedback can we ensure that we are, and we remain, relevant.

For more information, contact: socp@cii.org.uk â—?

Sue McCall is chair of the Society of Claims Professionals www.socp.org

EXTENDING OUR REACH Sue McCall gives an update on the growth of the Society of Claims Professionals

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GROUP RISK

GROUP SUPPORT Once again, the group risk industry provided financial support to a record number of families during 2018, as we find out

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ndustry data compiled and published by Group Risk Development (GRiD) showed that a total of more than £1.68bn was paid out by the group risk industry during 2018, a £64.5 million increase from 2017. More UK families than ever (26,505) were helped to avoid financial hardship after the death, illness, accident or disability of a loved one.

A total of 5,595 people were helped back to work after a period of sick leave and there were a total of 75,466 interactions during 2018 with the additional help and support services that are funded by group risk insurers.

Group life assurance policies paid out total benefits to the value of £1.117 billion (an increase of £50.2m on 2017); group income protection policies paid out a total of £482.7 million p.a. (an increase of £16.2 million p.a. over 2017); group critical illness policies paid out benefits totalling £82.4 million (a decrease of 1.9 million compared with 2017).

FINANCIAL LIFELINE The average claim amounts (£114,691 for group life; £26,322 p.a. for group income protection; £66,824 for group critical illness) evidence the fact that these benefits throw a vital financial lifeline to people regardless of their salary, age or position and that they should not be seen as simply perks for the higher paid.

For group income protection, as well as the claims paid, there are a material number of cases each year where people are helped back to work both before and after a claim becomes payable, often with the support of the insurer, the employer or both.

GRiD has captured details of the cases where the insurer supported a return to work with active early intervention (such as fast-track access to counselling or physiotherapy, funded by the insurer) before that person was eligible for a monetary payment. 3,551 people (36.3% of all claims submitted, up three percentage points on 2017) were able to go back to work during 2018 because of such early intervention (of which, 52.1% had help to overcome mental illness and 17.3% had support overcoming a musculoskeletal condition).

HELP AND SUPPORT As well as paying claims and helping people back to work, group risk insurers give access to everyday services that can be used to help and support people on a day-to-day basis. This is via a number of ways, including:

● An associated employee assistance programme; ● Facilitating a second medical opinion; ● Fast-track access to counselling, physiotherapy or other treatment; ● Helping people make changes towards better health behaviours; ● Liaison and mediation; ● Bereavement support and help with probate.

In total, there were 75,466 interactions during 2018 with the additional help and support services that are funded by group risk insurers, giving daily value to employers regardless of whether or not a claim was made under their policy.

Cancer was the main cause of claim across all three products during 2018 – with the highest for group critical illness (69%), followed by group life assurance (42%) and group income protection (24.5%). Mental illness was the second highest cause of claim for group income protection (24.1%). ●

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WAS PAID OUT BY THE GROUP RISK INDUSTRY DURING 2018

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£1.68bn socp.org.uk socp.org.uk / Society / Society of of Claims Claims Professionals Professionals / Summer / Spring 2019

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T E L E M AT I C S

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elematics insurance or usage based insurance (UBI) has been operating in the UK market for close to a decade now as a means to improve access to insurance for high risk, inexperienced motorists. Much of the focus has been on pricing and risk mitigation, but several factors are at play that will open the way for UBI data to become commonplace within claims.

Firstly, there is increased consumer appetite for telematics (based on our research, 60% of consumers want telematics insurance). This is underpinned by the evidence of safety improvements/reduction in claims loss ratios (35% reduction in road casualties over the past seven years as telematics adoption in young drivers increased).

There is also the fact that the cost of offering telematics has halved in the last few years.

Finally, data from cars is on an upward trajectory with the growth of car connectivity.

By 2020, all new cars in the UK are expected to be connected. There is therefore a massive opportunity for claims to become streamlined through telematics data, allowing claims professionals to focus on delivering valued customer support and claims investigation.

Already the motor insurance market has vastly improved claims processes in recent years through direct repair programmes, virtual claims handling and touchless claims handling.

Technology is used to capture damage or invoices, run a system audit and if the claim meets the approved criteria it is automatically paid without human involvement.

FRONT FOOT So where does UBI data fit in? Firstly, UBI enables insurers to get on the front foot at first notice of loss, helping to provide a better consumer experience post-collision. Through near real-time collision notification, the insurer is able to be proactive in managing the claim, calling the driver to check their status

and putting relevant services in place – recovery, car hire etc.

This proactive contact enables the insurer to collect valuable information regarding the circumstances of the incident before memory becomes blurred or third parties intervene. It also provides the opportunity to reassure and confirm to the driver the claims process.

Claims are the insurance sector’s shop window – UBI presents insurers with a unique opportunity to deliver great service at the time the customer appreciates it most. It is an experience that can make a huge difference to the customer’s shopping behaviour at renewal.

The second major benefit is the data collected in relation to the incident, for example road type, speed, braking and force of impact. This can help verify a claim and determine if it should be paid, defended or rejected. Ultimately, it speeds the whole claims process, reducing claims cycle times and improving the customer experience.

RETURN ON INVESTMENT

If we cross to the US, while many insurers have incorporated third-party data and analytics into their application and underwriting processes, few have integrated data deeply into their claims process.

To assess the effect of having more data earlier in the claims process, LexisNexis® conducted a study of claims among AM Best’s (the US) top 20 carriers. The results showed that having more data, earlier, had considerable benefits to claims outcomes.

For third-party bodily injury settlements, the study found that more data earlier resulted in: ● 15%–25% lower severity payments ● 25%–49% lower attorney involvement ● 5%–15% shorter cycle times UBI data integrated as part of the claims process can create greater efficiency, reduce costs and increase customer satisfaction. ● Graham Gordon is director of global telematics at LexisNexis Risk Solutions

While the benefits of UBI data in claims are clear to us, telematics is still a niche proposition in the UK. Furthermore, the number of telematics insurers using UBI at claim is fractional. Incorporating UBI data into the claims process requires investment but currently this is hard for insurers to justify based on the low market penetration of these policies.

UK ROAD CASUALTIES 2011

2012

2013

2014

2015

2016

2017

Total Casualties

203,950

195,723

183,670

194,477

186,189

181,384

170,993

17-19

18,529

16,620

14,261

14,715

13,774

12,772

11,984

16-24

49,364

46,530

41,388

42,862

40,576

37,979

34,951

25-59

107,573

105,382

100,762

107,270

103,120

92,101

95,732

60+

23,979

23,357

22,712

24,544

23,369

23,409

22,375

Source: LexisNexis

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T E L E M AT I C S

EVOLVING TELEMATICS Graham Gordon looks at how claims are changing through connected car data

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GDPR

GDPR A YEAR ON 6

This time a year ago, insurers were waiting and wondering to see whether the newly introduced GDPR would produce a swathe of new claims. A year on it seems awareness is building and so are the fines, as Liz Booth reports

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little more than 14 months ago, the European authorities introduced the General Data Protection Regulation (GDPR), with fines of up to 4% of global turnover.

The move resulted in hundreds of thousands of firms worldwide changing their systems, but also caused concern that smaller firms in particular were not prepared and could face penalties.

It also left the insurance industry wondering whether it would be facing a deluge of claims, relating to these complaints and inquiries.

A year on the European Data Protection Board (EDPB) has surveyed the Supervisory Authorities (SAs) of the EEA and found, from the very first day of application, the first cross-border cases were logged in the EDPB’s case register.

There is a current total of 446 crossborder. 205 of these have led to one-

stop-shop (OSS) procedures. So far, there have been 19 final OSS outcomes.

At a national level, most SAs report an increase in queries and complaints received compared to 2017. More than 144.000 queries and complaints and more than 89,000 data breaches have been logged by the EEA Supervisory Authorities. 63% of these have been closed and 37% are ongoing.

European data authorities report fines totalling more than €56 million so far – but bear in mind the French watchdog fined Google €50 million alone.

Just six days after producing its annual review, the EDPB announced that the Belgian data authority imposed its first financial penalty of some €2,000, concerning the misuse of personal data for election purposes.

The EDPB said “Although the fine is modest, the message is not: Data protection is an important matter to us all, but data controllers must assume their responsibility, especially if they have a government mandate.”

Generally speaking, awareness of the right to complain has grown

said the EDPB. 67% of EU citizens polled recently indicated that they have heard of the GDPR, 36% of them said that they are well aware of what the GDPR entails.

In addition, 57% of EU citizens polled indicated that they are aware of the existence of a public authority in their country responsible for protecting their data protection rights.

This result shows an increase of 20 percentage points compared to 2015.

Looking back on the first 12 months, Andrea Jelinek, chair of the EDPB, said “It has been a challenging first year, but we have reached the goals that we set out to achieve and we intend to keep up both the work and the pace.

“Earlier this year, the EDPB

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GDPR

adopted its work programme for 2019 and 2020. We will also see several cross-border cases carried out by SAs leading to a final outcome in the coming months. Last but not least, we want to continue to listen to and to work together with the people who can give us the best

insights into the day-to-day practice of data processing. An ambitious programme, but I am certain that we, as European data protection authorities will find more and more synergies, which will increase our effectiveness.”

RISING FINES Meanwhile, in the UK, the average fine levied by the Information Commissioner’s Office (ICO) has risen 14% in the year since the introduction of GDPR, rising from £125,000 in 2017/18 to £143,000 in 2018/19, according to law firm RPC. RPC says that since the introduction of GDPR on May 25 2018, it appears that the ICO is becoming more willing to levy bigger fines, especially in high-profile cases of data breaches and misuse.

IN THE YEAR SINCE GDPR WAS INTRODUCED, THE ICO HAS LEVIED A FINE OF £500,000 ON TWO SEPARATE OCCASIONS

In the year since GDPR was introduced, the ICO has levied a fine of £500,000 on two separate occasions, having never done so previously. This is the maximum fine the regulator was allowed to levy, as the incidents took place under the previous Data Protection Act 1998.

GDPR gives the ICO the power to fine businesses up to a maximum of €20m or 4% of global turnover for the most serious data protection incidents.

RPC says that it expects any increase in the size of ICO fines to be gradual and to come in response to a major breach of personal information on individuals.

Richard Breavington, partner at RPC, said “The ICO has already begun to ratchet up the value of fines and it has barely scratched the surface of its powers.

“The first large-scale loss or misuse of individuals’ data under GDPR will be an important ‘test case’ for the ICO, which will show us how far the regulator is prepared to go in using its new powers – this is a key area to watch.”

He added “However, we don’t expect to see blockbuster €20m fines being levied in the near future. So far the regulator has only started to hit businesses with the £500,000 maximum fine for breaches under the old Data Protection Act.” ●

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EVOLUTION OF ONE-STOP SHOP PROCEDURES MAY 2018-APRIL 2019

40

20

2019 Ma 20th y

April 2019

Mar 2019

Feb 2019

Jan 2019

2018 Dec

Germany: Number of procedures initiated by SAs from 7 Regional SAs

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Number of procedures initiated by SAs from 21 EEA countries

2018 Nov

2018 Oct

2018 Sept

2018 Aug

2018 July

0

2018 June

Number of Procedures

60

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M E N T A L H E A LT H

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FUTURE MINDS The challenges for employers and the claims society of mental health conditions in Generation Z

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ccording to UK government statistics, one in four people will suffer a mental health problem in the UK in any given year. Anxiety and depression are the most common mental health problems and although they are often a reaction to a diďŹƒcult life event, they can also be caused by work related issues.

Whether work is causing the health issue or aggravating it, employers have a legal duty to help their employees. There is currently a legal requirement for work related mental health issues to be assessed, to measure the levels of risk to staff and where a risk is identiďŹ ed, steps taken to remove it. Employers may have further legal obligations to make reasonable adjustments in the workplace, not to mention the moral obligation employers have to look after the well-being of individuals in their organisation.

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M E N T A L H E A LT H

The lead case on stress is Walker v Northumberland County Council (1995).

In this case, an employer failed in its duty towards an employee whose workload was not reduced following a nervous breakdown. When the employee had a second nervous breakdown, the employer was liable because, among other reasons, by then it should have reasonably foreseen the effects on the employee of the workload not having been reduced.

Against this backdrop, we have a future workforce – Generation Z (Gen Z) – people born since 1997, a group within which anxiety has now surpassed depression as the most common reason that Gen Z seek mental health help.

A study by the Stress Management Society in the UK in 2017, concluded that 37% of teenage girls suffered with anxiety and depression, compared with 15% of boys. The difference between boys and girls is stark and could be indicative of a reluctance on the part of the boys to admit to their feelings. According to Forbes, significant research is showing not only that there is an ongoing mental health crisis in the US and beyond, but that the effects are most transparent in young adults entering the workforce now. In the US, one in three teens between the ages of 13-18 has an anxiety disorder.

School and the pressure to get good grades is cited as the leading source of stress, with overprotective parenting and social media also attributing.

This anxiety will inevitably transfer to the workplace as Gen Z leave the education system and move into employment. Will employer’s duties be more onerous when on warning that there is a higher level of fragility among the younger workforce?

Will those warnings be ignored and create a spike in stress claims? Are stress claims the new noise-induced hearing loss claims?

VULNERABLE CLAIMANTS Another area to consider is how to manage a claim brought by a Gen Z (or any other identified vulnerable customer for that matter) for, say, a major loss under a household policy?

Statistically, a person is eight times more likely to suffer stress within 12 months of a major flood loss.

A claims call centre environment has its own pressures, with the requirements to answer calls quickly, deal efficiently, while maintaining empathy and calm during what is a difficult time for the client.

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STATISTICALLY, A PERSON IS EIGHT TIMES MORE LIKELY TO SUFFER STRESS WITHIN 12 MONTHS OF A MAJOR FLOOD LOSS Within technical claims teams, handlers are exposed to some circumstances that would prove challenging for even the most hardened claims expert to deal with.

One that sticks in my memory was a fatality involving a mother driving her car along a straight road with her 11- and 9-year-old children in the back of the car. She was hit almost head on by a young driver who was test driving a sports car and overtaking on the wrong side of the road. She lived for around 1-minute post-impact and turned to her son and asked him to look after his sister for her. They then witnessed her pass away.

I recall being moved to tears when the claim first came in and being quite distraught as I investigated it. I viewed the stretch of road where the

accident occurred, saw the damaged vehicle and I met with the estate’s solicitors on a number of occasions before we settled the case.

Catastrophic injuries, sexual abuse, birth defects and house fires involving fatalities are just some of the incredibly difficult claims a team may have to deal with.

BETTER CULTURE Creating a “culture of fair treatment” will help manage the issues we as a profession are facing around mental health. This statement transcends all the issues discussed, so whether an employer, working alongside a colleague with mental health issues, handling a claim or working in a call centre environment.

If our approach is to create a culture of fair treatment for our staff and customers alike, we have a sound base to support Generation Z as they move into the workplace.

The Society of Claims Professionals has issued a Good Practice Guide following the publication of the Vulnerable Customers Report by the Financial Conduct Authority.

A vulnerable consumer is defined as “someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”. The guide looks at creating a “culture of fair treatment” and gives guidance on how to go about this to include awareness training, support from relevant charities, signposting customers and mirroring successful initiatives outside of the profession.

As we are also considering our own employees, a robust and thoughtful policy will need to be developed within Insurance organisations.

To read the guide, visit: www.socp.org ●

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Sue McCall is Chair of the Society of Claims Professionals

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C O M M U N I CAT I O N

CURIOSITY –

PROFESSIONALISM’S SECRET WEAPON Richard Smith gives his take on the importance of communication with fellow underwriting professionals 10

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was excited to see the launch of the Society of Claims Professionals earlier this year.

Membership creates a fantastic opportunity to demonstrate the expertise, responsibilities and trust of the 20,000 people working in UK claims.

After all, the moment of truth for our customers is when the fair, correct claims settlement payment arrives.

While reading the excellent British Insurance Brokers Association (BIBA) guide to claims inflation, I was reminded of how claims people often act as the early warning system of our profession in spotting trends, problems and interesting issues develop. Thus, helping sustain our industry for the benefit of customers and society.

Whatever your level or role in claims, building and maintaining your knowledge and understanding the part you play in the overall customer experience of our profession is vital. Our role as insurance professionals is changing as we understand more about risk, customer behaviour and data and what is also changing is

how this information is converted into products, is managed, is communicated and how it influences customer behaviour.

Claims professionals of the future will need to have wider knowledge beyond what is going down on their desk, laptop or tablet.

ASKING QUESTIONS Whether you are dealing with straightforward household or motor claims; adjusting huge business interruption claims; rebuilding people’s lives after life changing accidents; shaping business resilience

programmes; identifying fr aud; or replacing lost luggage for distraught holiday makers, asking questions about your decisions influences and impacts the many stakeholders around you and will enhance your competence and demonstrate your professionalism.

But are you curious enough to rise to the challenge? Are you brave enough to deepen your insight?

Not just about the technicalities or legalities of claims – but what that knowledge means to others and how it is deployed to help customers, brokers and colleagues.

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C O M M U N I CAT I O N

INFORMATION READY

I ENCOURAGE YOU TO FIND SOME QUALITY TIME WITH UNDERWRITERS AND FIND OUT HOW YOUR CLAIMS WORK AND INSIGHTS INFLUENCE THEIR DECISIONS

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Richard Smith is managing director of Richard Smith Consultancy and Training

STARTER QUESTIONS

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Curiosity, alongside good coaching and exposure to interesting cases, is the bedrock of what I, and many others, call commercial acumen.

Curiosity is one of the most important attributes needed for insurance professionals.

No one can be taught to be more curious. People can be encouraged to find out more and pointed in the right direction. Everyone can help themselves by looking around at what’s happening, listening to others and asking questions. It is a good way to learn and makes life more interesting.

It is a personal responsibility to learn – people around you can help and challenge you, but only you can make it happen. Information has never been so readily available – the CII and the Societies websites are a great place to start.

Take some time each day to look at international, national and regional news and ask yourself whether what you are reading could impact what you and your customers are doing.

But what insight are you getting from the cases that cross your desk? Are you curious or brave enough to find out about or influence its use?

Underwriters, actuaries and market managers are hungry for information to help them make more informed choices about cases, portfolios and market strategy, but do you know how your claims decisions and insight influences their decisions?

Underwriters are a fantastic source of knowledge for the curious claim’s professional. I encourage you to find some quality time with underwriters and find out how your claims work and insights influence their decisions.

There are many more questions you can ask and, believe me, underwriter’s will be as excited as you to have these conversations and who knows where they will lead?

But one thing is for sure, dialogue will increase your knowledge, your commercial acumen and keep you fit and ready to shape the future of insurance.

Dare to be curious, professionalism depends on it! ●

● How do my claims decisions affect pricing; capacity; exposure; risk appetite; and coverage decisions for cases and portfolios? ● How do claims decisions influence prospect and pipeline identification and influence customer and broker relationships? ● What is the competition and market doing? ● What are brokers and customers telling you about the future? ● What are they saying about claims in general? ● Is there more information I can provide to make the life easier for customers and underwriters? ● What role can I play in winning and renewing customers?

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Chartered Insurance Institute 21 Lombard Street, London, EC3V 9AH cii.co.uk

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