London market in good shape but still needs to improve claims process

The London (re)insurance market faces a big share of the $100bn-plus claims that are expected to come as a result of Covid-19, but is in good shape and has used recent investment in technology to deliver contract certainty and continuity to customers, according to the latest London Mattersreport published this week by the London Market Group (LMG). But there remains room for improvement on claims, it adds. As with any major catastrophe, the current crisis provides the insurance sector with an opportunity to show its true worth to customers in their time of need. Lloyd’s’ reputation was sealed in the US back in 1906 when San Francisco suffered a deadly earthquake and fire. Legendary market leader Cuthbert Heath ordered all claims to be paid without quibble, issuing the famous edict: “Pay all of our policyholders in full, irrespective of the terms of their policies.” While the position of Lloyd’s and the wider London market remains stronger than ever in the US, according to the latest issue of London Matters, it remains seriously underweight in mainland Europe. As European risk managers have told Commercial Risk Europe consistently during our annual Risk Frontiers survey, the main problem is a perception of complexity, higher cost and time taken to settle claims. European risk managers would generally rather deal directly with local insurers and in partnership with local brokers. The LMG report recognises that this needs to be dealt with, despite recent progress made through process reform. “Historically, London has demonstrated its ability to work through complex claims situations involving multiple stakeholders. In the light of recent events, this ability is once again being put to the test,” states the report. “In interviews conducted for this report, London’s reputation for consistently and fairly paying claims was highlighted as one of the market’s strengths. However, interviews also showed there was some frustration with London’s claims processes, particularly with regard to the time and complexity involved in paying small claims. Client feedback also noted that policyholders and brokers often cannot track the progress of their claims after notification. In contrast, many local insurers provide online portals so that claims can be tracked. Since 2018, the London Market has taken steps to simplify its claims processes. This has streamlined the way smaller and less complex claims are dealt with, speeding up decision-making and payments,” it continues. The report says the market accepts it needs to further improve the claims system and, in particular, offer customers and brokers greater transparency. This is something that Commercial Risk Europe’sreaders would welcome based on our analysis. “The London market recognises that more work needs to be done to enhance its claims service to make it more transparent and efficient for clients and brokers. Current London market and Lloyd’s initiatives are addressing this. These include streamlining agreement and automating processing and instant payments, loss prevention advice, one-touch notifications and real-time loss assessments,” continues the LMG report. The report quotes one CEO of a service company as stating: “We just need to ‘meet the bar’ on simple claims, then it will make the overall proposition shine.” Matthew Moore, chair of the LMG, said that overall the London market remains in good shape and is working well to meet customer and broker needs in the current crisis. This work must be maintained and built upon, he said. “This report finds the London market in good shape. Aggregate market share held steady, maintaining London’s global dominance and attracting more US business than ever before. Nevertheless, some of the underlying challenges remain. Our share of reinsurance business is shrinking and in emerging markets it remains small,” he said. “However, the effects on market structure, products, processes and working practices caused by the Covid-19 crisis are likely to be profound and long-lasting. The current crisis shows that the London market can support its trading partners and clients through the toughest of challenges, and the fact it is doing so today is in part down to its adoption of previous LMG initiatives. For example, electronic placement has meant that remote working has been possible, and that contracts have been placed and renewed with legal certainty. The (re)insurance industry’s support for the wider business community has never been more important, whatever the circumstances they face,” he added.

London market in good shape but still needs to improve claims process

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