Hi, my name is _______ ……and I’m a Claims professional. So what exactly does that entail and what makes Claims a vital part of an Insurance organisation? If you had asked me 14 years ago when I, like so many others inadvertently “fell” into Insurance, I‘d have had no idea. The only professionals I knew of were the “learned professions” and the men and women of the night that would stand on dark sections of Canterbury Rd in Sydney’s South West. But after 14 years I’ve been involved in the settlement of, I estimate, about 5,000 claims and I now know what the role is all about ‐ problem solving. My esteemed colleagues in underwriting take risks by accepting a premium and making a promise to pay. They meet budget targets and are rewarded with handsome bonuses. The Claims professional is the human face and tangible aspect of that promise and we spring into action when someone suffers a loss and makes a demand for compensation. Consider for a moment what it would be like to be employed by the Lotteries. Your role is to personally visit each winner the day after the draw to officially inform them of their win. You hand over the oversized novelty cheque and happily pose alongside the winner for photographs. Imagine the joy you would see on faces, the dreams starting to look possible, knowing that their best days are now ahead of them. Imagine the tips and other gratuities that might be offered. A claims role is just the opposite in that we deal with people who have suffered personal injury, had property damaged or suffered a financial loss. It can be something as simple as our Insured, a tradesman, entering their home to fix leaking taps and bringing oil in on his boots and damaging the carpet. It can be as catastrophic as a 24 year old sheep shearer becoming a brain damaged quadriplegic after a helicopter crash on a remote property. Three months into my Insurance career I had a policyholder come in personally to report an incident. I saw the tremor in his hand and recall wondering if he had Parkinson’s disease. In between sobs he explained to me that family friends had visited his farm and he took the 4 boys for a spin on his tractor. It turned to tragedy when the youngest boy, only 4 years old, fell and was crushed under the wheel of the tractor. Whilst he told me the family had assured him they forgive him, he was unsure as to whether his God would. I’ve received a new claim and read how the Insured’s organ player sexually abused a 16 year old boy since the age of 12. One night the boy told his Mother about the abuse. His Mother then sat her 14 year old son down when he got home to tell him and steel him for the tough times to come in dealing with the consequences of that abuse. As she tells him what has occurred his reaction leaves her in no doubt that he too has been abused by the same offender. To heal all wounds in cases such as these is simply not possible. In many ways my primary role in resolving claims such as these is being able to draw a cheque to compensate for the loss, damage and injury that flows from negligent acts. But it is how I get the claim to settlement that gives me
most job satisfaction. Drawing & signing a cheque is the easy part, though that is not to downplay the symbolism and closure that goes with agreeing settlement terms, evidencing it with a release and making a payment. To get a claim to settlement stage is a team effort where the Claims professional is the key figure. The Claims Officer is the central player in a stoush (for want of a better word) that can go on for a matter of minutes or for years. We manage a portfolio of claims but strive to provide a level of service where the Insured will feel we look after their claims only. Whilst we can, given the right workload, resolve the majority of claims ourselves (with assistance from and in consultation with the Insured and broker), we also deal with Lawyers, Loss Adjusters, Factual Investigators, Surveillance operatives, Barristers, Accountants, Engineers, Surgeons, Occupational Therapists & Building consultants. In getting opinions from experts I have gleaned a great deal of technical knowledge in relation to many different industries. I know how much a panel beater should charge per hour to remove and replace panels. I know how much it costs to have a bricklayer (and a labourer mixing “mud”) re‐do a wall knocked down by a bobcat on a building site. How much to replace 180 lineal metres of tongue and groove timber flooring when a water pipe bursts and causes the timber to swell & warp. I know the replacement cost of a 16 cylinder diesel engine for a tuna trawler. By engaging an engineer I determine the cause of the engine failure (without getting my hands dirty). When a geologist who works in the petroleum industry falls from a faulty ladder hired from my Insured I appreciate the fact that during the late 2000’s every man and his dog was out looking for oil and he could have easily earned $200,000 per year for the rest of his 10 year working life. When a private School receives negative press concerning a bullying incident I know that enrolments will fall in coming years unless the complaint is resolved quickly and amicably. If people buy Insurance to protect their assets (not just physical assets but good will and intangibles as well) I know I have to make things good. There is the “big picture” to consider. Before the internet and email underwriters would go door to door selling Insurance. A senior Australian Insurance executive used to do that in his native England. At that point in time he would have been the face of his employer. Building a rapport with Insured’s and building confidence in his employer’s ability to satisfy any potential claim. What has changed is that Commercial Insurance business is mostly transacted via a broker. Domestic insurance is increasingly an electronic transaction conducted over the internet. Who builds the rapport in that situation? There is certainly a strong relationship between Account Executives at Broking Houses and Underwriters working for general Insurers. But in many cases a risk accepted produces no claims in the policy period. Is the Insured happy with their promise to pay, the fact that their Insurer enters into every contract with utmost good faith and has the credit rating to satisfy any claim? It is all qualitative and intangible.
As an organisation we work hard on business retention. We accept risks and play the law of large numbers. But to my mind in the event of no claims the decision to renew with us next year will be largely dictated by price (and perceived ability to pay in the event of a claim, especially since HIH). It is in the event of a claim that an Insured realises the benefit of that promise to pay and Claims professionals are the face of that. You can make a meal of it or you can impress an organisation with 1000 employees where not one of them would have the technical skills and behavioural traits to resolve the problem at hand, despite in many instances the problem having a major bearing on the Insured’s future dealings with the claimant, whether they be a customer, sub‐contractor, principal, student, a volunteer or member of the congregation. If your dog got out and attacked the neighbour’s child during Christmas lunch, the consequence being horrific physical injuries, post traumatic stress disorder and nervous shock claims by 6 family members would you be capable of determining whether you are liable at law, and if so, the amount of damages to be paid? Would you be able to handle the family knocking on your door and asking if you will fund treatment by a Psychologist at $200 per hour and demanding to know what you will do to make good their loss, by way of compensation? Offering $5,000 might be insulting, offering $300,000 you would probably have to sell your house to cover the cost and for the untrained it could be a very painful process, balancing empathy with your ability to pay. If you handle this sort of situation right you might continue to enjoy a good relationship with your neighbour notwithstanding the tragic accident that has occurred. Handle it poorly and it just might be the start of a long running feud. This is why you buy Insurance ‐ to be able to sleep at night and in the event of a claim against you, to be able to access a professional problem solving service. Insurance claims is not a “learned profession” so to speak. At Year 12 level careers counselling in Australia I doubt whether it is talked of as a “profession”. However, Universities today are offering undergraduate business degrees with a major in Insurance. For post graduate students you can complete an MBA with an Insurance major. Whilst this is notable, I found during my studies in the late 90’s that the percentage of the course material and class time dedicated to claims would almost invariably be about 10 – 15% of the overall course. Whilst it is important for a claims professional to understand risk assessment and risk pricing my view is we have to develop formal education that focuses on claims. I was only an average high school student and in the first two years of my undergraduate business degree I failed 8 of my 16 subjects. When I undertook my Fellowship studies (which started the night after my first child was born) I found my commitment and motivation skyrocket. I was hooked on Insurance. Despite my average academic ability I consider myself more than competent in this role. Now, can you imagine if students in the top 10% of their HSC year or business graduates with a Distinction average elected to enter into a career in Insurance claims? We should be able to attract those sorts of candidates to the industry. The salary a well trained Claims professional can command is nearing six figures for the right candidate. By well trained I think it takes 5 years of on the job training including claims handling/negotiating and basic legal, medical, engineering and construction training to get to that 90% level where you can work autonomously.
The right candidate is one who accepts responsibility for their clients and their portfolio, doing the extra’s required to improve processes within the department, assisting fellow employees so as to maintain service standards and support industry bodies and functions. So if an investment of 5 years in developing skills that are in high demand (and this is an International career where you can transfer your skills to any country in the world) and a salary in the order of the above then it sounds like a professional occupation to me. You require sharp analytical skills, medical & legal knowledge, to live and breathe the fundamentals as to what an Insurance contract is all about, to have accounting skills in analyse profit and loss accounts, fixed versus variable costs when assessing economic loss. You need behavioural skills such as business acumen, networking skills, open thinking & entrepreneurship. But to complement the technical skills you need the ability to actively listen, to empathise and be confident enough to make decisions and persuasive enough to create a win‐win in negotiations,to problem solve. In more recent times my employer has flipped the Insurance hierarchy to have Claims & Sales, the customer facing staff, at the top of that hierarchy. They encourage me to pay valid claims fast which is a change from the early days in my career (and I’m only talking 1997) when I naively thought my first employer expected me to deny claims wherever I could and we were seen as a “cost centre”. This year, for the first time, I’ve been afforded the opportunity to entertain clients and support industry events and functions. It is due to this that I now realise the importance of my role and that makes me strive to excel. To attract high quality candidates to the industry we need to be selling the opportunity to have autonomy in the role and responsibility for clients. You develop your own network and get opportunities to travel. Work arrangements are becoming more flexible, including part time positions. The benefit to an Insurer which invests in the development of the skills and status of their Claims staff in the industry is this:a dollar saved on a claim is more or less a dollar to an Insurers bottom line profit. While an Underwriter generates income that premium has to be “earned” over the course of 12 months, commissions come out and a percentage goes to the cost of overheads. Underwriting is all about taking risks and sometimes the risk written is a bad one and the loss ratio will be over 100%. Our job is to make the best of that situation. And if you are of the view that providing insurance is akin to gambling, have you ever heard of a Casino sending a “Whale” packing after winning $3M in one night on the tables? More likely they will offer him/her the Presidential Suite for the next 5 nights. Over the long term the result is smoothed out. The law of large numbers comes into play. I think it is the same when a client has a large loss. Good claims service can ensure a long term relationship. Over time likely claims costs become more certain, feedback from claims staff as to why losses occur can assist with risk management and improving the quality of the risk. Business retention is seen as critical since the cost of acquiring new business in a competitive market means having to discount premiums. Imagine being able to retain
business and charge more for it, consistent with its performance, because of a superior claims service? An observation I’ve made over the 14 years I’ve worked in claims is the Claims professionals approach towards settlement negotiations. Whereas 14 years ago it would not be uncommon for a claims professional to make an offer of settlement in a short, terse letter, saying “We offer you $10,000 all inclusive of costs in settlement of your claim, without any admission of liability. This offer will remain open for a period of 28 days whereby it will be withdrawn” Nowadays most negotiations are conducted face to face and I feel the day is not far away whereby a claims professional, armed with the behavioural & technical ability to assess a claim and make a decision, in cases where you know you are liable and they have a frank injury, are consistently meeting face to face with claimants, empathising with them and conceding that “Yes my Insured is liable. They have now corrected their work practices so that sort of incident will not occur again. I recognise your loss and it is my professional and moral obligation to try and put you back in the position you were in before thisaccident occurred. I would like to offer you the amount of $x which is made up like this……..” Having the skills and ability to be able to problem solve in this way will contribute immensely as to what this role can do for an individual, the Insurer and the general community. In a financial sense and in as far as reputation is concerned. With an aging workforce Insurers have to start recruiting the brightest young Year 12 and University leavers. They have to invest in legal & medical training. Support attendance at seminars and membership of industry bodies, as well as provide travel and secondment opportunities to attract the right candidates and make claims a specialist profession up there with the learned ones. When I first started in Insurance my Father told me in no uncertain terms not to be ripping people off. Despite having settled 5000 claims I can say, hand on heart that I have never ripped off or short changed a single person. On reflection I’m not really surprised that he had that fear but I hope that my colleagues and I are doing our bit to change perceptions about Insurance claims both as a service and as a career.