Rural researchers estimate claims surge

February 17, 2009

Returning to the more wholesome realms of conventional farming, “rural insurer” NFU Mutual’s infinitely precise research bods have calculated that the recent “winter weather” (by which one assumes they mean snow ‚ since, however else one might wish to characterise the weather in January and February, it is, by definition, winter weather) has led to “a 50% increase in insurance claims.”

NFU estimates that “2500 more motor claims will be made this winter compared with 2008,” (this figure denotes a year presumably, rather than a total on motor insurance claims) “largely involving cars, tractors and commercial vehicles that have skidded off the road, or crashed due to snow and ice.”

Apparently, there may also be some burst pipes. Who would have thought it? Perhaps they could issue another press release saying something similar next year…

February 17, 2009

Norwich Union has a problem with cannabis. Specifically, the insurer is worried that, unbeknownst to their landlords, certain nefarious individuals may be ensconcing themselves within tenanted residential properties bent on the illicit cultivation of the mind-bending recreational drug of that name.

Landlords should vet prospective tenants with particular care, NU warns‚ possibly rejecting those wearing dark glasses, carrying lamps, electrical cables and packets of seeds and/or speaking suspiciously slowly or indistinctly.

No offence, but, “residential landlords may not be covered if their property is damaged by tenants using it for cannabis production,” NU cautions. “As with most insurance policies,” the insurer insists, “the duty of care element means a landlord must protect his investment and minimise his losses. This means it is important to be aware of the warning signs and make sure all  reasonable precautions’ are taken.”

NU points out that in 2005 the police identified more than 700 cannabis factories in London alone, but strangely don’t appear to have got round to producing any comparable statistics for subsequent years.

It is widely recognised that NU has no problem with farmers per se, but when those farmers are not of the usual tweed-clad variety but actually (dramatic pause) cannabis farmers, it seems, warning lights start flashing‚ and the colours are just, like, incredible.

Where was I? Ah yes, fire! Drug farmers trail fire in their wake. Not only do their grow lamps tend to burst into flame from time to time, but attempts to siphon off unmetered electricity from the mains can also lead to conflagrations. Worse yet, cannabis farmers have been known to start a blaze or two intentionally to cover their tracks when they believe they are at risk of detection. And they are, of course, notoriously paranoid.

“Aside from fire,” notes NU drugs czar Mikes Colmans, “cannabis factories cause major physical damage to a property, from holes made to pass cables through walls to significant water damage due to leaking buckets and pipes.”

“We would recommend employing a letting or managing agent,” Colmans persists remorselessly, “to manage the tenant vetting process and provide the inspection service on the landlords’ behalf. Although there will be a cost involved, should there be damage or a fire and a landlord has been found to neglect their responsibilities, a claim might not be paid.” Heavy!

February 16, 2009

Super-suave ETWB chief exec David Stubbs whisked winsome Insurance Times reporter Lauren MacGillivray off on a fascinating behind the scenes tour of the car valuation business. The day probably went something like this:

The first stop is British Car Auctions (BCA) in Bedford, “a great place for insurers to value total loss vehicles.” Struggling for a familiar point of reference, MacGillivray likens proceedings to “a fashion show for petrol heads,” noting shrewdly, however, that “this isn’t London or Paris.”

As powerful engines purr and growl she watches entranced as “one by one, shiny cars are driven from an outdoor car park and up a small stretch of pavement before entering a covered showroom.” There, she imagines they will be judged on “shape, style and body condition.”

Further enflaming an atmosphere already crackling with erotic charge, Stubbs leans in closer whispering: “A lot of insurers go by Glass’s Guide, but that’s based on what happened in the past and…” he pauses meaningfully, “what might happen in the future.” MacGillivray nods attentively as Stubbs’ masterful hands trace undulating curves in the air to emphasise his point: “It’s trying to smooth out markets rather than reflect them.”

“Insurers consider a vehicle a total loss if repair bills, car rental and paying what it has lost in value add up to more than it would cost to buy a replacement,” she learns, with the payout “ based on what it was worth before the accident.” But nothing is quite what it seems in the parallel universe of motor valuations: “This sounds simple,” she tells her readers, “but can be tricky because of the number of valuation sources such as dealer surveys, value guide books, online pricing sites and private sales. Stubbs, it seems works in subtler ways that this: “He relies on auctions, salvage yards, private sales and any other resource to help determine what a specific vehicle was worth before an accident.”

A self-confessed lover of cars (although clearly not in the sense of that rather disturbing documentary they had on telly recently) Stubbs’ connoisseur’s eye picks out the “high mileage, dents, rust and other imperfections” among the assembled Micras, Corsas and Scanias offered up to bidders including “credit hire, leasing and rental companies, with fleet operators and private buyers.”

He draws her confidentially towards a 1999 Vauxhall Tigra. The rusty driver’s side door, he confides, suggests “the owner regularly scraped it against a curb. The tyre pressure is also low ‚ easy to fix, but could suggest the driver was a bit careless.” Surprisingly, however, the Tigra sells for £1,125 ‚ £125 above the Glass’s price. Perhaps the winning bidder is “a rookie private buyer,” Stubbs snaps, momentarily losing his cool, “or there might be a limited number of Tigras around.” Changing the subject quickly, he suggests adjourning to more comfortable surroundings.

Back at his office in Milton Keynes MacGillivray is starting to wonder where the day is going, but listens patiently as Stubbs tells her that in an audit of “total loss valuations made by five leading insurers, the sums varied from 87% to 105% of Glass’s Guide prices.” ETWB, he avers, “regularly achieves claim settlements of 61% to 78% of Glass’s price,” and “for a book of 16,000 total losses a year, each percentage point off the Glass price typically delivers a £480,000 reduction in indemnity cost.”

Insurers have different views on what constitutes a total loss, he persists. Some insurers consider a vehicle a total loss if repair costs are 51% of re-sale value. Others go as high as 80%. “Car prices are depressed and variable right now,” Stubbs says, and “insurers should be aiming for a trigger point of about 60%.” She’s still nodding, he notices, but somehow without the same rapt enthusiasm as before.

“Sales of new cars are down and there’s an attempt to shift and sell. But the used car market is also depressed because no one can afford to trade up. And it’s tougher to get finance.” Sensing he is losing her, he invites MacGillivray to inspect one of his case files. It’s a Chrysler 300C 6.1 V8 SRT-8, bought new for £40,000 18 months ago. “ It is now worth no more than £15,999,” Stubbs insists, “because it guzzles petrol. Last year, he says, it would have been worth £25,000 to £30,000. There’s no way that conversation’s going to go well,” he says. “But we don’t negotiate; we just try and explain so they understand our reasoning.”

As another conversation seems to be going less well, the speed of Stubbs delivery increases. Insurers can send ETWB their claims details, he gabbles desperately. “The company then researches and decides the vehicle’s pre-accident value and phones the policyholder to discuss their decision and close the settlement. The settled claim details go back to the insurer, which issues the cheque to the policyholder and/or finance company.”

MacGillivray decides it’s time to make her excuses and get out of Milton Keynes – but not before learning enough to understand that “some total loss vehicles still have outstanding loans. An insurer will pay the finance company what it is owed first, and then the policyholder. If the total payout goes to the loan company and the policyholder still owes money, he or she becomes more likely to default.”

Now here’s the controversial bit. “For this reason,’ MacGillivray writes “a senior valuation source [clearly not the one she has just spent the day with] tells Insurance Times, some lower-end car finance companies purposely delay claims settlements. This way, they still get a few payments from the policyholder, and then their payout from the insurer.”

Back at Insurance Times HQ, she stumbles upon another gem to bury deep within this tawdry tale of men and motors. “Research from released last week,” she writes, “has found that nearly 30% of motorists are delaying repairs to save money. Seventeen per cent say they have put off replacing worn-out tyres and nearly 6% have not fixed brake problems. If these percentages hold true across the country, more than 6 million may have defective brakes or worn-out tyres ‚ which could have a big impact on motor claims.”

That almost sounds like a story.

February 12, 2009

In a candid conflab with Post Magazine’s estimable Mairi MacDonald, new Helphire chief exec Mark Adams revealed his hopes and dreams for the economically challenged credit hire organisation (CHO). In startling contravention of the received male wisdom that being married to a model is a good thing, he was quick to stress that Helphire “is not married to the credit hire model.”

Asked whether the rise of bilateral agreements marked the beginning of the end for CHOs, he expressed confidence in Hellfire’s plans to diversify and find new ways, as the Post article described it, “to employ Helphire’s fleet of 18,000 vehicles to ensure they do not sit in a car park losing profit.” Adams is clearly not a man whose thinking takes place inside boxes: “I had no preconceived ideas about Helphire; credit hire wasn’t an industry I was familiar with,” he said going on to describe his role as “driving Helphire into its third stage of development.”

Being careful to avoid overt criticism of his predecessor, former CEO Mark Jackson (no relation to the more famous Michael), Mark II said Mark I had “been instrumental in the growth of the business in recent years and recognised that his skill set probably wasn’t appropriate for the next stage of the plan.” In a statement issued in December the company accepted that it has “an infrastructure designed for higher levels than we are now anticipating” and announced plans to cut costs and drive through efficiencies.

Declining to rule out redundancies among the firm’s 3000 staff, Adams now says: “We always knew the growth levels we were achieving were unsustainable – any business that grows at 40% recognises at some point that growth will come off. But it’s fair to say it has come off much more quickly than we anticipated…

“We are committed to working with the insurance industry and developing the model. We recognise credit hire is the core product offering within our business, but we are more about providing mobility solutions to the motorist. So if the model evolves to the point where credit hire reduces and is replaced with other business, then so be it. To some extent, we are already providing these solutions,” he chuntered on listlessly.

There’s lots more, but it gets a bit repetitive to be honest.

February 11, 2009

The FSA has given its approval for the management buyout of the former UK insurance businesses of Insurance Australia Group (IAG) first announced in December, reports Insurance Times.

The MBO includes Bexhill-on-Sea intermediary Hastings Direct and underwriting operation Advantage both bought by IAG in 2006 as it sought to reduce its dependence on the Australian market. Since then the UK businesses have proved a drag on IAG’s ailing finances and the group has been keen to offload them for any reasonable consideration since July last year.

Its new owners plan to invest in “revitalising the Hastings Direct brand.” Could this mean ditching Harry Hastings for a mascot styled on a more successful British wartime leader‚ Churchill perhaps, ah no‚ or maybe switching allegiance to the winner of the famous battle whose year the last four digits of the Hastings phone number commemorates? King Harold, after all, was a confirmed pedestrian.

According to chief executive Edward “The Confessor” Fitzmaurice, Hastings will now become a leading independent mass market insurance firm, offering products underwritten by a panel including Axa, Equity Insurance, Chaucer, Markerstudy, Premier, Provident, Highway and Hastings sister company Advantage Insurance ‚ with other underwriters set to follow. Direct brands, and will be positioned separately from Hastings Direct and targeted at their own market sectors.

Fitzmaurice confessed regally: “We are delighted to receive regulatory approval for the management buyout of Hastings Direct and Advantage Insurance Company, securing the future of the businesses for our staff and over 400,000 customers.” IAG paid £140m for Hastings and Advantage in 2006.

February 9, 2009

Curious residents of North West coastal resort Seascale gathered this morning around a bloated two-metre long carcass washed up by the wintry surf.

Local children prodded gingerly with driftwood at the massively distended form, until amateur marine biologist Malcolm Carstairs warned any disturbance might unleash a noxious torrent of fish guts and foul air from the swollen innards of what he immediately recognised a rare northern bluefin tuna (Thunnus thynnus). His warning, tragically, came too late for them.

Oh sorry, wrong story. Bluefin Insurance Services has acquired Windermere-based Lakeland Insurance Services which specialises in guesthouse insurance. “The Lakeland team presented an ideal strategic fit with Bluefin’s business and people,” Stuart Reid, chief executive of Bluefin Insurance told Insurance Age. “We are pleased to welcome them and their clients under the Bluefin banner as we pursue our ambitious plans to grow the business while maintaining a face-to-face approach in local markets.”

February 6, 2009

Amanda Stevens, president of the Association of Personal Injury Lawyers (APIL), reports national journal of record The Times, is displeased with the FSA. At APIL’s annual dinner she accused the regulator not simply of having at least one blind eye but of deliberately turning it in an inappropriate direction.

She’s not happy with insurers either ‚ alleging they’ve been strong-arming motor accident victims into settling for low compensation. Citing an isolated anecdote involving “a woman” who was offered £1000 to settle immediately after an accident without involving lawyers, who declined this offer, and who ultimately won ten times the amount (plus costs!) thanks to Stevens’ firm, she said accident victims were being let down by “weak regulation of certain insurance activities.”

“It’s not OK,” she continued, “for the Financial Services Authority to turn a blind eye to high pressure tactics. These are not isolated anecdotes, but issues that trouble us day in, day out in our offices.” And surely no-one who has ever been troubled their office could fail to sympathise this view. Then, cranking up the pathos before an already visibly moved audience, she went on to characterise APIL as an organisation that puts people before the “pursuit of financial gain,” a pursuit, she said, which has led “so many in the City to the brink of collapse.”

February 6, 2009

Software house Transactor Global Solutions has partnered with Bankstone to offer its broker clients a groundbreaking automated claims handling service. Transactor clients will now have access to an instant online claims validation system.

Linking Transactor brokers’ back office systems with Bankstone’s sophisticated claims management system via a secure internet connection will allow outsourced claims handlers to gather all the information they need from claimants over the phone simply by asking the caller’s name and postcode. All relevant information will then be automatically uploaded from the broker’s system onto the claims handler’s screen, and, just three questions into the call, they will already be discussing the detail of the claim.

Transactor clients who take advantage of this new claims handling proposition will also gain access to an array of previously unavailable real time management information tools and analytics developed by Bankstone. These allow brokers to understand precisely what is happening with all their claims in aggregate, by type or account, or individually. Bankstone’s graphically enhanced suite of MI tools allows brokers to see precisely how each of their insurer account is performing and how profitable their claims handling activities are at any time.

Transactor business development manager Tony Withers comments: “Bankstone has some very advanced claims technology and a sophisticated business model, and by working with them we can offer brokers a seamless outsourced claims service that will genuinely add value. The technology is all in place already and we expect to have a fully functional solution for Transactor brokers who choose to work with Bankstone early in the New Year.”

Bankstone director Dickon Tysoe comments “We are delighted to be working with such a dynamic and forward-looking technology provider. Not only do Transactor have an excellent technology platform, they really understand the insurance process. Together we have we the capabilities to offer brokers a fully automated claims handling methodology that combines all the advantages of outsourced claims handling with none of the hassle.”

About Transactor Global Solutions

Transactor Global Solutions is one of the top 5 insurance software houses in the UK and focuses on the top 5% of insurance brokers (top 200) and emerging brokers committed to major expansion.

Transactor’s software caters for all insurance business processes from new business to claims, with a complete range of fully automated policy transactions available to the operator, both in the office and on the Internet, and with full sales ledger accounts to trial balance.

It is one of the few software providers to use modern Microsoft based technology with total user configurability to offer a complete insurance solution. Thanks to its powerful .Net architecture, Transactor’s systems are readily scalable, supporting multiple branches, channels, brands, affinities, languages, and currencies.

Transactor’s clients include the UK’s largest specialist motor insurance provider Adrian Flux, specialist scheme broker Caravan Guard, high-volume UK insurance broker Hamilton Fraser, leading UK independent insurance broker and employee benefits consultant Heath Lambert, leading insurance and reinsurance broker Jardine Lloyd Thompson, call centre and Internet insurance provider KwikFit, and specialist pet insurer PetPlan USA.

February 6, 2009

Without a hint of bias, US IT research and consultancy firm Gartner claims that Europe lags behind the States in its efforts to improve insurance claims technology.

Insurance Times, which found space for this jingoistic nonsense in its latest slimline edition, allows unchallenged Gartner’s blithe proclamation that UK general insurers will increase their spend on claims technology by 20% during 2009. This view, it turns out, is based on nothing more substantial than a survey of 40 life and general insurers across Europe conducted during the second quarter of 2008 ‚ that and the touchingly naïve belief that those interviewed within this inevitably heterogeneous sample a) meant what they said, b) understood the questions, and c) have not revised their plans in the last nine months.

Insurance Times can now reveal that insurers have realised they need to invest in claims technology: “as the recession deepens and fraud spirals*, new IT tools are more useful than ever.” Gartner, the paper declares, has concluded from its studies that “a highly competitive market, tough regulator, threat of the direct model and high cost of labour” are conspiring to dictate that “UK insurers need to find new ways to save money ‚ such as claims management technology.”

Gartner analyst and vice-president Kimberley Harris-Ferrante is quoted arguing that “Since customer service delivery was rated the top business problem among general insurers, they must now take a more aggressive approach and invest in re-engineering, legacy system management and technology augmentation to support mobile, adjuster and supply chain needs.” If insurers don’t do this, insists Haggis-Ferrari haughtily, higher claims handling costs will hit profits and insurers will lose customers because of poor customer service.

What of those research findings in detail? Without telling us how many of the 40 companies questioned were UK-based or whether these included life as well as general insurance firms, Insurance Times quotes Gartner’s bold assertion that 10% of UK firms are investing in call centre technology. For the sake of pretending that such statistics actually mean anything of any possible interest or relevance, let’s assume that fully half of those sampled were UK firms. We can hence deduce that two UK insurers out of 20 plan investing in call centre technology. The same proportion apparently intend “bringing in an entirely new claims system” ‚ ready presumably sometime in 2011 or 12.

A staggering 40% (or eight insurers) plan introducing “claims analytic tools to measure claims performance and better understand trends, costs and so on.” Twenty per cent of respondents (4 firms) said they would be investing in “a major claims administration system that focuses on financial aspects of the process, such as payment and reporting.” Thirty per cent (six) plan “new customer relationship management tools to help [them] find out more about [their] clients and improve their satisfaction levels.”

Forty per cent are “getting connected” and plan to “add links so everyone in the supply chain can access the process information, make notes and review others’ comments.” Meanwhile an oddly low 30% are spending money on fraud detection tools. Perhaps the other 70% already have something state-of-the-art in place or have outsourced to someone who does. Ah yes, 40% (eight companies) are apparently outsourcing their claims operations ‚ and thereby cunningly saving themselves the trouble of coming up with 21st century claims platforms, fraud detection tools, analytics, call centre functionality etc. of their own.

We then learn that 60% are intending to “keep their existing system but add web services and install different operating platforms. So how does that stack up alongside the 40% who are outsourcing and the 10% who are building an entire new system? Hang on a minute, under the heading  an all-new system,’ we then learn that 60% plan to “buy or build a new application to support claims processing.”

Confused yet? Probably the best thing would be get some expensive consultants in to gather a lot of information about your business and turn it into a judicious combination of fatuous truisms and incomprehensible jargon ‚ either that or you could outsource your claims to someone who actually knows what they are doing.

*Spiralling fraud, of course is the very worst kind. When fraud simply goes up and down it need not be completely intractable. But once it starts going round and round in circles you’re really in trouble. Just ask anyone at Lloyd’s.

February 5, 2009

“We’ve been frustrated,” confided Zenith Insurance claims director Ian Holmes to Post Magazine this week. The source of this frustration, it transpires, is that the insurance industry has failed to tackle the growing issue of motor fraud “with any cohesion or vigour,” as he puts it damningly.

Enough, it would seem, however, is enough. Zenith has taken the bull by the horns, set up its own motor fraud team, and joined the Insurance Fraud Bureau. The company now intends “stepping up the fight against the fraudsters.” “We’re determined,” Mr Holmes told Post, echoing the resolutely split infinite that so captivated audiences of the original Star Trek series back in the 1970s, “to vigorously defend any fraudulent claim made by or against our policyholders.”

Holmes is not an unreasonable man, however. “Obviously not all cases that arouse suspicion prove to be fraudulent,” he conceded, adding: “we ensure that legitimate claims are handled speedily in the normal way. But in a recession,” he returned doggedly to his original theme, “it is likely that we will regrettably see an increase in fraudulent activity.” Fraudsters should therefore be warned, Holmes finished strongly, “that they will not find Zenith Insurance an easy target for their endeavours.”

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