Igrea signs up AGCS to claims charter but plenty more work to be done

Allianz Global Corporate & Specialty (AGCS) is the latest international insurer to sign up to Igrea’s claims charter that, among other key points, demands insurers confirm how they will deal with a claim and whether it is valid within 30 days of being served, as well as make payment within 60 days.

The association of risk managers at leading Spanish corporations launched its charter last October at a meeting in Pamplona.

At the time, Igrea invited leading insurance companies to sign up to its request for more consistency, clarity and communication when larger claims are filed, so that the process can be smoother, quicker and less riddled with uncertainty.

Leading Spanish market insurers have since reacted to Igrea’s charter and agreed to its principles. Senior claims managers at five initial signatory companies – Zurich, Mapfre, Generali, AIG and XL Catlin – agreed to take part in the opening panel discussion at Commercial Risk Europe’s Risk Frontiers Madrid conference late last week on the topic.

AGCS was not on the panel, simply because it had only signed up to the charter and joined its key rivals two weeks ago. This had left no time to prepare for the discussion. But during the debate, Igrea president Augusto Pérez Arbizu, risk manager at Telefónica, said he was delighted that AGCS had joined its peers and reacted positively to Igrea’s claim initiative.

Mr Pérez Arbizu said the association’s members welcome the generally positive response from the insurance market to the charter. But he also said that while these positive signs and statements are clearly good news, risk managers need to see more practical evidence of action on the ground when claims occur. The words need to truly move onto action.

“We have focused on this topic for a number of years now but the debate needed moving on. Therefore, last year we decided to put this paper together to set our concerns and requirements in black and white, [which] was presented in our Pamplona meeting last October,” explained Mr Pérez Arbizu.

“This document shows the principles that we believe are really important and it is great to have a group of senior claims managers here today. We need to be clear on the processes and how we can work together to ensure that we reach the right result for all parties,” he added.

Mr Pérez Arbizu explained that Igrea members naturally assume all valid claims will be paid. Their main concern is the lack of clarity, communication and certainty that surrounds the process and length of time it can take. They are also concerned about often unclear roles and responsibilities of various parties involved, including brokers, loss adjusters and lawyers.

The lack of clarity about what will be paid, on what basis and when, also makes it difficult for any company that makes a claim to book the expected revenue into accounts.

This means payments can arrive as an extraordinary item a couple of years later, benefiting the manager at that time but often not the one in charge when the losses occurred, added Igrea’s president.

Any lack of clarity and certainty does not reflect well on risk managers as they report claims progress – or otherwise – to their colleagues or bosses, he continued. It is difficult to convince bosses of the value of risk transfer if major claims are complex, lengthy and uncertain, pointed out Mr Pérez Arbizu.

The detailed responses of claims managers on the stage to Mr Pérez Arbizu’s questions will be published shortly in a full report on this year’s Madrid conference.

But they all welcomed Igrea’s positive move and were happy to respond to the association’s demands. They recognise that the claims process needs to be improved generally, that the roles of the various experts and advisers involved need to be clarified and that communication needs to be clearer and faster.

But they also pointed out that the insurance market has responded to large corporate buyer’s demands for more bespoke and thus naturally complex coverage.

This simple fact means that larger claims can be very difficult to settle and naturally take time, even more so if the claim occurs in another country with different rules and policy wordings that may not concur with the master programme.

One claims manager pointed out that Argentina and Peru both have statutory rules that demand claims clarification is provided within 30 days, or an explanation about why cover cannot be clarified or confirmed provided. This 30-day deadline is never met, he said.

A couple of the claims managers also tentatively pointed out that risk managers themselves have a responsibility to deliver the right information quickly to help determine the validity of cover before valuation is even considered.

The overall response was that insurers are working harder than ever to improve and speed up the claims process. But it really is a joint effort, they stressed. For now, it appears they cannot commit to such hard and fast deadlines for all claims. It therefore looks like Igrea’s laudable campaign will take some time to succeed in full, or make any noticeable difference to claims processes in Spain.

Surely it would make sense for other Ferma member associations, or the federation itself, to take a close look at what their Spanish colleagues are trying to achieve and join the fight?