Claims as a USP for insurers

Adrian Ladbury interviews Renske Franken-le Clercq, head of claims – central region, Liberty Specialty Markets, about the insurer’s claims strategy and what it has to offer customers in a positive way in this tough period in the market. He also asks about the impact of Covid-19 on the claims environment.

Adrian Ladbury (AL): Claims departments were once regarded as a back-end function within insurers. But many are increasingly realising that their offering can be key to setting insurers apart, especially in this tough market. How would you describe LSM’s overall strategy towards claims?

Renske Franken-le Clercq (RFC): In a traditional view, the claims department of an insurer sits dormant until a policy is triggered. Only at that point would the claims team respond, investigate and pay valid claims. At Liberty Specialty Markets (LSM) the reality couldn’t be further from that.

I think there’s a real shift happening, where clients are increasingly sophisticated in how they approach essential items like insurance cover. The conversation is not always about price for a year, but how an insurer complements their business, whether there’s long-term scope to build a partnership, and where they can create shared value from it.

That shared value is where the claims department can really shine, as it is the team that provides immediate customer care when a loss happens and that also has the knowledge and experience to make a difference throughout the relationship. Increasingly, this is delivered by the product responding even without a claim, through sharing loss lessons and insights to assist with risk mitigation.

AL: Another way to clearly differentiate yourself from the pack as an insurer is to invest in tools that are designed to help clients better manage risk – so that making a claim is a true last resort. What kind of tools and approaches have you introduced to help clients avoid claims and to reshape your value proposition?

RFC: Insurance responds to losses as a result of a covered risk, but at LSM our claims departments are increasingly able to work with customers to talk about risk mitigation strategies. For areas like cyber, we’re able to work with larger clients at the onboarding stage to help review systems, highlight where potential risks are and suggest some remedies they might wish to consider.

In other areas such as natural catastrophes, which traditionally are response-oriented, by working with experts with remote-imaging capabilities we are better able to quickly qualify losses, and have discussions around preventative measures customers can take against similar future risks. These capabilities are very much valued by clients and are a real differentiator for LSM.

AL: What impact has the pandemic had upon the claims environment in general? Has the insurance market coped adequately with this crisis and what have been the main challenges?

RFC: Thinking back to the first weeks of the pandemic, I think the market as a whole proved pretty resilient in terms of keeping the claims infrastructure going. At LSM we use a lot of digital systems day to day, which continued to run efficiently. We also initiated a vendor preparedness programme to ensure experts and adjusters could cope with a new way of working. In some instances, we actually saw speed of service improve, and unlocking tools like virtual mediations and remote market meetings helped make sure we could keep finding resolutions, albeit on a digital learning curve. Everyone is in the same situation, and remembering that helps maintain perspective and empathy with colleagues and customers.

There’s another important point around the impact on our colleagues’ wellbeing, and making sure the right support is in place for everyone to manage and respond as positively as they can. One of our values is putting people first – and keeping teams safe, engaged and supported is essential, as is making sure new joiners to the company are being helped to settle in. At LSM, we have made sure people working at home have regular check-ins and access to wellbeing and health tools, as well as appropriate equipment to work from home safely.

AL: How has the shift to home working hit the way claims are managed and handled in the commercial and corporate market? What do insurers need to do to make sure they deal with claims efficiently and fairly in such an environment?

RFC: At LSM, we’ve tried to manage what’s changed by staying consistent with our principles. Whenever we are helping customers with a claim, we aim to ‘do the right thing’ and ensure efficient and fair treatment. Our Claims Charter outlines how we expect claims handlers and relevant third-party administrators to provide appropriate outcomes for customers when working to resolve queries and claims. And while everyone has appropriate autonomy to work as needed independently, colleagues can phone or video call peers to discuss or reflect, so no one is left isolated. That accessibility extends to our brokers, experts and vendors. Barring a couple of initial concerns with safe physical access to onsite locations for adjusters, we’ve been able to continue to work together for the benefit of customers.

AL: What impact has the crisis had upon the liability claims landscape? Are we about to see a flood of D&O claims, shareholder lawsuits etc?

RFC: We’ve seen fewer general liability claims in Europe, and so far, we have seen limited activity in the D&O space. This is to be expected as we see claims of varying natures in the different locations we operate from. Generally, we’ve seen fewer bankruptcies and insolvencies than would otherwise have been expected, partly because of government support for businesses in the past year. With decisions around whether this level of support can continue imminent, we may start to see increases in D&O notifications as the year unfolds.

AL: How has the co-insurance market performed during the recent hard market? It seems that one unintended consequence of the hard market has been the fragmentation of the insurance programme. Instead of one carrier, risk and insurance managers have several insurers on the same risk. And this time, for the first time, widely across Europe they are reporting they also have different wordings from each insurer. The risk (already seen in the US) is that when it comes to paying the claim, insurers take differing views of settlement. How will this play out and how can you ensure that this situation does not cause problems for customers?

RFC: It’s important to remember that a hard market refers to pricing and availability of capital, and is inherently subjective – whether a market is hard, soft or uneven. In any event, there should be no impact on paying valid claims to customers. In terms of fragmenting programmes, we do sometimes see broker wordings alongside insurer wordings, which can cause confusion, but within a programme there should be lead/follow hierarchy.

AL: What about cyber? There is talk of rapidly escalating cyber incidents and claims. Is this correct and what kinds of incidents are causing the main claims? What do risk managers need to do to make sure their policies actually pay out when called upon? Will this situation lead to further pressure to deal with silent cyber and if so, how would this best work from a claims perspective?

RFC: Our portfolio for continental Europe has seen a limited impact on the cyber front. But a feature of cyber risk is that it’s a rapidly evolving landscape. The best way we can combat the unknown nature of those threats is by remaining vigilant and making people aware of best practices for safe cyber environments. In Europe, we have not seen a significant trend towards large cyber losses.

We support our clients from a risk mitigation perspective. Increasingly, this is delivered by the product responding without a claim, through sharing loss lessons and insights to assist with risk mitigation.

We also have the practical impact of the shift to home working, where companies may find themselves increasingly vulnerable to phishing attacks, data breaches, ransomware and human error. For example, with the rise in e-commerce, there is heightened scope for payment card skimming attacks, as unscrupulous actors exploit ‘stay at home’ messaging to target customers who are avoiding physical stores and choosing to shop online.


Commercial Risk is hosting a Claims Management Conference on 27-29 April 2021. We have worked with a number of European risk management associations to bring together a group of experts in a virtual forum to discuss how best to adapt to emerging long-term risk trends and explore the type of claims patterns that these new exposures are generating. Click here to secure your seat at the event.

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