"No longer a nice to have"
Claims support has historically been a “nice to have” for Insurance Brokers, however with prescriptive insurer contracts now in place, Loss Adjusters have to represent their principals and working directly for policyholders is outside of their scope. This can often result in a service gap, with clients feeling unsupported and isolated when a claim occurs. Coupled with recent changes to legislation and continued focus by the regulators on customer treatment (sales and claims), we believe it has never been more important to put in place a robust claims solution to represent policyholders. To assist Insurance Brokers we have provided a summary below of the claims sector and the various options available in today’s market.
Chartered Loss Adjuster
In the UK, Loss Adjusters appointed by insurers represent their clients – so cannot represent the policyholder as well. It is also not what insurers instruct them to do. The Chartered Institute of Loss Adjusters no longer requires its members to be impartial, so the policyholder can often be left on their own feeling unsupported and vulnerable.
The recent implementation of The Insurance Act 2015 continues to drive change across the insurance sector. The FCA has also extended its work on treating customers fairly, by introducing Conduct Risk. With further potential Thematic Reviews and the Insurance Distribution Directive now on the horizon, claims will undoubtedly become a key area of focus for Insurance Brokers.
Insurance Brokers have historically taken different routes when providing claims support for clients. Some have attempted to handle losses internally using administration staff, whilst others have developed direct relationships with external providers. In dealing with claims internally, Insurance Brokers can be exposed to compliance issues and other associated risks if they don’t employ skilled and technical people.
Loss Recovery Insurance or Assessor’s Fees Insurance as it was previously known, can provide access to some loss adjusting services. However as with all insurance policies certain types of claim are not covered (e.g. liability claims are generally excluded) and there are exclusions and various qualifying criteria to comply with before support can be accessed. This can often leave clients feeling unsupported at a time when expert help is needed most.
Under the traditional loss assessing model, fees are variable and clients have little certainty over the final cost of obtaining professional claims support. The cost of fees can vary and as a general rule, if a client has to appoint a Loss Assessor on an “after the event” basis, fees are typically 10% of the claims settlement. This approach can incur a significant fee payable by the client at the end of a claim.
In 2003, CEC launched a unique claims assistance service, which provides access to an independent Chartered Loss Adjusting network. CEC is a market leader and with affordable products and fixed fees in place, the company now assists businesses and home owners across the UK. With no exclusions or qualifying criteria, CEC delivers certainty, with real support and expert advice when it is needed.