Modern Insurance Magazine - Issue 28 by Charlton Grant

I N T R O D U C I N G

25.04.2018

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MODERN Insurance

Editorial Contributors David Williams Technical Director AXA Insurance

Martin Milliner GI Claims Director LV=

Donna Scully Managing Director Carpenters

Michael Warren Managing Director Minster Law

Dr. Hugh Koch Clinical Psychologist and Director Hugh Koch Associates

Nik Ellis Managing Director Laird Assessors

James Roberts Business Development Director Europcar UK Group

Richard Beaven Distribution Director Swinton Insurance

Jason Tripp Operations Director Coplus

Richard Taylor UK Business Director GT Motive

Jonathan Hewett Chief Marketing Officer Octo Telematics

Rupert Armitage Managing Director Auto Windscreens

Julie Thomas Head of Diversity & Inclusion Zurich Insurance Group

Sarah Roberts Marketing Executive Eclipse Legal Systems

Keith Tracey Managing Director Aon Risk Solutions

Tim Wallis Mediator and Solicitor Trust Mediation

Marc Lafferty Chief Revenue Officer EDAM Group

Trevor Lloyd-Jones Senior Marketing Manager LexisNexis Risk Solutions, Insurance

WELCOME s 2017 comes to a close and a new year begins, millions of people will be looking to the future to see what 2018 will bring them. Insurance professionals are no different, though they’ve very likely been looking further ahead and for much longer, trying to identify the emerging risks that will impact their policyholders. But there is another risk, not to policyholders, but to the industry itself, that until recently insurers have been overlooking.

This is of course the rise of the start-up. As the big players have begun to adapt to the expectations of the modern customer, somewhat encumbered by their size, the door has been left open for a raft of new businesses to move in and set up shop. The freedom and flexibility of these start-ups has allowed them to meet the needs of some more niche customers, and this issue of Modern Insurance includes the first of our new Industry Innovators interviews, as we take a look at some of the ways recent entrants are filling the gaps in the market. We spoke to Steven Mendel, CEO & Co-Founder of Bought By Many, about the challenges of establishing yourself in a crowded market, and we look forward to hearing about the experiences of other disruptors in future editions. Larger insurers have recognised the need to evolve, and we are beginning to see them developing their own start-up incubators, allowing them to invest in and gain insights into the adaptability of these smaller companies. Munich Re is one such example, and we talked to cover star Mark Dennis, COO & Co-Founder of their Digital Partners unit about the way insurers can work with startups to address unmet demand. The brand new UK Customer Service Excellence Awards takes place on Wednesday 25th April 2018 at Café de Paris in London, and this unique evening is the perfect opportunity to be recognised for the way you are delivering outstanding customer service in this competitive industry. There is a huge range of exciting categories you can enter into for the chance to win a prestigious accolade that will let your customers know you are the best choice for them. It’s entirely free to nominate, and nominations are open until Wednesday 14th February. You can find all the details on how to enter at https://www. customerserviceexcellenceawards.co.uk and Modern Insurance would like to wish all nominees all the best for the UK Customer Service Excellence Awards, and for 2018.

Brendan Gurrie, Editor, Modern Insurance Magazine. 01765 600909 | @ModernBrendan | brendan@charltongrant.co.uk Issue 28 ISSN 2515-3803 Editor Brendan Gurrie

Editorial Assistant Poppy Green

Project Manager & Events Sales Rachael Pearson

All material is copyrighted both written and illustrated. Reproduction in part or whole is strictly forbidden without the written permission of the publisher. All images and information is collated from extensive research and along with advertisements is published in good faith. Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

Issue 28

Modern Insurance 03

MODERN Insurance

Issue 28 | ISSN 2515-3803

07 12 25 44

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contributors

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04 Modern Insurance

Risk Solutions provides products and services that address evolving client needs, while upholding the highest standards of security and privacy.

Issue 28

MODERN Insurance

NEWS 07 Graeme Trudgill

Graeme Trudgill, British Insurance Brokers’ Association (BIBA), discusses the influx of change within the broking community and how BIBA is working to help its members navigate their way through them.

INTERVIEWS 12 Mark Dennis

Mark Dennis, Munich Re Digital Partners, discusses how start-ups are disrupting the insurance industry and how Digital Partners is working with them in order to build exciting new and innovative products.

17 Jerry Wilson

Increased emphasis on cyber security, the rise of insurtech and the effect of numerous external factors are all impacting the insurance industry. Jerry Wilson, Jelf, told Modern Insurance how brokers are responding to this change and how their role as client advisors will only become more crucial.

20 David Hertzell

Fraud was a hot topic at the A2J Autumn Update Conference in November. Modern Insurance caught up with David Hertzell, Chair of the Insurance Fraud Taskforce (IFT), almost two years after the IFT published its final report, to see how insurance fraud, and the industry’s response to it, has evolved since.

EdiTorial Board

FEATURES

25 An inclusive industry

41 Sector Soapbox

25 The evolving landscape of technology and how to avoid being left behind

44 Coming clean about claims

Julie Thomas, Zurich Insurance Group

Rupert Armitage, Auto Windscreens

27 A work in progress

Keith Tracey, Aon Risk Solutions

27 The Discount Rate and reinsurance

David Williams, AXA Insurance

28 The role of the Case Manager

Jo Evans, Unite Professionals Ltd

Richard Taylor, GT Motive

29 A cruel joke?

Donna Scully, Carpenters

31 Accelerated change

Nik Ellis, Laird Assessors

James Roberts, Europcar UK Group

33 Opportunity to innovate

Marc Lafferty, EDAM Group

33 Digital collaboration for happier customers

Sarah Roberts, Eclipse Legal Systems

Tim Wallis, Trust Mediation

35 Getting ready for GDPR

Jason Tripp, Coplus

37 Future focus

Martin Milliner, LV=

37 Telling it as it is: The impact of advanced communication skills

Jonathan Hewett, Octo Telematics

Trevor Lloyd-Jones, LexisNexis Risk Solutions, Insurance

The twin track approach to successful claims settlement

53 Case Study: Eclipse

Dr. Hugh Koch, Hugh Koch Associates

38 Future of flood prevention

Lea Cheesbrough, Head of Broker Development for New Start Ups at Broker Network, gives a crash course on why insurance brokers often go it alone, and what makes start-ups thrive.

52 Just a thought from Eddie Longworth

38 Scaling the (tech) mountain

Tristan Prince, iovation, discusses the ever-evolving ways insurance fraudsters are obtaining and using stolen data, and explains the ways insurers can help protect themselves and their customers.

50 Safeguarding the independent broker

35 Unprecedented change

In the first of our Industry Innovators Interviews, we spoke to Steven Mendel, CEO and Co-Founder of Bought By Many, who told us how it takes a consumer-centric mindset to stand out in today’s insurance environment.

48 Tristan Prince

31 Refresh the supply chain

Claims Rated enables claimants to offer feedback on their claims experience. James Clarke, Founder, explains how insurers need to recognise the importance of feedback and how they can use it to their advantage when driving new business.

46 Industry Innovators Interview: Steven Mendel

29 Digital Collaboration

Modern Insurance’s panel of resident associations outlines the burning issues facing the claims sector.

Eclipse’s Proclaim Case Management system enhances speed and transparency at Bellegrove Business Insurance

10 MINUTES WITH 54 10 minutes with…

Dan Chesney, S&G Response.

39 Investing in technology

Michael Warren, Minster Law

39 Is underinsurance flying under the radar?

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Richard Beaven, Swinton Group

Modern Insurance 05

carpenters

NEWS

Graeme Trudgill TALKS NEWS Graeme Trudgill, British Insurance Brokers’ Association (BIBA), discusses the influx of change within the broking community and how BIBA is working to help its members navigate their way through them.

o the brief for this article was examining current issues or topics of interest affecting brokers, but where to start?

At the time of writing, we are part way through the BIBA Tour of the Regions, meeting brokers from across the UK, and there is a flood of issues coming back from members. It’s all systems go in Westminster now that the ‘new’ Government has returned from recess. There is a raft of legislation in the Queen’s speech relevant to the broking sector. For instance, there’s the Financial Guidance and Claims Bill (looking at the replacement body for the Money Advice Service), the Automated and Electric Vehicle Bill, the Civil Liability Bill (looking at whiplash fraud) and a flock of Brexit Bills. Outside of that, there are changes to the Ogden Discount Rate, the Financial Conduct Authority’s new Senior Management and Certification Regime, the Competition and Markets Authority’s study into digital comparison sites, a House of Lords debate about reducing regulation, the Insurance Distribution Directive (IDD) arriving in February 2018, a refit of the Motor Insurance Directive (looking at the Vnuk issue amongst others), the FCA concluding their access to insurance call for input (looking to offer greater support to people with cancer accessing travel insurance), the Data Protection Bill bought about by the General Data Protection Regulation – let alone campaigning against further rises in insurance premium tax in the forthcoming budget. All of this change puts massive pressure on the insurance broking community, whether it is a broker using passported capacity under threat from Brexit or a firm trying to navigate the Data Protection Bill jungle. Many BIBA brokers long for stability, but all of these changes bring with them the need to divert resource into adapting to change, for example, the new insurance product information document (IPID) will mean software house system changes. We are pushing for an extension to the implementation of the IDD to give members sufficient preparation time.

It has been great to see the broking community embrace the ‘Dive In’ festival recently, supporting diversity and inclusion; this is something BIBA strongly endorses

We asked members their views about Brexit and it became clear that around 60% were affected. The issues members raised included: • The need for a new free trade agreement. • The FCA to be given a new ‘global competition objective’ like the Financial Services Authority used to have. • Around 85% wanted access to passported capacity. • A desire for a multi-year transition, as in less than six months, April 2018, the industry will be issuing policies that potentially enter the post-Brexit period.

Underinsurance and the Ogden Rate

The change to the Ogden Discount Rate in February caused premiums to rise, but what became clear to brokers was the sudden increase in underinsurance risk as previous reserves for injury claims increased greatly. For example, one broker reported reserves for a liability claim increased from £8 million to £15 million

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Modern Insurance 07

NEWS

The change to the Ogden discount rate change in February caused premiums to rise, but what became clear to brokers was the sudden increase in underinsurance risk

the moment the rate changed, and with many policies offering a limit of £10 million of cover this was a major concern, let alone all those package polices with just £2 million of cover.

The use of unrated insurer capacity remains an issue and it is good to see so many brokers using the BIBA Litmus Test due diligence tool in order to check any markets before they use them.

The Lord Chancellor’s new proposals about how the Discount Rate is set are welcome. They included a move to low risk investments and a new independent panel. This will achieve balance in the insurance sector and will provide claimants with fair and just compensation. However, there will still be a period while the -0.75% rate applies, meaning there continues to be a concern about potential underinsurance.

Aside from all of this, members have been saying it is difficult to attract new talent to the insurance sector. BIBA is working with the Department for Work and Pensions and their careers advisers and the Chartered Insurance Institute on careers and apprenticeships to try to attract and retain new talent to our sector from different channels and backgrounds.

Barriers to innovation

Members often talk about the pace of technological change or the ‘fourth industrial revolution’, as it is often called. BIBA is helping members navigate through this change by creating a cross-industry innovation working group. This will look at industry barriers to innovation and will help brokers to engage and access innovative technology that can help their businesses. Outside forces can often affect a broker’s business model. It was interesting to hear concerns raised by politicians about UK productivity being so low in comparison to other countries after attending the recent Labour and Conservative party conferences. BIBA was very firm in our reply that it is the burdensome FCA regulation, red tape and cost that actually stifles brokers in their daily business as well as new start-ups and innovations. We were pleased to be involved in the recent House of Lords debate on reducing regulation and will look to Nicky Morgan MP, the new Treasury Select Committee Chair, to hold the FCA to account on our members’ behalf.

With so many live issues it is easy to forget that only last year we had the biggest change to insurance law in more than 100 years when the new Insurance Act came into force. This seems to have bedded in fairly seamlessly to date, but members have had to work harder than ever to ensure the fair presentations and reasonable searches are meeting the new requirements. We will see further clarification when case law is made. And after years of calling for reform of the Financial Services Compensation Scheme’s funding we should finally see the FCA put forward their proposals shortly. Finally it has been great to see the broking community embrace the ‘Dive In’ festival recently, supporting diversity and inclusion; this is something BIBA strongly endorses. In BIBA’s 40th year as a trade body, we don’t think we have ever seen such a full agenda of broker issues. . Graeme Trudgill is Executive Director of BIBA

We are also helping the industry to better understand cyber risks and working on initiatives to increase the number of cyber products bought. This is in partnership with Government, security services and BIBA’s Cyber Committee.

08 Modern Insurance

Issue 28

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INTERVIEWS 11-19

Munich Re was already driving many innovation initiatives, but we wanted to create a one-stop shop where Insurtech start-ups and disruptors could come to build exciting new insurance propositions

INTERVIEW

Mark Dennis Mark Dennis, Munich Re Digital Partners, discusses how start-ups are disrupting the insurance industry and how Digital Partners is working with them in order to build exciting new and innovative products.

Q A

Can you outline the role of Digital Partners, and the steps that led to its creation?

I launched Digital Partners with Andy Rear in the early part of 2016 in response to a growing demand from the new world of Insurtech. Munich Re was already driving many innovation initiatives, but we wanted to create a one-stop shop where insurtech start-ups and disruptors could come to build exciting new insurance propositions. At the time, Andy and I were in “grown-up” jobs in the reinsurance business of Munich Re. These days we work in a small co-working environment, wear jeans and t-shirts to work every day, and we constantly work on new ideas.

Q A

How does Digital Partners work with start-ups to develop and expose their products to the wider market?

We meet many start-ups every month, more than 500 since we started eighteen months ago. I describe our model as doing the heavy lifting for the start-up so that they can focus on what they are best at, such as acquiring customers and providing a great experience. We provide insurance capacity of course, but we also have expertise in product design and pricing, legal and regulatory requirements across multiple markets, and technology. We can provide access to venture capital and we have a network of service providers who form part of the new insurance ecosystem. We are deliberately disruptive and we want to be the catalyst for change.

Simplified graphic of the DP model Global multiline capacity

§ Speed, both in decisions and execution Venture capital

Execution

Product design and data

§ Operational agility and scalability § Implementable underwriting excellence § Building sustainable relationships with our partners

Technology

Once we meet a prospective partner, we will move very quickly, with a decision on the partnership made within 1-2 weeks. We then aim to deliver a full solution including the technology within 3-6 months. It is an intense process but we know we need to move at a serious pace.

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Q A

Have you identified trends and similarities in the way startups are disrupting the insurance market?

The first wave of Insurtech tended to focus on better distribution models, so typically mobile first and low friction quote and buy processes. We are now seeing more plays throughout the value chain, with smart automation around rating, such as no questions asked underwriting, or claims automation using artificial intelligence and some machine learning. I am very excited about what may happen in the claims space over the next couple of years; it is the area with the most friction and generally the worst customer experience, so it’s absolutely ripe for disruption.

What does the customer of today expect from their insurance provider, and do you believe large, established insurers are able to meet those expectations?

Today’s customer still does not really want to think about insurance; after all it is not a particularly compelling purchase. In general, most consumers, and in particular millennials, now expect instant results, whatever the subject. They expect to be able to click or possibly swipe right to buy. They expect slick apps and intuitive interfaces. They expect products that fit their needs, not products that their parents once bought. Some established insurers have been slow to respond.

Why don’t traditional insurance product models suit the needs of some consumers, and what sort of models may be more appealing to those consumers?

There is still a demand for traditional insurance products, but they are being complemented with other choices. For example, on-demand insurance that covers you only when you need it, or usage-based insurance that is effectively a metered pay-as-you-go service. Certain customer segments will perhaps always buy a traditional product through a traditional channel, but even that is changing. We probably underestimate the uptake of technology by the non-millennials, and the fact that they also really want the right product for the right price, delivered via a channel that they want to use.

Are the requirements of modern insurance consumers similar outside of the UK, and have you seen international differences in the types of start-ups that are emerging?

There is a misconception that all millennials are the same or at least very similar. In fact, they are probably more individual than any previous generation, and therefore they expect to be treated as such. In insurance terms, this means more sense of personalisation in product and journey, with the ability to pick what is right for you at the time and for that to change on demand

Modern Insurance 13

INTERVIEW

The very best Insurtech start-ups are those who understand the market they are trying to disrupt and over time. We observe that this is the case in both the US and Europe, which are currently our main target markets.

Q A

How does the pace of technology adoption differ between start-ups and more established insurers?

Start-ups will almost always use the latest open technology and will describe themselves as digital first. They will not be constrained at all by any legacy systems or processes. The established insurers will almost always be the opposite, stuck with legacy systems that make change slow and painful. Although legacy tech is a huge problem, I believe that a legacy mind-set is the biggest hindrance to a traditional insurer addressing the needs of the modern consumer. At Digital Partners, we are in a strong position. We have the strength of our parent group behind us with a wealth of talent and expertise to tap into. But we are also a start-up ourselves and we are geared to work at the pace of our partners. In many cases we execute even faster than the start-ups, which is a testament to the fantastic team we have built.

Q A

About Digital Partners and Munich Re Established in 2016, Digital Partners is a global business unit of Munich Re, designed to partner with disruptors who are changing the way insurance is experienced by customers. Digital Partners has operations in Europe and the US. Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. In the financial year 2016, the Group, which combines primary insurance and reinsurance under one roof, achieved a profit of €2.6bn. It operates in all lines of insurance, with over 43,000 employees throughout the world. With premium income of around €28bn from reinsurance alone, it is one of the world’s leading reinsurers.

What challenges do start-ups face when establishing themselves in a competitive market like insurance?

The biggest challenge they face is how to operate effectively in a highly regulated environment. The start-ups will move at a pace that is not in tune with the old-style insurers or the regulators. At Digital Partners we pride ourselves on the ability to join the two worlds together, providing the gearing in the middle to ensure that this works. One of our key skills is in execution, with around half of my team, including myself, from a project delivery background. The very best Insurtech start-ups are those who understand the market they are trying to disrupt.

Where are the currently underserved areas of insurance in which you predict new and innovative companies will emerge to address customer need in the future?

Many of our partners target underserved areas of insurance. For example, cancer patients who require travel insurance but find a traditional product prohibitively expensive. At Digital Partners we have an appetite for addressing those needs and for taking a somewhat experimental approach. We test and learn and will adjust accordingly. The feedback from our partners is that this is another aspect that sets us apart from the competition.

About Mark Dennis Mark has a background in technology and insurance, having worked across the life and general insurance sectors for more than 20 years. He lives in London with his family, and in his spare time he coaches and plays football.

Sample Partners

Our partners may often be from outside the insurance industry but they are all consumers of insurance. They see the pain points in finding suitable cover, whether that is for a small business or for an aging pet. They are innovators who want to make insurance a better proposition, and we are here to make that happen.

Q A

How far have Digital Partners come on their journey so far, and what else in on the horizon?

After eighteen months of operating, we currently have more than ten partners live with another fifteen to twenty in our very active pipeline. These partners operate across all areas of personal and commercial lines. We have grown from just two of us at the outset to a team of 30. We continue to meet new and exciting start-ups every day of the week, and will continue to work with them in creating great insurance solutions to address the emerging demands. Mark Dennis, Chief Operating Officer, Munich Re Digital Partners.

14 Modern Insurance

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INTERVIEW

Jerry Wilson Increased emphasis on cyber security, the rise of insurtech and the effect of numerous external factors are all impacting the insurance industry. Jerry Wilson, Jelf, told Modern Insurance how brokers are responding to this change and how their role as client advisors will only become more crucial.

Q A

What are some of the current challenges facing brokers on a local and national level, and how have these been met?

At Jelf and Bluefin, we see ourselves very much as client advisors; we are there to help our clients protect themselves from whatever risks they have, to help them understand what those risks are and to give advice accordingly, before they start to think about price. Increasingly we are seeing the effect of the Insurance Act 2015, and that means educating many of our clients. We need to explain everything upfront and clearly, give them advice about what we think they need, but more importantly, what insurance can and cannot do. Then, and only then, can we go and find out what the cost of putting that together for them is. Many of our SME clients still think that insurance is a purely transactional thing. But the market remains very competitive, and so insurers are looking for new opportunities because there is no growth in the market place as a whole. The UK GDP is static at best, and it might even be going backwards. Motor and fleet insurance is going up in price because of the Ogden effect, whereas property related risks are shrinking because premiums are falling in a competitive environment.

Q A

How have client demands changed over time, and have brokers kept up with them?

Clients expect a quality service, the bar continues to rise, they donâ&#x20AC;&#x2122;t want any surprises when the moment of truth comes, and if they do get surprises then there are inevitably consequences for the broker. People are also more aware of how to complain; they are aware that if we get it wrong then we either put it right or pay the consequences. The world is changing in that respect, and certainly insurers are more black and white than they ever have been. If there were non-disclosures at the outset or information they thought they should have had, they are quick now to either pull away or limit what they might consider reasonable to pay within the terms of the policy. Getting it right for the client and making sure that they are properly informed is the most important thing. They may not always know it, but it is the way it needs to be. They are now used to buying personal lines through aggregators. Do they really understand what the differences are in policies? Insurance is no different to anything else; if you are paying less you are generally losing something in way of cover.

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Most people see insurance as a cost rather than an investment, so technology can only help in this regard

Modern Insurance 17

INTERVIEW

The reality is that we will probably find that the high street distribution will be very niche and specialist, and we increasingly expect the share of online will grow, but it won’t take over entirely

What have been some of the largest external influences on the broking industry, particularly in regards to legislative and regulatory changes, and what effect have these had to date? The broker/client relationship is now set out far more explicitly, and that is positive. The fact that insurers now have different remedies to what they might pay in a claim or whether they would re-visit the risk, depending on whether things are deliberate or accidental, is also positive. But again, what we are seeing is that we need to be more explicit in the types of information we extract from the client in order to provide that to the insurer. Then there are other factors like the Ogden rate, which has had a significant effect on any insurance provider of personal injury. We are seeing premiums increase in the motor sector, certainly on renewal. However, there is still a motor market out there that is competing for new business. That is likely to have a bigger impact as we go into 2018 as the reinsurance cycle kicks in; certainly what I am hearing is that reinsurance premiums are going up for insurers in those spaces. Then there’s the GDPR, and I believe that will have a very positive effect on driving cyber insurance. A lot of clients are still struggling to understand why they need it, and I think GDPR is helping brokers to get the message across that this is about data protection.

How is the emergence of cyber risk being tackled by brokers, and where does this response still need to be improved?

We run seminars for clients and help to raise awareness of the types of losses that are happening in the marketplace as a whole. Certainly on all our renewal meetings, cyber is firmly on the agenda. I was speaking to a colleague the other day, whose client said that they don’t need cyber insurance as all of their computing is done in the cloud. When asked what happens if their data, hosted by Google, is breached, he replied saying that’s their responsibility, but in reality of course the client will have a responsibility here. There are lots of misconceptions out there. “We don’t hold personal data”. Well who does your pay roll? Are you providing information to a payroll provider? All that falls under GDPR, and any breach is considered as a data loss, but data loss falls under cyber insurance. It is all about trying to bring this to life for them; real case examples certainly help. Again, it is about being a little bit more direct with our clients; we make sure that if they don’t buy cyber insurance, we are flagging the risks and that they have made a conscious decision not to.

Q A

What other new and emerging risks do you predict will affect the industry, and how should these be addressed?

Whilst it is not immediate, autonomous vehicles will have an impact, and they may even have an impact on the way motor insurance is sold and by whom. We also have to be mindful of disruptors coming into our marketplace. For example, what impact would a Google or an Amazon entering the insurance market have?

18 Modern Insurance

Has the impact of insurtech been felt in the broking sector yet, and how will technology developments in the near future assist brokers? I know insurers are exploring the use of AI, and they are also exploring how they can use big data to deal with claims in particular, for example, by using technology to speed up claims, using photographs sent by the client from their smartphone to authorise claims and make sure that they minimise third party costs or credit hire. There is a lot of work going on in this space now, which is excellent. At the end of the day, insurance is complex and, certainly in the business sphere, that requires a lot of understanding of lots of different types of insurance; every risk is unique in that respect. We believe that space will continue to exist and even grow. Most people see insurance as a cost rather than an investment, so technology can only help in this regard.

What have been some of the largest developments in the broker/insurer relationship you have witnessed, and how do you foresee this continuing to evolve in the future?

We will see more bespoke products and the broker will be developing the product with the insurer underwriting it in the background. So that is not an MGA, it’s developing our products, which allows us to differentiate ourselves and help us ensure that our clients are getting a unique offering. It allows brokers to be more confident in the advice that they are giving their client around the product itself. We have got to be more specific in how we advise our clients, what we tell them and making sure that they understand not only what they are covered for but also what they are not covered for, and what they need to do in order to ensure the policy continues to operate at all times. The bar continues to rise, and that plays to the broker’s hand.

Is locality of broker still important to modern clients, and how do you see the position of high street or independent brokers changing in the future?

Jelf Bluefin have a large network of offices, and we also sell personal lines insurance, both over the counter and over the phone. Young people who have grown up with technology are more comfortable with using the internet, and that doesn’t mean to say that the older generation don’t use it either, but where the broker comes into its own are for people who value advice. We can solve problems that the client has that perhaps can’t be done over the Internet in a cost-effective way because we can drill down and understand more. It is evolving and is certainly having an impact, but we do see clients coming back from the online marketplace because they realise somewhere along the line that they are having to invest a lot of time into finding what they want, which we can do for them; they value the advice. The reality is that we will probably find that the high street distribution will be very niche and specialist, and we increasingly expect the share of online will grow, but it won’t take over entirely.

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INTERVIEW

Increasingly we are seeing the effect of the Insurance Act 2015, and that means educating many of our clients. We need to explain everything upfront and clearly

Q A

How has Marsh’s acquisition of Jelf improved both businesses and the service offered to clients to date?

We are two complimentary businesses, and we have found that we have been able to serve our clients’ needs in both directions. Jelf is able to help Marsh in areas where it wouldn’t normally operate, which gives the group a combined opportunity that wasn’t there before. Equally, we will have specialisms and Marsh has specialisms that we are now able to share, and we have done so to good effect. We have also been able to expand the products and services that both are able to offer, as well as internal employee benefits, case management and the Claims Consultancy, which adds value to both businesses..

Q A

What are some of Jelf’s aims and projects in 2018?

Our number one aim is to continue to grow and serve our clients as a trusted advisor, as well as focusing on our communities, whether that is a physical community, a particular niche of clients or a particular industry sector.

Jerry Wilson

Jelf and Bluefin will be integrating their businesses more closely during 2018, which is very exciting and provides new opportunities for us to provide additional services to our clients and to promote what will be our new and combined business into our enlarged client base. Our goal is to be one of the leading trusted advisers in our chosen markets. We want to be the best and we want our competitors to aspire to be as good as we are. It is a big objective but one that we know we can do.

Jerry Wilson started his career at Aviva, initially on the road as a Trainee Inspector before moving on to selling General and Life products to agents, brokers and the general public. He joined Goss & Co in 1987 as an Account Manager, quickly progressing to Managing Director just two years later. He led the team to grow the business from £1.7m to £6.3 million over five years, through both organic growth and acquisition, before selling to Jelf in 2006. Since being with Jelf, Jerry has led teams on major projects such as the installation of Acturis, and in his role as Group Operations Director he’s been responsible for IT, premises and numerous other areas across the business. Most recently, his appointment as the Managing Director, South East, of the Jelf and Bluefin combined business sees him leading a team of over 500 colleagues across 20 offices with combined revenues approaching £50m.

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INTERVIEW

David Hertzell Fraud was a hot topic at the A2J Autumn Update Conference in November. Modern Insurance caught up with David Hertzell, Chair of the Insurance Fraud Taskforce (IFT), almost two years after the IFT published its final report, to see how insurance fraud, and the industry’s response to it, has evolved since.

Two years after publishing the Insurance Fraud Taskforce’s final report, how has insurance fraud evolved, and how do you feel the industry has responded?

Fraud follows the money. Fraudsters inevitably target the softest targets they can reach to get the highest return for the lowest risk. There has been a slight decline in what you might call traditional fraud areas, like crash for cash and staged accidents. Bent metal claims are probably about the same, and there has been an increase in identity fraud. We’re also seeing a lot more holiday sickness claims, but I think the emphasis on holiday sickness claims will move on, partly because travel companies were quick to respond to the problem and are liaising with each other and insurers more than they previously were. Also, those claims have a very direct feedback mechanism, because if the price of holidays goes up as a consequence of fraud or if holiday companies don’t want to take British tourists, it is a direct effect that will help people realise there is a cost to this fraud, and it will discourage it.

Which of the recommendations made in the final report have you seen implemented successfully, and which do you feel should have been acted on that might not have been yet?

To be fair to everyone who was given jobs to do as a result of the Taskforce, they’ve all started. Some recommendations were more long term than the others, so you can’t compare one with the other, but everyone’s done what they said they would. The most effective quick wins have involved improved communication. One thing I believe the Taskforce did is to improve communication amongst people who thought they might not have any direct relationship with insurance fraud. There’s also improved communication between the insurance industry and some of the relevant regulators, like the Claims Management Regulator and the Solicitors Regulation Authority, and the Information Commissioner’s Office’s project to pull together a multi-agency group to discourage and prosecute nuisance calls has seen a decline in complaints about nuisance calls.

Data sharing is probably one of the most effective means of countering fraud

There’s been a lot of improvement on the Claims and Underwriting Exchange, the database insurers use, but there’s less clarity yet on the involvement of price comparison sites. It’s not clear where the incentive is for them to get involved, but I think they’ll come all at once as a block so there’s no competitive disadvantage in taking part, or they just won’t come at all. If they don’t come voluntarily as a block, this may become a regulatory issue. The improvement of the SRA powers is also something we recommended, but I don’t think much has happened with that either.

What impact do you predict the Ministry of Justice’s proposed personal injury reforms will have on fraud in the industry?

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INTERVIEW

The best results, or the most immediate results, have come from co-operation between the insurance industry and other sectors

It’s almost an impossible question to answer. Simplistically, fraud follows the money, so, if you take money out and make the process more difficult then you would expect to see less fraud. The trouble with that is those reforms weren’t completely targeting fraud, and there were other reasons for them. By making life more difficult you’re targeting both the dishonest and the honest alike, so there’s a problem with the acceptance of that. If demand moves into another area, the fraud will move there too.

Has emphasis on the Discount Rate reduction within the insurance industry resulted in less focus on personal injury reform and combatting fraud?

I don’t think so. The Discount Rate hit the headlines in a big way because it was a big, big change with a very large financial impact, and the insurance industry wasn’t expecting that much movement in the rate. So there was a lot of noise and excitement about it and a lot of pressure at high levels to do something about it. The anti-fraud measures have carried on; these probably haven’t hit the headlines because they’re long term and not short term, but you find that people who signed up to do things have done them.

Do you believe that transfer of claims management company regulation to the Financial Conduct Authority will positively affect the influence of poor CMC behaviour on fraud?

It’s quite hard to know how this is going to work in practice. The FCA is a more intrusive and therefore more expensive regulator than the CMR so the new regulatory regime will be better resourced. It will have a bigger effect on legitimate CMC activities, so you might see industry consolidation. However, those kinds of organisations don’t tend to be the ones involved with fraud. The ones tempted to be involved in that area are more likely to play regulatory arbitrage and dress themselves up as something else to avoid it, or try to stay out of the regulatory matrix all together if they can get away with it and operate illegally if they can’t. You’ll see a better organised, more mature business sector, and the fringes will have to be dealt with by whatever mechanisms are available.

Where have you witnessed successful examples of industry collaboration in combatting fraud in the last year, and what effect have these had?

One of the great achievements of the Taskforce was to improve communication among insurers and between insurers and other sectors that are involved and affected by all of this. The insurance industry has continued what is quite expensive support for the IFB and IFED, and they’ve agreed through the ABI for a long-term consumer education programme involving behaviour

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economics and the like; it’s quite a large investment with a lot of continued operations. The best results, or the most immediate results, have come from co-operation between the insurance industry and other sectors.

Q A

Where should the government focus its attention in order to fight fraud and improve the insurance industry?

The government have a particular role because they coordinate all the various sectors, because you can get so far with voluntary initiatives, but there are limits on that. The government’s continued interest and support for the IFT is helpful because people can come together to give the government an overview of activity. There’s going to be an annual report to the Minister so there will be a persuasive element for continued cooperation. Something like improving the SRA powers requires government intervention. However ultimately effective anti-fraud initiatives are going to be something that will be best dealt with at an operational level by cooperation among the participants, rather than by government diktat.

Q A

Has enough emphasis been placed on educating the public around fraudulent behaviour, and how might this be improved?

More can be done here. If you ask the ombudsmen, you’ll see one of the biggest causes of dispute between policyholders and insurers is that policyholders don’t understand what they’ve bought. The insurer might not be wrong in saying that something isn’t covered, but it can leave the policyholder feeling like they’ve been ripped off, creating a victim mentality. So education has a big part to play in stopping this. To some extent this needs to happen in the mainstream media too, because sometimes you hear insurance being discussed where there isn’t a clear understanding of how things work. However, it’s very slow to change a cultural viewpoint; it would take many years and needs a lot of effort, resource and continued upkeep put into it. An effective one off anti-fraud campaign could stop fraud for a couple years, but once it stops things would go back to the way they were before. There needs to be long-term acceptance, funding and commitment, which is always difficult.

Q A

What role will data and data sharing play in combatting fraud in the years to come?

This is crucial. Data sharing is probably one of the most effective means of countering fraud. It’s very hard for any individual insurer to see an organised, well-structured scam, because they only ever see some of it, and the clever fraudsters won’t overplay their hand with one insurer. So unless there’s sharing of data, they don’t tend to pick these things up. That’s even more the case when you’re looking across sectors into banking or other sectors where people are committing fraud.

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INTERVIEW

One thing I believe the Taskforce did is to improve communication amongst people who thought they might not have any direct relationship with insurance fraud With the new GDPR coming in, there is a question as to how data sharing can be maintained. However, from what I’ve seen the current exemptions will be carried forward into the GDPR, which would be useful because data sharing is crucial. Historically, insurers were rather siloed in their approach, and that was to their overall detriment, because while they all thought they had marvellous antifraud strategies, they were only good for relatively short-term success. Fraudsters worked out how to get around the insurers; what those insurers didn’t see coming from one side was coming around from the other. It’s been a hard lesson for people to learn, but I think on the whole the silo mentality is a lot less prevalent now than it may have been ten years ago.

Q A

How do you foresee the growing implementation of automation across the industry impacting on fraud?

There’s always pressure to make the customer journey easier, and to cut costs by automating things. There’s a balance to be had between doing that and having effective anti-fraud strategies in place. At the end of the day, the insurers who get that balance right will have happy customers on one hand and a good anti fraud system on the other, but it’s by no means an easy thing to achieve.

Which recommendation would you make to the industry today that you feel would have the most impact in the fight against fraud?

It’s a very simple one: communication. If everyone keeps talking with each other and liaising effectively, particularly with other sectors, like the telecoms sector, which can be a conduit to fraud, you do get good results. Keeping the communication going is probably the most important recommendation of the Taskforce.

David Hertzell The Insurance Fraud Taskforce was set up in 2015 by the Ministry of Justice and the Treasury. It had six members drawn equally from amongst insurance industry organisations and from consumer organisations. The chair was the former Law Commissioner David Hertzell. The Taskforce took evidence from a very wide range of organisations and people and set up a separate personal injury sub group to report on the issues in that sector. The Taskforce produced an interim report and call for evidence in 2015 and in January 2016 a final report with 26 recommendations. All 26 recommendations were accepted by the government who, as recommended, published in August 2017 their first implementation report on the steps taken to meet the Taskforce recommendations. Two further reports on progress are expected.

Fraud follows the money. Fraudsters inevitably target the softest targets they can reach to get the highest return for the lowest risk

Post-recommendations, those people who were tasked with actions got together to keep talking to each other about what they had done, what they were doing and what the barriers might be, which provided a format for the Treasury to publish its annual report. Unfortunately due to the last election they published it nine months late in prime holiday season, but nonetheless they did it, and they’re going to write another one next year, hopefully more promptly. There’s a big tick for everybody for continuing to put the time and effort in and for investing quite a lot of money into something that is actually very socially damaging if it’s allowed to run out of control, and I want to see communications continue. The only caveat I have with all of that is that there can be an overemphasis on lowering premiums by fraud prevention, but premium costs are such an amalgamation of factors that to quote numbers is pure speculation, and unfortunately those numbers can have a currency that’s beyond their real value.

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EDITORIAL BOARD 23-39

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An inclusive industry How is the insurance industry embracing diversity, and is there still room for improvement in attitudes towards inclusion? e are seeing real momentum as insurers do more to improve diversity across all levels of their organisations. Whilst recognising there is always more we can do to embrace diversity, we are undoubtedly witnessing an increase in the number of D&I practitioners being recruited into the sector.

Zurich is a founding member of the Insurance Diversity Forum, alongside Aon, Aviva and Lloyds. By working together in close collaboration, sharing best practice and concerns, we can help address the diversity issues that challenge our businesses, such as re-balancing gender at the top, extending development opportunities for all ages and addressing the gender pay gap. The launch of cross industry employee resource groups (ERGs), such as the Gender Inclusion Network, iCAN (Insurance Cultural Awareness Network) and the LINK Network for LGBT inclusion, are also helping to address diversity. Last year, Zurich launched the first insurance only ‘LGBT Role Models & Allies’ Guide, in partnership with LINK, with profiles from over 35 people across the industry. With two talented female leaders as CEOs, Tulsi Naidu, Zurich UK and Inga Beale, Lloyds, things are changing. Zurich, globally, has 45% women on the board and 30% women in our Global Executive Committee, which we’re really proud of. We’re making great strides at the top. The next step is to tackle diversity at the upper management levels where diversity isn’t as visible. This is where inclusion needs to come more strongly into play as people want to be the ‘included’ one, not labeled ‘the diverse’ one. Zurich is focusing on increasing the scope and uptake of its flexible working models and ensuring employees have equal access to career critical assignments that can pave the way for their future. We are creating an inclusive culture built on respect, with open and trusting relationships where people feel valued and can voice their concerns and ideas. We’re doing this by making our managers accountable through our ‘Eight Great Things People Managers Do’ Standard, a global initiative supported by a learning program including face to face training and online learning. Our in-house Yammer platform also enables employees to share experiences and ideas for success. It’s crucial that we maintain momentum, by keeping the conversation and collaboration going, so we continue to evolve as a successful industry that’s relevant for our customers and future talent both today and tomorrow.

The evolving landscape of technology and how to avoid being left behind was recently asked if I thought that the adoption of technology in the insurance industry would plateau. In my opinion the answer is crystal clear – absolutely not, it can’t. I’ve no doubt that some are hoping that it will slow down but this simply isn’t an option. It doesn’t fit with our culture and developing modern way of life.

The reality is that more money than ever is being pumped into advancements in AI and sophisticated technology, with expectations of partners and customers higher than ever. We cannot stand still, hoping everything grinds to a halt because we’re unprepared. Innovation is snowballing. It’s an opportunity for the industry to lose the shackles of our Jurassic reputation. The presumption that the customer will receive great service, speed and convenience, all at the touch of a button, is a given. How do we ensure that we’re not left behind if we don’t have the time or capital to keep up with the likes of Lemonade or Neos? The majority of us are moving in the right direction by playing to our strengths and forming partnerships with those in the know. For Auto Windscreens, the biggest complication has been addressing the new ADAS (Advanced Driver Assistance Systems) technology in modern vehicles. I have personally been amazed at the exceptional speed that ADAS has been implemented by vehicle manufacturers. It is becoming ‘the norm’ to have these features in even the basic models of cars and currently, the number of windscreen replacements requiring recalibration is fast approaching 10%, further complicating the claims journey and related costs for insurers. The vehicle manufacturers are at the forefront of ADAS technology, dictating the timescale of a driverless future, which is why we made the decision, 18 months ago, to partner with them rather than attempt to ‘keep up’ with their advancements. This strategy not only ensures that we have access to current technology, which is updated every night, prioritising the safety of our customers, it also guarantees that when we fix a windscreen and send it to the vehicle manufacturer for recalibration, it is returned to the customer in the exact condition it was in when it was purchased. Going forward, we must all adopt a method that ensures we are catering for our children and grandchildren, who are far more comfortable with the idea of ‘driving’ without touching a steering wheel than us ‘dinosaurs’. We’re known in the financial industry for being rather archaic when it comes to innovation, but if we focus on the generations ahead, we might finally shake off the unflattering comparison to an old relic! Rupert Armitage, Managing Director, Auto Windscreens.

Julie Thomas, Head of Diversity & Inclusion, Zurich Insurance Group.

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EDITORIAL BOARD

A work in progress Cyber insurance is being promoted as promising but problematic. How can it be utilised to best serve customers? he cyber insurance policy is evolving to respond to the risks of the threat landscape and to the needs of businesses. Cyber insurance remains, therefore, a work in progress. One of the reasons often cited for not purchasing insurance is the difficulty in understanding the cover offered: its complexity can be challenging, even for industry professionals.

How can one navigate this opaqueness? Before considering the cover available, start with four questions that will determine risk profile: 1. What data is held? 2. What protections are in place (this includes technical tools as well as policies and procedures)? 3. What is the assessment of the threat to data loss and what would the consequences be? 4. Are adequate response plans and continuity procedures in place? Some of these questions may present challenges, but having gone through the exercise, one has an understanding of the known and unknown elements of the risks. An insurance professional versed in the cyber product can then help to design what cover is desirable and how to best present this to insurers.

The Discount Rate and reinsurance Following the announcement of a reversal of the Discount Rate reduction, where does the insurance industry’s focus need to be in order to provide lower premiums for customers? here are a number of initiatives ongoing at the current time which impact Personal Injury Claims, probably the most contentious area when in discussion with the media outlets, as well as, of course, our solicitor friends.

Whether it’s whiplash reform or discount rate, insurers have been very vocal about how much this is costing, and how these costs simply get passed on to the insurance buying public. Unsurprisingly, with government promises of specific premium reductions, as these initiatives hopefully come to fruition, the focus will be on whether insurers are actually passing on any savings ‘as promised’. Several large insurers have indeed promised to pass on any savings, and we should expect there to be considerable attention, maybe even some form of mandatory monitoring, looking to see what impact any changes are actually having on premiums.

Proposal forms are usually required, but in some instances they contain irrelevant questions. Meeting with insurers and presenting the risk with supporting documentation is, in many cases, a better route to securing insurance terms. The signed proposal can be supplied at a later date.

So what savings should we expect? The big problem here is what our starting point is. We are currently negotiating reinsurance renewals, and suggested to reinsurers that we expected to see lower increases than those imposed on July Renewals, as we now had a clearer view as to what rate would apply going forward. We expected the challenge “but when will the rate be reduced?”, but what took us by surprise was the assertion that July reinsurance renewals didn’t in fact reflect a full Ogden increase. Instead, they suggested that they were based on the 1% discount rate, which, whilst not in any legislative papers, was the figure claims actually seemed to be getting settled at!

A dialogue with insurers has several benefits. They are repositories of a lot of valuable information about the threat landscape facing similar businesses and can help with assessing prudent levels of information security protection. More insurers are now offering access to threat information and risk diagnostics to help organisations improve their risk management.

This is relevant not just in the fact we maybe can’t rely on reinsurance reductions in setting retail prices, but also in terms of how we are measured when any changes are implemented. I already hear people talking about reducing rates ‘in anticipation’ of an amended rate, however, no doubt any tracking will be looking at when legislation is passed. We need to be aware of this.

The major benefit of insurance may be the post-loss response services. These are provided in addition to the indemnity for financial losses. The services provide a swift and effective response to a cyber incident. They are available from a single point of contact that project manages the incident response, accessing the suite of experts that the insurer has on retainer. The services encompass forensic analysis and intervention to bring the incident and its consequences under control. Legal support is provided to deal with third parties and, potentially of course, regulators.

I think the biggest area of focus will quite rightly be on young drivers. They produce the majority of catastrophic losses, and also are struggling to afford substantial premiums. Their premiums should most benefit from a sensible change in the discount rate, and we insurers need to be able to show this has been fully implemented. If not, then maybe the calls for a cap on young driver premiums will surface again. David Williams, Technical Director, AXA Insurance.

Risk awareness is growing, and of course GDPR is imminent. This is a class of insurance that all businesses are likely to require in the future. Keith Tracey, Managing Director, Aon Risk Solutions.

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EDITORIAL BOARD

The role of the Case Manager ase management is complex and the process is defined well by CMSUK standards as ‘A collaborative process, which assesses, plans, implements, coordinates, monitors and evaluates the options and services required to meet an individual’s health, care, educational and employment needs using communication and available resources to promote quality cost effective outcomes’.

of cost benefit and proportionality. Providing and co-ordinating rehabilitation at an intensity that provides results is not a cheap option, but it is ultimately cost effective.

A skilled case manager needs to circumnavigate the often complex stake holdings of claimant solicitor, third party insurer and client to facilitate transparent dialogue, and ensure that the client remains at the centre of everything they do. This interface can present a “new frontier” for Case Managers who come primarily from a health and social care background. At Unite Professionals the Case Manager works outside and is independent of the litigation process. Unite Professionals focus heavily on training of Case Managers with insurers and lawyers in this unique skill, in order that they are alive to, and informed of the dynamics within this environment and their responsibilities.

Our Case Managers act as the conductors of a very complex and dispersed orchestra of professionals, regularly facilitating interdisciplinary communication across numerous and complex service providers. They are encouraged to draw on their previous NHS knowledge of injury and illness and utilise statutory pathways as far as is possible, being aware that the clients will often need to access statutory services long after their compensatory process has concluded. A modern day challenge for the Case Manager is recognising that in our current health system, there are significant challenges to delivering the intensity and resource of specialist rehabilitation required within statutory services alone. Beyond the amazing Trauma Centre delivery of acute care there is limited resource, and therefore a need to integrate private services to work alongside statutory provision is essential. This requires expert skill to ensure a seamless collaboration.

Our Case Managers are client focused at all times, considering efficacy of intervention, progression of the case and reflective

Jo Evans, Managing Director, Unite Professionals Ltd Case Management and sits on the board of CMSUK.

EDITORIAL BOARD

Digital Collaboration T

his has been a hot topic for many years, even going back to when I was in the Insurance industry, and it’s certainly something that will remain a priority.

When thinking about the accident repair industry, an obvious area to improve is having the ability to better communicate with the customer at the earliest point, which is key. Having a crash can be a very distressing situation, so the sooner the customer is engaged with by the insurer the better, and more information taken at this point will aid the process of looking after the customer. As an industry we need to ensure that we make this difficult situation less painful for the customer. ‘Consumer self-service’ technology is a great way of making sure that processes are streamlined and less painful for the customers. If you think about what a customer wants in any distressed situation, it’s to get back to the position that they were in before this happened. In some cases this can take weeks, and historically we have seen that when manual processes are involved, things take longer to be resolved. Of course, in the year 2017 technology is considerably advanced, and in the motor claims world, and as a business, this is something we are always looking to improve on. Something advanced like artificial intelligence shows how clever collaboration can be, and without a doubt this will improve the engagement process with the customers involved in an accident, in terms of making efficient decisions and improving the processes involved. AI can even help to improve the emotional relationship between customer and company. Research by GT Motive in France, Spain and Italy shows that the expectation of a customer is always around communication during the claim process. And satisfaction on this process has a real impact on renewals. In the insurance world, any digital collaboration is a good thing; it improves processes and workflow, and of course this will improve the end result for the customer. This is not just true in the motor industry but also across other aspects of the insurance proposition. A simple example of this is the collaboration that GT Motive has with insurance companies across Europe and the proposition that we are offering. Our cloud based estimating platform and claims flow solutions improve processes for all parties, including the customer. Interesting times are ahead, and digital collaboration will be at the forefront of everything that happens. Richard Taylor, UK Business Director, GT Motive.

A cruel joke? What more can be done to improve the regulation of CMCs and reduce the number of cold calls? hilst all corners of the sector wait, with either trepidation or enthusiasm, for the publication of the Civil Liability Bill, the House of Lords will be considering an actual piece of legislation already before us, which could have enormous potential to actually make a difference to the claims landscape.

Elements of the Finance Guidance and Claims Bill were key provisions of the Brady Review into the regulation of CMCs and have been welcomed by claimant solicitors and insurers alike. The transfer of claims management regulation to the Financial Conduct Authority is long overdue. There may remain some lingering concerns about the profile of this new function within such a super-regulator, but only time will tell whether this function will have the profile and drive that is required. Similarly, we will have to hope that the CMR has sufficient resources and powers to continue to police the sector. We also cannot know whether concerns that CMCs will be driven underground or overseas by the new regime will prove unfounded. The FCA fees are steep, but hopefully not too steep for CMCs. We must all hope that the transfer and implementation is swift and conducted as efficiently as possible and wish it well for the future. However, the issue is as much about what is not within the Bill. The Bill provides what is most likely to be the only opportunity in this Parliament to pursue a wider advancement and strengthening of the regulatory framework for CMCs. It remains very disappointing that the Government is apparently resisting the inclusion of provisions to ban the cold calling and texting of consumers about making a personal injury claim, despite having proposed it during the general election campaign. A blanket ban would dramatically reduce the number of frivolous and potentially fraudulent claims made each year. It would enable identification of rogue unregulated CMCs. It would also cut off at source those claims pursued by a small minority of solicitors that have been developed through cold calling. Such a move would almost certainly not stop cold calling in its entirety, but it would surely dramatically reduce the millions of calls made each week that have blighted the sector for too long. Of course, it is somewhat baffling that the Government is seeking to re-organise the regulation of CMCs and, by implication, cold calling, with one Bill, whilst seeking in the Civil Liability Bill to effectively deregulate the market and encourage CMCs to operate in the PI market. If the situation wasn’t so serious, you might be forgiven for thinking that it is a cruel joke. Donna Scully, Director, Carpenters.

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EDITORIAL BOARD

Accelerated change

Refresh the supply chain

Do you predict a plateau in technology adoption in the industry, or is this something that will continue to evolve for the foreseeable future?

nsurers are constantly seeking new ways to cut costs whilst enhancing the customer experience. Everything from core processes to resources used to deliver services is regularly examined to identify opportunities for improvement. But I wonder if one of the most obvious routes is actually to simply examine the services delivered by existing suppliers?

t’s an exciting time for developers at the moment, with tech that was seriously expensive or rare just a few years back now much more attainable. This allows our imagination, rather than a budget, to control how we move forward and evolve our systems and processes.

We stand at the foothills of Artificial Intelligence (AI) with lawyers and insurers beginning to realise the benefits that come with clever use of this tech, in particular the savings in time and personnel, which in turn has a dramatic impact upon costs. The usefulness or helpfulness of AI currently in place in some solicitors and barristers is scraping the tip of the iceberg, and I have no doubt that AI will become embedded in many more tech stacks in the near future. AI is very dependent upon linking systems via API, and in the last few years we have seen a dramatic shift in the way systems have evolved and realised the advantages of divergent systems talking to each other. In the motor engineering industry, the ability to have detailed instructions injected immediately and accurately into systems, coupled with effective safety-net subroutines, and then being able to attract all the data required from the DVLA, HPI, Glass’s, etc. is significantly time saving. The benefits to assessors and their customers are myriad. It is certainly not limited to the office though. This year we have seen a huge growth in partially autonomous vehicles paving the way to the future; level 5 vehicles with full autonomy i.e. humans not included. Contemporary cars and trucks that brake automatically in emergencies, have lane changing protection, can park themselves, etc. are level 2 automation and are already common place. The UK is determined to be at the forefront of this tech, and this year we have seen self-driving tests from large vehicle manufacturers such as Volvo, Ford, Jaguar Land Rover and Tata Motors through to independent tech start-ups driving themselves on anything from city roads to the M6 motorway. I’ve no doubt my children will be driven around by only slightly evolved versions of these vehicles. As these autonomous vehicles reduce accidents, engineers will also need to adapt from looking at bent metal to understanding how these systems work and what happens when they fail or are hacked. The assessors’ world moves from a hammer to the keyboard.

The cost of change is often cited as a key reason for staying with existing service providers. Will switching to a new provider require investment in new technology and systems? Will staff need to be trained on new ways of working? And, most importantly, could a switch to a new supplier risk the customer experience? Will the end-customer feel that the service they receive has changed, which might influence how they feel about the brand in the long term? But the reality is that these very barriers could actually be the way to deliver new benefits to a business. New processes can actually refresh the customer experience, which, in turn, can enhance brand retention. And, of course, any business seeking to win new business will look for ways to make the transition as smooth as possible. So, in making the decision to review one service provider, or a whole supply chain, what should be the determining factors? I believe that there are four key factors that any supplier should be expected to deliver, regardless of their speciality: 1. Transparent MI – does the service provider deliver the insight into the service provided to the insurer’s customers in a timely and meaningful way? 2. No upselling – the price paid by the insurer should not be subsidised by upselling to the policyholder. 3. No conflicting interests – a service provider with a foot in two camps could be profiting at the cost of the insurer. 4. Making the customer experience smoother through technology – is the service provider offering an integrated solution that enables claimants to self-serve, thereby enhancing the claims experience as a whole? Of course, putting a supply chain to the test isn’t always about change. It could simply re-energise a relationship to deliver a better service for an insurer’s customers. But it’s important to remember that the cost of change is often less than the cost of staying with an underperforming supplier, who retains their role simply because it feels too difficult to change. James Roberts, Business Development Director, Insurance, Europcar UK Group.

I therefore predict that the uptake of technology both in the office and in the hardware on our streets will not plateau, almost the opposite; I expect an accelerated rate of change as we move into 2018 and I look forward to the benefits it brings. Nik Ellis, Managing Director, Laird Assessors.

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Modern Insurance 31

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EDITORIAL BOARD

Opportunity to innovate

Digital collaboration for happier customers

How can an innovative approach in the automotive industry benefit the claims process?

How can insurers use digital collaboration tools to engage more with their customers?

t is clear that the UK automotive industry is going to change greatly in the coming years, with more electric vehicles joining the mix and autonomous systems getting ever smarter. As far as the insurance sector goes though, the knock-on effect of those developments won’t be seen at a significant level for a while yet.

ollaboration tools are becoming gradually more popular across all sectors, allowing users to work smarter in virtual working environments and benefit from improved information sharing. The insurance industry, despite its reputation for being slow at innovation, is now recognising that it can reap great benefits from this technological shift.

Instead, we have the immediate opportunity to innovate the claims process in an established area, and utilise other new technologies that are more easily adopted.

Specifically, opportunity lies in leveraging the use of digital collaboration tools to not only enhance customer service, but improve internal communication. As a result, all touch points, for customers, staff and stakeholders, will allow for efficient interaction.

One way in which we have updated the process is with the introduction of our ‘Roadworthy Repair Scheme’. Too often, customers are given unnecessary inconveniences by vehicle inspections as the driver has to make themselves available for the inspection to take place, to do so again later once the repairs have been arranged and the car can be taken to the garage. Our service streamlines that process by delivering the replacement vehicle and collecting the damaged vehicle simultaneously. That approach means that the customer must only make themselves available once, and are without a vehicle for a shorter period. It also enables the garage to strip the vehicle in preparation of the engineer’s inspection, and the required repair work and associated costs can immediately be agreed between the inspecting engineer and garage. It allows us to overcome the delays that are caused by supplementary estimates being submitted and repair work not being clear, streamlining the process and achieving a faster key to key time for the customer. Anything that enables us to create a better customer journey, and reduce the time to hire lag, is critical to us, and the ‘Roadworthy Repair Scheme’ is an effective way to realise that.

FNOL – it’s the car’s call

Innovation isn’t restricted to the physical processes though, and some of the new systems being introduced present considerable opportunities to the insurance sector. A key example of this is in the telematics systems installed in many vehicles, which enable an operator to speak directly with the driver in the event of an accident. That has huge FNOL implications and is something that will heavily impact how claims are managed. EDAM Group has started providing this service, where our operators contact the driver, firstly to check on them and establish their safety, and then to manage the process appropriately. So even though there are considerable elements of what we do in this industry that aren’t expected to create major step changes in how we operate, opportunities exist to tackle traditional problems with innovative solutions, as well as to be responsive to innovations within the industry.

By replacing incumbent systems and processes throughout the insurance lifecycle, firms are slowly improving business outcomes through digital collaboration, specifically in the below areas:

Sales

This has often been an uphill battle for the insurance industry as its reputation leaves many customers with a distinct lack of trust, further strained by attempts to understand the complexities of insurance vocabulary and documentation. To improve this process, a number of insurers are slowly making use of live chat technology and web-conferencing, providing a more personalised experience for the customer, and an increase in human interaction. Similarly, the telesales functionality is shifting to include the use of video conferencing as a way to provide explanations of complex products, services or coverage, and to largely simplify the customer onboarding process.

Claims

Savvier insurance companies are streamlining the claims process by investing in a robust claims management system, to ensure that all customer data is centralised and available at a glance. Utilising a good case management system will allow for document, photo, video and file sharing, both internally and externally, providing greater transparency and speeding up the processes either side.

Existing customers

Existing customers often complain about poor communication, long waits and a difficulty in finding quick answers to questions. Further, communication is still very much paper-based, meaning renewals, premium notices and policy changes take much longer than necessary to complete. Using collaboration tools such as online portals means that insurers can rapidly reduce costs in terms of time spent processing queries, and reduce the risk of mistakes because the customer will benefit from shared access, and the ability to provide input. The insurance industry has come a long way in terms of technological growth over the last decade, and digital collaboration, if done right, will further change the face of service, resulting in happier customers, faster problem solving and increased revenue, and all at a lower cost to the business.

Marc Lafferty, Chief Revenue Officer, EDAM Group. Sarah Roberts, Marketing Executive, Eclipse Legal Systems.

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Modern Insurance 33

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EDITORIAL BOARD

Unprecedented change

Getting ready for GDPR

Do you predict a plateau in technology adoption in the insurance industry, or is this something that will continue to evolve for the foreseeable future?

he General Data Protection Regulation (GDPR) comes into effect on 25th May 2018 and is the biggest update to data protection laws since the Data Protection Act 1998 came into force. GDPR recognises how personal data handling has changed with today’s technology.

here is threefold proof that this is a hot topic. During October, no less than five major Insurtech and Legaltech conferences took place in London. In the same month the USA “InsurTech Connect” hosted “the world’s largest gathering of insurance leaders and innovators”, and the House of Lords Select Committee on Artificial Intelligence received evidence on the economic, ethical and social implications of advances in artificial intelligence.

This level of activity marks the move from hype to action. Further evidence of that proposition was indicated earlier this year when a number of insurers embarked on digital transformation programmes and others (or, perhaps, the same ones) sponsored “Startupbootcamp InsurTech”. This was an accelerator programme for insurance technology startups focusing on disruptive and collaborative innovation in insurance. Here is a sample of some of the current development areas. Not all are solely insurance initiatives, but they will all change the insurance landscape. • AI (Artificial Intelligence), IBM’s Watson, machine learning, predictive analytics, virtual assistants and chat-bots, predictive filing of documents and emails. • Blockchain (the technology at the heart of Bitcoin). This has immense potential for the insurance sector. Marine underwriting costs could be halved by Lloyd’s of London introducing a blockchain system (“The Times”, September 6, 2017). • Cloud Computing, which enables, for example, the manipulation of big data and collaboration and technical applications such as Application Programming Interfaces (APIs). • Telematics, drones, Internet of Things (IoT). The drivers for change are powerful. First, there is competition, be that a determination to innovate or a fear of your organisation being disrupted and becoming the next Kodak. Secondly, customer expectation. Technology is having the effect of transferring power to the customer, including the millennials, the “everything-on-everything-now” generation for whom smartphone connectivity and efficiency is the norm. These changes will mean different customer relationships, different business models, the disappearance of some work roles and creation of new ones and fundamental change, the nature and pace of which will be unprecedented. Without doubt, technology adoption in the insurance industry will plateau. The only issue is when. My best guess, today, is that this will happen somewhere around 2030! (A date influenced by Professor’s Susskind’s evidence to the House of Lords).

Whilst GDPR has been described as “an evolution not a revolution”, the reputational risk and financial consequences (with fines of up to 20 million Euros or 4% of global turnover, whichever is higher) of a breach re-enforces this an important subject for all businesses. Collecting and using personal data is essential in the insurance industry and often needs to be shared through many supply chain partners. With that in mind we’ve looked at some of the questions brokers need to consider in preparing for GDPR implementation. 1. What is your personal data journey? How is personal data collected and received, how is it stored, shared with others and what do you do with it once you no longer need it? A detailed understanding of your personal data journey is necessary in order to evidence appropriate personal data controls; this is a key aspect of GDPR. Have you considered how third party suppliers, such as software suppliers, process your customers’ personal data on your behalf? 2. Does any third party process your customers’ personal data? GDPR places obligations on both personal data controllers and processers. Under GDPR, personal data controllers need to ensure written contracts are in place with any personal data processors acting on their behalf. These must include prescribed clauses requiring compliance with GDPR. 3. How will you demonstrate compliance? Evidence is a key factor within GDPR and companies must be able to show records of the personal data activities undertaken, the security measures and retention policies in place. For example, GDPR requires more detailed and specific information to be given to individuals in privacy notices. This may involve additional training for staff collecting personal data, as well as updating documents, websites or IVRs. 4. If you use consent as a ground for processing personal data, how is consent gained? Under GDPR, an unambiguous and clear affirmative action is necessary before a consumer is deemed to have given consent for their personal data to be used. This could mean changing how prospects are ‘opt in’ as well as reviewing what consent has been given for any existing personal data. A clear process for withdrawing consent is also needed. Jason Tripp, Operations Director, Coplus.

Tim Wallis, Mediator and Solicitor, Trust Mediation.

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Modern Insurance 35

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EDITORIAL BOARD

Telling it as it is: The impact of advanced communication skills

Future focus Following the announcement of a reversal of the Discount Rate reduction, where does the insurance industry’s focus need to be in order to provide lower premiums for customers? hen the Ministry of Justice (MoJ) announced its decision to reform the personal injury Discount Rate, we were obviously pleased. When the Government originally announced it was reducing the Discount Rate to -0.75%, insurers had no choice but to increase motor rates. The timing of it couldn’t have been worse, as the Government had recently announced that Insurance Premium Tax was rising to 12%. All of this combined meant that UK drivers were faced with record high premiums.

Seven months on, we now thankfully find ourselves in a situation where the Government is proposing a new system, one which we think will ensure fair payments for those making claims but at the same time also help reduce the cost of car insurance for drivers, which is very much needed. Given that we had to increase our rates when the original announcement was made, it only makes sense that we reduce those rates if the Government is successful in passing the legislation. LV= has already committed to passing on 100% of the savings if the legislation is passed. The Government has a significant legislative agenda around Brexit, but we’re hopeful that they will take these draft proposals forward, and we will support them in doing so. However, there are other areas we can focus on in order to provide reduced premiums to customers. For example, the Government recently agreed that Claims Management Companies will be regulated by the Financial Conduct Authority (FCA). This is excellent news and our hope is that this will come into force next year, at which point we can work closely with the FCA to support them. In a similar vein, we will also be working with the MoJ to support the Civil Liability Bill, which will tackle the cost and volume of minor to moderate soft tissue injury claims. Collaborating across the industry in order to reduce repair costs, cost of mobility and the frictional costs that currently exist in the process will be crucial in providing lower premiums for customers. Finally, with technology evolving at pace, utilising automation, digital solutions, robotics and machine learning in order to improve processes and reduce the overall operational cost will also play a big role in driving premiums down. There’s a lot we need to tackle in the next year, but if we can address just some of these issues then we’ll be able to go some way in providing customers with lower premiums, avoiding additional costs influenced by other factors such as Government actions and fraudulent activity.

ith news of the latest fraudulent claims in the holiday industry, the importance of all parties in the claims industry having effective deception detection techniques and culture is crucial. Finding someone to blame appears to encourage a section of the population to consider bringing a claim, sometimes legitimately, sometimes not. Fraudulent holiday sickness claims is likely to be a primarily seasonal challenge, but the veracity of other claims in the usual areas of traffic accident, medical care and work injury still present a challenge to lawyers, experts and the courts alike.

Inconsistency of evidence from different sources remains a key area for investigation – with access to GP and hospital records, occupational health records, multi-witness statements and the evidence from digital (mobile phone; Facebook) and CCTV sources supplementing the direct face-to-face interview data. The latter still exercises many commentators, both in and outside the industry, in terms of research and beliefs about how experts utilise their advanced communication skills of active listening, focused questioning and complex deception detection techniques. These face-to-face skills highlight how verbal and non-verbal behaviour can reveal untruthfulness to the experienced eye and ear. An impartial and neutral perspective on claimant self-report, often 6–24 months after an index event, is that accurate recall can be compromised by many different factors and, of course, compounded significantly if the claimant has the intention to mislead. Lawyers, experts and the court generally have, in the UK, significant levels of skill (medical, psychological, legal) to ascertain what constitutes a robust and balanced opinion, typically as a result of using their advanced communication skills – these have been learnt in basic training, ongoing experience and continuing professional development. Recent research has suggested that inviting a claimant to describe his/her experience backwards is so unsettling that an overlearnt and untruthful script teller trips up and reveals unreliable and unsupported information – I’m not sure if this will be a best seller technique but is interesting to consider! Writing this article backwards would have been one challenge too far for this (truthful) editorial writer. So I shall say hello at this stage and start my article… Hugh Koch, Clinical Psychologist, Director, Hugh Koch Associates.

Martin Milliner, GI Claims Director, LV=.

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EDITORIAL BOARD

Scaling the (tech) mountain Has technology adoption in the insurance industry reached a plateau, or will it continue evolving for the foreseeable future? echnology adoption in the insurance industry will continue to evolve, driven by customer demand. Modern consumers are used to an online lifestyle, accessing almost all aspects of their lives through apps, or, at least, laptops. Changing customer requirements have meant that many industries have been forced to adapt quickly. This is especially obvious in sectors such as banking, where clients want to access bank accounts through smartphones but with the same functions and services that they would get in branch. Beyond fintech, the tech revolution has progressed to the point that people can even order drinks in Wetherspoon’s via an app.

However, insurers have been slower to adopt new technologies and may be behind the curve. As a result, the technology adoption of the insurance industry is unlikely to plateau any time in the near future as the industry is in the process of updating and catchingup to consumer demand. There is a lot of work being done by insurance companies to make sure they are up-to-date.

Future of flood prevention How have attitudes towards flood prevention and recovery within insurance changed in the wake of recent UK and international flooding incidents? lthough for the UK it’s been a relatively benign period for severe weather losses recently – at least since the December 2015 floods – global losses from the Hurricane season peaked again this year, representing the third year of severe losses in the past 15 years.

Flood Re has been successful in terms of its remit, with a greater choice of affordable policies. And at LexisNexis Risk Solutions we were instrumental in the beginning, serving property data from our location intelligence service Map View to assist individual insurers signing up to Flood Re. Severe flooding has occurred in thirteen of the last sixteen years, with the worst floods in the north of England in 2015 costing the economy over £5 billion. There is still so much to be done and Flood Re itself is slated to run for no longer than the next 20 years.

This has led to some very exciting insurtech developments. Accurately pricing risk has always been the central mission of insurers. This requires as much data as possible and is the central purpose of telematics, which in itself provides an excellent example of the adoption and evolution of technology by the insurance industry. From the technology’s beginnings as a ‘black box’ that simply recorded driving data, telematics systems and providers have undergone a large-scale change. Rather than hardware providers, telematics companies have become data firms, providing actionable intelligence through their analysis of huge datasets constantly gathered by the sensors and even smartphone apps. This is an evolution, which will continue as new and innovative technology is developed and make more leaps possible.

Also, we know that extreme weather events are increasing in frequency and severity. Analysis for the ABI by AIR Worldwide shows temperature increases of just one or two degrees are likely to lead to insurance losses for high winds which could be 11%, 23% or even 25% higher, and with risks especially concentrated in northern parts of the UK.

The digitalisation of the insurance industry is an ongoing process and there needs to be more focus on bringing the insurer closer to their clients through technology. Providing insurtech ecosystems, which allow insurers to easily and quickly on-board new insurtech products, and offer them to customers will greatly assist with customer satisfaction and service, as well as providing a greater level of support for new companies developing innovative products. For established companies, the cost benefits and business efficiencies that can come with technology can be very attractive.

Could it be time for home insurers to incentivise preventative measures, like flood protection doors or raised electrical sockets, much as we incentivise the use of asset trackers or vehicle immobilisers in motor insurance?

Technology adoption in insurance is far from plateauing – in fact, there are ever-greater heights to climb and there are exciting times ahead for the industry and the technology companies working within it. Jonathan Hewett, Chief Marketing Officer, Octo Telematics.

So whilst there is much more being done now, integrating weather data and other new types of GIS data related to property location, various participants in the UK property chain – local authority planners, government, housebuilders, insurers – could be doing more with holistic flood resilience, building design and physical protection.

Accumulation risk – identifying those hidden pockets of flood risk or other risk across geographies and across lines of business – is another area where we’ve been helping to create visibility for insurers across their whole book of business, using Map View. Traditionally, this is an aspect of risk that can often remain dormant, only to surface at times of a catastrophic event. So although the industry is in good shape when it comes to recovery, there is still more to be done nationally on prevention. Insurers have in the last few years strengthened their rating capability to assess flood risk at address level using Map View, a significant improvement from the previous norm, which was to rate at postcode level. There is a growing amount of data available for insurers to price insurance cover in line with location-specific risk levels. Trevor Lloyd-Jones, Senior Marketing Manager, LexisNexis Risk Solutions, Insurance.

38 Modern Insurance

Issue 28

EDITORIAL BOARD

Investing in technology T

wo weeks ago, I stood up in front of 150 claimant lawyers and told them that, contrary to popular belief, technology is the savior of personal injury law, not the assassin.

Although there has been much wailing and gnashing of teeth in the legal profession with regard to the impact of technology and what it will do for jobs in the profession, a 2016 report from Deloitte noted that while 31,000 jobs had been lost from the law in the past few years, a further 80,000 have been created. The difference is that these new jobs are technology roles, because technology platforms are taking over more mundane legal functions and the law is hiring people, such as software developers, who can drive the innovation. Just as in other industries, technology can deliver legal services faster and more efficiently than was ever thought possible. It’s a double whammy, of course; workplace and vehicle technology improvements will also reduce the incidence of accidents, but that surely is a good thing for our society. However, we must do more, not less, to automate routine processes using robotics, algorithms and even artificial intelligence. At Minster Law we are investing efficiency savings in workflow management systems and other processes to make the customer journey as simple as possible. We also need to invest in technology that the customer is responsive to. Minster Law’s personal truths website provides help and support for members of the public affected by injury. We are also investigating how we can use virtual assistants to help clients and support in-house functions.

Is underinsurance flying under the radar? U

nderinsurance and a lack of customer confidence in the amount of cover remains a significant problem for the industry.

Current figures from the Association of British Insurers suggest that one fifth of homes in the UK are underinsured1. Insurers and brokers need to ask themselves whether they are doing enough to combat this and ensure their customers are confident they’re getting insurance that is right for them. We recently conducted in-depth research into the problem and uncovered a worrying knowledge gap among UK adults’ understanding of what they think they are covered for. Our study of more than 4,000 adults found that 60% of contents policy holders pay little attention to purchasing their insurance, spending an hour or less researching different policies. Contents insurance is a prime example of where lack of awareness is rife. We discovered that a fifth of people are unsure what their policy actually covers, or what total value they need to be insured for. People often forget to recalculate the value of their contents each year when they renew their policies. As you would expect, the value of a person’s contents tends to go up as they move through life. In particular, milestones like marriage or starting a family can lead to a dramatic rise in the amount and value of possessions owned. Equally, we discovered confusion over the line between contents and building insurance and what would be covered by each. As a result, policy holders can be left thousands of pounds out of pocket if they need to claim.

We are starting to re-engineer our talent pool and our culture away from ‘traditional lawyer’ and put a strong focus on the diversity in our business. We want to recruit talent that is technically competent and IT-literate. I don’t want Kavanagh QC, I want Q, especially if he or she is willing to move to Wakefield.

This should be a serious concern for the insurance community, if it isn’t already. The knock-on effect of this confusion has a bad feeling on the part of customers towards insurers and an increased likelihood of them shopping around.

The remaining members of the panel shared the same broad view, namely that technology will ensure that firms can continue to make a living from handling personal injury. And the audience was sanguine too, even enthusiastic about the opportunity to broaden services into other propositions with the help of technology.

The lesson here is not just one for customers. While we should always encourage them to undertake due diligence, it’s also necessary for us as insurance experts to provide the right information, offer an engaging service and ensure that getting the most suitable cover is accessible and simple.

I left the conference feeling optimistic for the future of our industry. Lawyers are starting to grasp the opportunities posed by technology, rather than burying their heads in the sand.

Insurance is a competitive market that is increasingly becoming driven by price as many customers look to online comparison sites to provide quotes. Insurers and brokers should see the issue of underinsurance as an opportunity to add value and differentiate themselves from automated services.

Michael Warren, Managing Director, Minster Law.

The onus is now on us to improve our communication with customers across the channels they choose to use, and give them the peace of mind of knowing they have the right insurance. This underpins our new brand position and campaign to turn those nagging doubts into nothing-to-worry about through giving expert support and guidance when people buy their insurance. Richard Beaven, Distribution Director, Swinton Group. 1https://www.abi.org.uk/globalassets/sitecore/files/documents/publications/public/ migrated/home/is-your-home-underinsured.pdf

Issue 28

Modern Insurance 39

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Sector Soapbox

Modern Claims’s panel of resident associations outlines the burning issues

Discount Rate for personal injury claims new mechanism proposed by the Government for calculating the Discount Rate for personal injury claims is said to be fairer to “all parties”. But the strategy is not fair to injured people, and calculations by the Government’s own Actuary’s Department (GAD) demonstrate this conclusively.

The basis of the proposed new mechanism is that claimants should invest their damages in low risk, rather than very low risk, investments. The Government expects the Discount Rate, if it were set today under the proposed approach, to fall within the range of 0 per cent to one per cent. The GAD has identified that with a one per cent Discount Rate, an injured person would have a 30 per cent chance of being under-compensated by 5 per cent or more; a 19 per cent chance if the rate is set at 0.5 per cent; and an 11 per cent chance if it is set at 0 per cent. No matter where on the scale it falls, injured people stand to be undercompensated. A 5 per cent deduction in their damages is a lot of money to people who have specialist needs and no certainty of receiving so much as another penny for the rest of their lives. The first thought of someone who receives compensation following a catastrophic, life-long, life-changing injury is not “how can I make the most of this fantastic windfall?” It is instead, “how can I eke this out to make sure it lasts long enough?”

A catastrophically injured person is inherently risk averse. He goes through probably the worst thing ever to happen to him. His way of life has probably been shattered. The damages he receives must be made to last. He is probably not acquainted with the world of financial investments. He cannot simply go out to work to earn money if one of his investments does not pay. He cannot afford to take risks. Catastrophic personal injury is not something for which anyone is prepared. What an injured person needs and deserves, above all, is certainty. An injured person should, therefore, be allowed to be a risk-averse, safe investor as envisioned in Wells v Wells in 2008. The Government must recognise this fact if it is to come anywhere near fulfilling its repeated assertion that it is committed to 100 per cent compensation for injured people. The proposal that injured people should move from investing their damages in ‘low’ risk, rather than ‘very low risk’ investments, will not deliver on the Government’s objective of fairness to all. Brett Dixon, President of Association of Personal Injury Lawyers (APIL).

Who says it is time for change he new Doctor in Doctor Who is a woman, and whether you agree with the casting decision for this traditional fictional character or not, it has to be seen as a step forward in terms of addressing traditional gender roles. The BBC programme’s main target audience of younger viewers are generally less concerned over the change. After all, diversity and inclusion, in all its guises, is a key part of the modern education system and structure; it is just the norm. Many will, I fear, be bewildered when they leave the education system to find that the world of work can be very different. Insurance is not alone in having been slow to adapt and embrace change, but there is no doubt in my mind that the insurance market must improve its record on women, ethnic minorities and sexual orientation if it is to attract the best talent going forward, continue to innovate and be able to understand and serve its customers. The very existence of the increasingly influential annual Dive In Festival, which launched back in 2015, shows that the profession knows that there is a problem with diversity and inclusion. The event has grown in its reach, both across the UK and globally, and has in recent years had a focus on gender parity, particularly at management level and upwards. But it is no good just swapping pale middle-aged males with pale middle-aged females – the wider challenge is attracting and retaining a workforce that better reflects the diverse customer base. Last year the CII launched Insuring Women’s Futures (IWF), a programme aimed at promoting and enhancing the

Issue 28

insurance sector’s role in relation to Women & Risk, www. insuringwomensfutures.co.uk, and this autumn, in conjunction with the Insurance Supper Club, we published Inspirational Women in Risk, www.cii.co.uk/47043, a publication showcasing a variety of women operating across the insurance sector. The women featured in the booklet show how age, race, gender or sexual orientation do not prohibit success in the profession, and that opportunities exist whatever peoples background and interests. There is a long way to go, even just on the gender issue. After all, my own Faculty Advisory Boards are mostly dominated by men, and whilst we are working to address this, it is also a reflection of the existing shape of senior management in many insurers and brokers. Clearly gender is only one of the many diversity and inclusion issues that need to be addressed, including diverse ways of thinking, and the CII, as the professional body for the insurance sector, is working hard to help members and their companies tackle diversity. We have even created a range of tools, including a booklet: Making Inclusion a Reality. In the final analysis, diversity and inclusion policies make sense and should be embraced by all. As the Doctor once said: “In 900 years of time and space, I’ve never met anyone who wasn’t important”. Ant Gould, Director of Faculties, Chartered Insurance Institute. To find out more about Making Inclusion a Reality, please visit: http://www.cii.co.uk/knowledge/policy-and-public-affairs/articles/cii-equality-anddiversity-guide/23109

Modern Insurance 41

FEATURES

The Discount Rate – what’s happening now? here has been much speculation as to when we can expect further movement of the Discount Rate. In early September, The Lord Chancellor announced that the Government will bring forward legislation to change the method for setting the Discount Rate which will create a fairer and better framework, with a continued commitment to the 100% compensation principle. The principles for setting the Discount Rate will be set out in statute, with the initial review to be carried out promptly after the legislation receives Royal Assent, and thereafter, a review at least every three years. Reviews are to be completed within 180 days of starting, with the initial review set by the Lord Chancellor with advice from the Government Actuary’s Department (GAD). The new rate is to be set by reference to expected rates of return on a ‘low risk’ diversified portfolio of investments, rather than very low risk investments as at present.

So where does that leave us for now? The Ministry of Justice has published the draft legislation, which interested stakeholders responded to. Following this, the Justice Select Committee (JSC) announced pre-legislative scrutiny of the proposed legislation, which is ongoing. The JSC has taken oral evidence as a part of this and have been asked to report to Government by the end of November. As such, the Government are unlikely to introduce legislation until that process has completed

While giving oral evidence to the JSC, Lord Keen of Elie stated that it was the Government’s objective to ensure fair compensation to claimants, but also to reflect the rights and interests of those who have to meet the cost of compensation. To that extent, he highlighted the GAD’s report, which demonstrates that with the current Discount Rate the median claimant is overcompensated to the extent of 135%. It is this overcompensation that impacts all consumers. We should expect to see legislation introduced to Parliament as early as possible either by way of a stand-alone Bill, or as part of a wider piece of legislation. The manner in which legislation is introduced, however, is not as important as the speed at which it is introduced. The NHS Litigation Authority announced in its most recent annual report that despite the overall volume of clinical negligence claims falling, their total provisions for the following year had been increased by over 250% to £65 billion, in part attributable to the change to the Discount Rate. This overcompensation of claimants is costing all taxpayers and consumers and needs to be addressed without delay. Natalie Larnder Policy Adviser, Civil Justice, Association of British Insurers (ABI).

The Data Protection Bill implementing GDPR n June 2017, the Queen’s Speech heralded a new Data Protection Bill for the UK to implement the provisions of the General Data Protection Regulation (GDPR) into UK law. This announcement was amplified by the Government’s Statement of Intent on 7th August 2017, and subsequently The Data Protection Bill was published on the 14th September, which will eventually replace the Data Protection Act 1998 as the primary data protection law within the UK.

The Bill widens the reach of GDPR, which as a Regulation already has direct applicability in the UK. The Bill also sets out the derogations that will apply in the UK and, therefore, provides welcome clarification as to how some of GDPR’s provisions might be navigated. At 218 pages, including 18 schedules, the Bill is by no means straightforward and may of course yet be subject to further change as it proceeds through Parliament. At a time of fast paced change and innovation within the insurance and claims sectors, the combination of data and technology is increasingly intertwined with every area of business. It is against this backdrop that GDPR enters the stage and revamps the law in relation to how data can be lawfully processed, i.e. how it is collected, analysed, shared and stored. The Bill imposes new obligations, enhances existing rights and creates new ones.

42 Modern Insurance

As the ICO have recently pointed out, there has been a good deal of scaremongering in respect of the consequences of noncompliance and the level of fines that may be imposed, with the ICO underlining its commitment to advising and educating organisations and using its powers judiciously and proportionately. However, the new enforcement regime certainly warrants highlighting. Where a breach infringes a data protection principle or a data subject right, fines of up to 4% of global turnover or €20 million, whichever is higher, can be imposed. Thought is required as to the conflicting requirements in relation to the GDPR. On the one hand, the system must safeguard data and protect user’s data. But on the other, it must also consider the implications for the use of data legitimately in the fight against fraud. Although it is true that GDPR introduces a tougher enforcement regime, with significant penalties for non compliance, it also provides new opportunities for firms that are adapting to the changes. The ability to demonstrate compliance, to offer transparent processing of personal data and systems that keep data secure will be a business enabler that is likely to generate increased customer confidence and may influence purchases. Nigel Teasdale, Immediate Past President of the Forum of Insurance Lawyers (FOIL) and Partner at DWF.

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A broker’s perspective f insurance brokers were in any doubt that change was somehow something new, it was the Greek philosopher Heraclitus who said that “change is the only constant in life”. In recent times, however, it seems that change and the speed at which it moves has gathered pace. As someone who runs a relatively small business, the regulatory burden seems to increase exponentially year-on-year as the re-examination of FCA rules leads to new working practices and systems changes. The CASS 5 client money rules were a good example of this as despite a three year consultation, the rules remain unaltered. Yet the burden of audit exerted by our independent auditors due to pressure from the FCA has now increased, and in turn, this has increased our not insignificant fees for audit by some 240%. It is inevitable that at some point, across the market, these increased fees for compliance will be passed to the consumer, but it is that same consumer that cannot be priced out of the valuable advice provided by brokers. Investments in technology have been essential to keep pace with customer expectation and the availability of good quality staff is always a constant challenge to any business, but in spite of this, brokers continue to deliver good quality independent advice to clients at a reasonable cost. So, what is on the horizon? The General Data Protection Regulation (GDPR) becomes effective in May 2018, and it is important that clients are both made aware of and receive appropriate insurance protection for their obligations under the new laws. But it is perhaps a more subtle change that could, in the wider sense, have

the biggest impact on the most vulnerable clients. That change is the Financial Guidance and Claims Bill that was highlighted in the Queen’s speech, where the provision is to establish a new financial guidance body and to regulate claims management services. As already mentioned, it is important that the general public receive good quality advice, and through previous agreements with the Money Advice Service, BIBA has signposted customers to this advice through their Find-a-Broker service. The regulation of claims management services will also reduce some cost in the industry where these firms, unlike loss assessors within general property and casualty insurance circles, have hitherto fallen outside the FCA’s regulatory regime. So change is inevitable, and while brokers see their role as being key to advising clients regarding change, the resilience that small firms continue to show to provide consumer choice and guidance to their clients, remains, in my opinion, one of the cornerstones to the continuing success of the UK general insurance market. Andrew Gibbons, ACII, Managing Director, Mason Owen Financial Services Ltd and Chair on behalf of BIBA of the Industry Claims Working Group.

Is progress being made? t a time when the MoJ is poised to embark upon a new round of “reforms”, it is almost timely that a review into the last major round of changes to the claims regulatory landscape is taking place. Unfortunately, any lessons learnt about the abject failure of much of the LASPO legislation may well be too late to impact the Civil Liability Bill, unless it is not published until after the review is concluded in April 2018. This could be another misdirected, poorly considered and deeply unfair piece of legislation reaching the statute books, without having considered the errors of the past.

Although delayed by the ‘snap’ election, the LASPO review is underway and key organisations, such as MASS, are currently meeting with officials to provide views. Our assessment of Part 2 on litigation funding and costs was pretty grim for the review team. One of the primary Government objectives for LASPO was to reduce costs for insurers so that insurance premiums could be reduced for consumers. After a short period, during which they did fall, they have increased dramatically, hitting pre-LASPO levels again with seemingly no sign of any sustainable reductions.

but at the expense of accident victims, from whose damages they are deducted. Accident victims rarely benefit from a 10% uplift in damages, and if they do, this is negated by the loss of recoverability. QOCS have undoubtedly been used by some legal practitioners, but they are often disallowed and there are a number of QOCS cases proceeding through the courts in an attempt to clarify their uncertainty. Third party capture remains unregulated and is still a significant problem. The related ‘fundamental dishonesty’ change has led to many genuine claimants coming under unfair pressure to cease a legitimate claim ahead of going to court. PI cases involving children have been particularly hard hit due to the Jackson reforms. The referral fee ban appears to have made little or no difference to those that wish to retain such relationships. All of this, coupled with the reduction in legal aid, needs to be seen in the context of the wider impact of LASPO on the justice system and accident victim, to the detriment of access of justice. Five years on and it looks as if the mistakes of the past are about to be repeated. As they so often are. Simon Stanfield, Chair of the Motor Accident Solicitors Society (MASS) and Partner at Simpson Millar.

With that main objective not being realised, other elements of LASPO can also be questioned. The absence of the costs of success fees and ATE have indeed benefited insurers financially,

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Coming clean about claims Claims Rated enables claimants to offer feedback on their claims experience. James Clarke, Founder, explains how insurers need to recognise the importance of feedback and how they can use it to their advantage when driving new business. t is time the insurance industry stopped being so cautious and shy when it comes to talking to the public about claims experience. Claims are the heart of the insurance proposition, and so it is time we recognise the importance of this and use it to drive new business.

As a consumer, you will never know how good or bad, simple or complex, making a claim will be until something unfortunately goes wrong; whether you crash a car, lose a suitcase, face the illness of one of your pets or find your home has been broken into. This means when customers are deciding between policies they are offered to purchase, claims experience becomes such a vital piece of information to know and understand. Right now, however, in an industry fixated on selling at the cheapest price, its impact is being lost.

The industry should not be frightened

That is why I founded Claims Rated, a new service enabling claimants to offer feedback on their claims experience but also for insurance brands to use this crucial independent measure to differentiate and promote their products at point of sale. We recently ran a survey of consumers across Great Britain that found a real disconnect in perception versus reality when it came to making an insurance claim. Six in 10 (59%) believed making a claim was daunting, complicated and time-consuming, but seven in 10 (71%) of those who had made a claim said their experience was good or very good. This is exactly why the industry should not be frightened to talk about claims experiences as they help customers make better informed policy-buying decisions. I think it’s a myth that claims services need to be improved wholesale. Already a couple of leading insurers are using statistics in their advertising to show the percentage of claims they have paid out. This is a basic but simple way to develop real and long-lasting trust between an insurance brand and a potential customer, proving they will be there for them in their hour of need. But we need to go further; by highlighting how well insurers are doing using independently gathered feedback of real claimants, so insurers get credit where credit is due. This becomes a methodology that can’t be argued with. Done properly, it can speak far more strongly to consumers than a cheap price offer or enhanced cover levels that may never be used.

Perception versus reality

There appears to be a real mismatch between customer expectations and the reality of their experiences. Of course,

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Claims are the heart of the insurance proposition and so it is time we recognise the importance of this and use it to drive new business some services will always be better than others. That is why data becomes so important. For quality to rise to the top and outshout low-cost policies, insurance brands, underwriters and claims handlers all need to be brave about flagging the great work they are doing. For example, 38% of all those we surveyed did not feel insurance companies did their best to make the claims process as simple as possible. And while half the respondents nationally said they did have trust that insurance companies would pay out, either in full or part, should they need to claim, this fell to 37% of 16-29s, signalling a lack of trust among the industry’s future long-term customers. From conversations we’ve had across the industry, we believe positive experiences are the majority; so why are we so shy about mentioning them? Everyone we have talked to recognises that this information is sorely lacking in the majority of sales processes, and they can see the value in customers relying on an independent measure to make more informed decisions. Decommoditising the industry by increasing the focus placed on ‘quality’ at the point of sale has obvious benefits for all sides. On our site, claims ratings are available for the travel, gadget, pet, home and car insurance sectors initially. Across those five, our survey found an average of 70% said knowledge of the claims experience, which they perceived their insurance brand would provide to them, was important to their policy purchase. However, a recent FCA survey showed a little over 12 million people do not think they have enough information to decide on quality between different insurance policies: https://www.fca.org. uk/publication/research/financial-lives-survey-2017.pdf#page=12 That has to change - and fast.

Encompassing the entire experience

Price will never stop being an important factor, but we truly believe that introducing an easily understood metric, highlighting quality of claims service at point of sale, can propel the industry forward.

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Decommoditising the industry by increasing the focus placed on ‘quality’ at the point of sale has obvious benefits for all sides

However, it must tell a 360-degree story. Just focusing on percentages of payouts as a metric is not enough. How about the time it took to reach that conclusion? Or feedback on the complexity (or hopefully simplicity) of the forms and processes to get there? That is why gaining real claimant feedback is crucial to create an independent marker, encompassing the entire claims experience; one in which customers can have confidence. Our technology makes it easy for insurers to gather and quantify feedback from their claimants - proactively reaching out to them for their views, which are then collated to generate a rating from. We understand the customer only ever ‘sees’ the brand they buy from, but we know that often multiple organisations are involved in ensuring a great claims experience. So they must all be recognised, both for rewarding success and showing where improvements can be made.

We recently ran a survey of consumers across Great Britain that found a real disconnect in perception versus reality when it came to making an insurance claim

It is why we have focused deeper than just our public insurance brand ratings, also offering a service that enables underwriters and claims handlers to gain a Claims Rating too, broken down by brand, type of claim, excess of policy, etc. For the insurance brand, this also gives them vital data on who they can work with to boost their own consumer reputation. Overall, it helps every organisation involved to understand, for example, how different sales channels, different policy wordings, different excesses, etc., result in differing levels of satisfaction at the point of claim.

The end at the beginning

The insurance industry must start to bust the myth that a claims experience is going to be painful by reducing the dependence it now has on star ratings generated from friendly sales processes or a belief that a policy represents value for money, which can never be known at the initial purchase point until, or unless, a claim is made. It must become brave enough to flag up claims experiences focally within peer reviews. Even the bad ones, if only to prove just how rare they are. We are not trying to challenge existing comparison or review sites. Claims Rated enhances these services by delivering a key piece of information currently missing from sales paths. By working with the insurance industry to place its focus on this one very specific and strong metric, we can shift perceptions, increase trust and generate more sales, potentially at higher policy price points. For an industry so defined by the end result, it’s time we began to talk about claims experiences right at the beginning. James Clarke, is Founder of ClaimsRated.com

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Industry Innovators Interview: Steven Mendel In the first of our Industry Innovators Interviews, we spoke to Steven Mendel, CEO and Co-Founder of Bought By Many, who told us how it takes a consumer-centric mindset to stand out in today’s insurance environment.

Q A

How would you describe Bought By Many in three words and why?

Consumer-centric. Digital. Caring. Consumer-centric because everything we do is designed by and developed for all our members. Digital because although you can interact with us over the phone, everything we do is designed to work beautifully on your mobile device or desktop. And caring, because our agenda is to help people look after the things they care about – we make it easy for them to claim, and pay all claims we can.

Q A

What makes Bought By Many different from traditional companies?

Can I give you the same three answers? There isn’t a single insurer out there that could genuinely claim to have the same values at its core. They might say they do, but there are very few who could give evidence it’s true. There is nothing that we do that isn’t about helping our customers.

We don’t clock people in and out; you have a role to do and you can do that how and when you like, and the better you do the better for everyone, but it is totally up to you on how you do that

All insurers use data, but we use millions of lines of online insurance searches to find out what people want and where there are gaps in the market. The data informs how create products – we base them on the biggest needs rather than the biggest profits.

consumers do not trust the insurance industry. There are so many brands out there and people are trying to work out who to go with, what to do when they get there because there are vast amounts of jargon, cover options and differences in price. What we are trying to do is rise above that noise by saying that we just want to make your experience better. We know we’ve got insurance that will be beneficial for you because we designed it based on the things people search for. If you look at what we have done in the pet insurance space, that is where we are going to go for other insurance types better for value, better coverage and a better journey.

Q A

What would you identify as the gap in the market that Bought By Many aims to fill?

What we want to do is help individuals get access to a better insurance than they could do elsewhere. Better might be about price, coverage or the terms of the insurance, it could be the customer experience and the customer journey, but hopefully better is all these things. Although there are plenty of insurers out there who might target one of those aspects, we are trying to cover all of them at the same time. If you ask consumers what they want from insurance they’re likely to say cheaper cover, but our study of search data found thousands of searches for things like ‘pet insurance with no excess’ or ‘pet insurance that includes pre-existing conditions’ – these are things they are really looking for. These products did not exist so we created them as part of the seven pet insurance policies we launched earlier this year.

Q A

What were the main challenges in standing out and establishing yourself in a competitive market?

I like the fact that you are using the past tense in that question as we do already stand out. The main challenge is that many

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How is the wider industry responding to challenges in your area of the market, and how are you tackling these?

The wider industry isn’t responding. If you look at the pet insurance space, the products really haven’t changed or moved on in years. Last year we heard from over 40,000 pet owners about what was wrong with industry, that’s a huge response. Other insurers could have created the product we made, but they didn’t. We are trying to make the industry much more consumer-centric, whether that’s through our own insurance or by setting an example of how insurers should behave. Interestingly, every month we get enquiries from insurers from around the world to see how we can help them. They know we’re one of the few companies tackling the challenges.

Q A

How are changing consumer buying habits forcing change in the insurance industry?

It comes down to two things. It is partly about understanding the importance of mobile; nearly 80% of our customer base deals with us on a mobile device. Although most insurers have a mobile offering, some of them do not offer the best user experience. The other element, which is much less well adopted

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People interact with us on social media and we use it to find the exact people who may benefit from our insurance. The suggestion that other insurers are playing catch up is probably true.

by the industry, is the importance of social media. We have a huge Facebook presence. People interact with us on social media and we use it to find the exact people who may benefit from our insurance. The suggestion that other insurers are playing catch up is probably true.

Q A

How is technology influencing your service offering, and how will this be developed in the future?

Search and social are at the very core of what we do. We rank on the Google first page for over 20,000 insurance terms and we reach out to consumers directly inside social media platforms, but that is only a small part of technology. We want to use technology to make the whole customer experience better. Online search data informs the design of our policies, and our inhouse developers create the products and a mobile-first journey. Because we build our own tech we’ve been able to create an industry-leading quote form and online account. Policy documents are tailored to the customer that holds the policy, and we’ll soon be able to process online claims.

Q A

What’s unique about the culture of Bought By Many?

There are a few things that are important to us. For example, we are passionate and we really care. Caring doesn’t just mean we care about our consumers; we also care about each other, the industry and the business. We’ve consciously created the environment of a modern tech company rather than an insurer. We don’t clock people in and out; you have a role to do and you can do that how and when you like, and the better you do the better for everyone, but it is totally up to

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you on how you do that. We are focused on scaling challenges but we absolutely make it as equal, enjoyable, fun and celebratory as we possibly can in that process.

Q A

Where do you see Bought By Many this time next year?

I like to think that we have done some pretty great stuff in the cat and dog insurance space, but that is only one category in the market place. By this time next year, we should be doing something similar in a couple of other categories. We’ll bring to life this concept of being caring, customer-centric and digital, using technology smartly for other product categories and areas of insurance. If we haven’t done that by this time next year then we have missed a massive opportunity. We have over 390,000 members and we’re adding thousands more every month.

Q A

What advice would you give to anyone else looking to disrupt the insurance industry?

This is not something that you can do overnight. We have been at this for five years, and we have worked very hard to get to this point. The company is a bit like a swan; there is furious paddling below the surface to make everything look serene, calm and collected above. Our customers experience is what many people see, but we have to work very hard behind the scenes to make that happen and we will keep working hard.

Steven Mendel, CEO and Co-Founder, Bought By Many. If you think you could be one of Modern Insurance’s Industry Innovators, get in touch and tell us why.

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Interview with Tristan Prince Tristan Prince, iovation, discusses the ever-evolving ways insurance fraudsters are obtaining and using stolen data, and explains the ways insurers can help protect themselves and their customers.

Q A

What have been the biggest developments in fraud and fraud prevention you have witnessed in 2017? 2017 has been the year of the data breach.

At our last quarterly user group, I heard insurers talk about account takeover for the first time. Account takeover is effectively where fraudsters get hold of genuine customers’ details, log into their account, glean information from those accounts or potentially add elements into the policy without the consumer knowing. It is a real risk as the fraudsters are now putting additional vehicles or risks onto customers’ policies, and because that interaction is predominately handled online, the genuine customer may not even be aware. The other element is authentication - things like one-time passwords and password recovery. Stolen credentials are now available online for fraudsters to buy from the dark web. This is driving the market towards understanding that personal data isn’t the only answer, and that having a blended view of a transaction is important.

Q A

Can you outline what is meant by ‘device intelligence’, and how can it be used to protect against insurance fraud?

Imagine a fraudster has twenty stolen identities. If they try and apply for an insurance policy and use that personally identifiable information, those twenty policies (if they get that far and get onto the books) present a massive risk to the business. If in that situation an insurer had device intelligence available, they would have seen that those twenty policies are all linked and originating from one or two devices. Suddenly you begin to see where risk is identified on a device or with a policy, and you can begin to link them all together. Device intelligence enables the linkage of data that personally identifiable information doesn’t. In addition to that, what is unique about device intelligence is that it gives the ability to our insurance clients to share evidence about how those devices have behaved. We have 45 different evidence types, which our insurance clients can share evidence against. As soon as a device that has been linked to risk comes to any of our clients, they are able to spot the fact that that device has performed a risk before, and they can then act appropriately. Device intelligence can also span outside of the insurance industry. It also works outside of the UK throughout the world, and it allows people to share information and insight that can help to prevent risk.

Q A

2017 has been the year of the data breach

What role might aggregator platforms play in the fight against fraud? The really interesting thing with an aggregator is the dichotomy; their business is ultimately to generate quotations

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Just a thought

Authentication solutions are really starting to pave the way for how businesses will manage their interactions with consumers moving forward for the insurers. Their whole purpose is to drive consumers to their website and to get the best price for consumers. The dichotomy is that if they put fraud constraints in place, and they do things to reduce the volume of quotes, this potentially negatively impacts their revenues.

going to be driving that. One of the requirements of GDPR is secure authentication, which means that you will have to have multiple points of authentication with a consumer to allow them access to their account. Device intelligence can also act a point of authentication.

Some aggregators see the benefit in providing better quality, verified leads to their insurance panel members, because ultimately if you provide better quality then the pricing is going to be more accurate, but also the likelihood of those being converted into policies is increased. The forward thinking aggregators are beginning to layer on information services, device intelligence and other data that they can provide to properly risk assess whether or not a quotation is genuine or not. They can also provide insurers and brokers with more information they can then risk assess accurately.

The Internet of Things, Alexa and similar technology within the connected environment we live in now means that some of these devices can become a proxy for identity. This means that we can establish that it is really you because you are in the right environment preforming the transaction.

The aggregators are starting to realise that preventing fraud, although it may initially reduce the leads that they produce, will in the long term create better quality, and ultimately result in preferential rates, new products being trialled and potentially some aggregators falling off by the way side if fraud continues to go through them as a channel. I think they can facilitate having access to more data, they can provide insurers and brokers with more insight and they can put better upfront constraints and preventative measures to stop the fraud from coming into the business.

How do you predict utilisations of technology, and the data obtained from technology to fight fraud, will evolve in the future?

One of the things we have seen in the market place is a convergence between the fraud professionals in a business and the Information Security and CISO’s of that business. What we are seeing now is that there are fraud prevention requirements that are also linking into information security requirements, which means that businesses are looking for things like authentication solutions to help protect the data they capture and their consumer accounts on an ongoing basis. A lot of businesses are getting smarter at preventing fraud. We monitor and report on Black Friday and Cyber Monday, and we noticed that credit card fraud dropped by 29% over the last year. This is because online retailers are beginning to strengthen their capabilities, but it is also because that is not what fraudsters are going after anymore. Once they have all of your information, they wouldn’t go for your credit and use your £3,000 limit, they would apply for a mortgage or a high value loan; ultimately, getting hold of those financial funds is more exciting. Authentication solutions are really starting to pave the way for how businesses will manage their interactions with consumers moving forward. GDPR is also

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Q A

What developments do you foresee in the fraud space in 2018, and how can the insurance industry prepare for these?

Account takeover is going to be the key one. Driving more products remotely is going to widen the net for fraudsters and give them an easier way to access online accounts. You’re going to see insurers going from attempting to block the fraud upfront at quote or at policy inception to asking ‘how do we protect our existing customers?’. There is also the Amazon effect; Amazon is floating into the insurance market, and they are going to be a very disruptive force in how things are done, especially through technology. There was a recent report from Willis Towers Watson that revealed that 58% of senior level executives in the insurance industry believe that they are behind other industries in implementing digital technologies. In addition to that, the report said 74% of those believe that the sector is reluctant to show leadership in digital innovation. So you have got an industry where executives believe they are behind, yet people within the organisation are reluctant to try and show leadership, and you’ve got disruptive forces like Amazon coming into that marketplace. They will do things very differently and will use technology in order to do so. There will be a lot of fraud starting to appear that insurers have never traditionally seen, so having a detailed fraud prevention strategy in place is going to be key for 2018 and beyond.

Tristan Prince is Strategic Business Development Director – EMEA at iovation.

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Safeguarding the independent broker Lea Cheesbrough, Head of Broker Development for New Start Ups at Broker Network, gives a crash course on why insurance brokers often go it alone, and what makes start-ups thrive. tarting a new company can be tough and has its challenges, but it can also be hugely rewarding when your hard work pays off. Setting up an insurance brokerage is no exception.

As an industry we are seeing a variety of different brokers deciding to take the plunge and set up on their own. Firstly there are those individuals that work at large corporations. There are many executives or team leaders with a strong entrepreneurial streak and a firm belief that they can do things better under their own steam; such as improving customer care or streamlining processes, and secondly there are the individuals that have gone down the appointed representative (AR) route. The lack of independence and not being able to choose how and where you transact often becomes an increasing frustration over time. When you factor in that becoming directly authorised can save 40% of your income, you find there are some strong pulls to starting afresh. There are challenges in starting up a new brokerage. If it was easy then everyone would be doing it, but I’m a firm believer that if you want to find a way to make something work then you probably will, and I’ve seen enough success stories amongst brokers to really appreciate how much there is to gain. As the UK’s largest Network for independent insurance brokers, we know better than anyone that no two independent brokers are the same, but whilst the personal challenges will vary from person to person, there is a common thread that ties them together, and that is often the admin side of the business. Many brokers will know insurance and broking inside out, but they may never have had to organise a company’s finances, set up their own back office software, deal with HR issues or understand new compliance regulations.

Start-ups can compete against the larger corporations and thrive

There are a lot of big players in the insurance industry, and it can often seem crowded. However, the start-up scene is booming, and there are some real success stories from new brokers the behaviour of staff within a company. Start-ups are naturally going to need to put a lot of new structures in place, which is to be expected, and provides a fantastic opportunity to innovate. That’s just scratching the surface though. Starting a new brokerage is a one-off opportunity to define your own ethos, your brand culture and your trading style. It’s a truly liberating experience, particularly if you have come from a more regimented background. Start-up brokers are perfectly placed to mould themselves and shape their own destiny, and with a degree of agility that is the envy of larger organisations. Whilst insurance brokers starting out will naturally keep an eye on larger organisations and how they do business, remember that the opposite is also true, with larger firms watching the start-up scene with interest.

There are a lot of big players in the insurance industry, and it can often seem crowded. However, the start-up scene is booming, and there are some real success stories from new brokers. “Combining the energy of a start-up with experience and a longstanding reputation has gone down brilliantly with customers”, reveals Luke Broadley, Director of Longfields Insurance. “For us, service is everything, we have a lot of friends who have become clients and a lot of clients who have become friends. If you’re sitting across the table from them over dinner you need to truly believe that the service you’ve provided is unparalleled.”

How start-ups can present an example for the rest of the market

On the flip side, new brokers are faced with a unique opportunity to mould a company as they see fit. It’s often much easier to change technology and infrastructure compared with changing

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Start-up brokers are perfectly placed to mould themselves and shape their own destiny, and with a degree of agility that is the envy of larger organisations The common traits of successful start-ups

As a rule, it’s the guys that have their house in order who tend to shine, particularly when starting up. There’s a lot of upfront work involved in creating a new insurance brokerage, and the more time this takes up, the less time you have to spend on your clients and building your pipeline. You are thoroughly dependent on getting your compliance and TOBA in order of course, which can be very labour intensive if you don’t have support. Another big one is marketing. Your customers will increasingly expect a brand presence through your website, social media and printed collateral. This has a huge impact on drawing in new leads, but you also need to consider the more administrative side of your brand, like logos, business cards and letterheads.

How do you prepare for the unknown?

Luke’s response was a simple one: speak to someone who’s already done something similar and been through it.

There are key trigger points where issues come up again and again. If you hit them head on it can cause chaos, but if you are experienced, you can spot a lot of them early and take evasive action. For instance, did you know that six weeks into the FCA application the FCA will contact your employer as part of the process? This can cause huge issues if your employer wasn’t already aware. Similarly, if you are under a restricted covenant in your contract, this can hamstring your initial growth forecasts if you aren’t prepared. We deal with issues like these time and time again. When you’ve been through it as many times as we have at Broker Network, it means you can see many of the hidden traps long before they spring and react accordingly. Even if you don’t think a network is for you, find someone who has been through the same process – it will be pay dividends in the long run. Lea Cheesbrough is Head of Broker Development at Broker Network.

“When we started off, we already had the experience of running a business and we knew we had the expertise in insurance, but any new business can have its twists and turns in its early days. A few unexpected obstacles are inevitable, but as long as you have a solid business plan and have completed your full due diligence then it should have minimum impact on your business. You need to be prepared to muck in whenever the need arises, and having someone on hand who has been through the same thing and can help warn you about some of the potential pitfalls is invaluable.”

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Just a thought

from Eddie Longworth The twin track approach to successful claims settlement

n the world of claims and, especially, at the interface between claimant and insurer, we often hear of the need to deliver ‘extraordinary’ service. With claims being seen by some as a differentiator from the competition, it is argued that an ‘extraordinary’ level of service results in greater client loyalty, renewal behaviour and advocacy. Some of these assertions (because they are rarely backed by objective evidence of behavioural changes) may well be true, but it seems to me that the claims world continues to confuse what we deliver with how we deliver it and, in doing so, misses the real demand from customers and the real opportunities to save time, fulfilment cost and administrative expense. A recent visit to my local PC World store serves to illustrate the point.

it seems to me that the claims world continues to confuse what we deliver with how we deliver it

Designing a great claims product

My goal was to purchase good quality Bluetooth earphones to work with my iPhone. In this instance the product I was seeking to buy and use was obvious. In truth, had I not needed to ask a few questions about functionality, then I could have bought the item online and had my immediate needs fulfilled. However, I chose to access the additional service package on offer, which consisted of assistant knowledge, easy comparability, testing of items etc. The product that I required and the accompanying services available to me were clearly differentiated and easily understood. Had I chose to dispense with the additional services then no doubt the product itself would have been cheaper This is where the world of claims settlement – particularly in personal lines - becomes confused and starts to incur unnecessary costs whilst often failing to deliver what the claimant is really looking for. The product that we offer is that of claims fulfilment - repairing a car, fixing storm damage, replacing lost goods, repairing water leaks, replacing carpets, and all the other events that insurance covers. Alongside and running throughout claims fulfilment are the additional and accompanying services that we also throw into the mix – claims handler knowledge and advice, 24 hour access, online tracking systems, work guarantees, sourcing replacement goods etc. This latter group of what are essentially sales and after sales services may well have a key part to play in securing customer satisfaction, and this will inevitably vary considerably according to customer type and claim complexity as well as the quality of the services supplied. However, do not confuse them with the core product requirements of the customer – the need to stop a leak, get a vehicle back on the road, replace the stolen watch and customer demands for speedy and fair settlement as part of their core product requirements.

services is that it allows us to identify where the real problems might be, the opportunities to improve on the core of what we do and to tackle those underlying cost drivers that only ever seem to drive expenditure upwards. Customers are usually pretty clear on what they really want in order to resolve their problems, and everything else is an optional extra. I’m not suggesting that claims departments adopt a Ryanair or EasyJet approach to customer management, but both of these businesses (which are amongst the most profitable airlines in the world) are absolutely clear that their core product offer of cheap flights to foreign climates is where they will deliver what is required of them – everything else (including baggage, allocated seating, check-in etc) is additional accompanying services. In this instance, they will seek additional payment and, of course, if you don’t want any of these extra services then your costs as a consumer and as an airline are lower. Similarly, in the world of claims, our job is, firstly, to focus on those better, cheaper and faster ways of delivering the core product of claims fulfilment. If a simple building repair takes four weeks when the actual work involved warrants only a few days labour, then we must question our own supplier, project and logistics management. Why is it that many insurers are still not able to provide same day settlement of cash offers? Innovation in the world of motor claims and repair is better than in many other sectors, but still we struggle with the simple task of intelligent deployment of repairs that would reduce costs and cycle times. By not confusing the claims ‘product’ with the accompanying claims ‘service’, the world becomes a lot clearer, and it’s easier to design and deliver great solutions that meet customers’ real needs. Eddie Longworth is Director at JEL Consulting.

Learn from EasyJet

The significance of viewing the role of claims settlement in this dual-definition split between product offer and accompanying

52 Modern Insurance

Issue 28

CASE STUDIES

Eclipse’s Proclaim Case Management system enhances speed and transparency at Bellegrove Business Insurance nsurance and Risk Management firm, Bellegrove Business Insurance, is implementing the Proclaim Case Management Software solution from Eclipse Legal Systems, the UK’s leading legal software provider.

Operating from offices in London, Bellegrove offers a full range of business insurance services and has specialist bespoke insurance products for Chauffer fleet operators, Motor Traders, the construction industry and residential/commercial property owners and developers. Darren Gower

In addition, Bellegrove is able to offer a comprehensive suite of risk management solutions including the writing of Health and Safety policies and Fire Risk Assessments. With a nationwide service to over 3,000 clients, the firm prides itself on its high level of customer care and market-leading products. Eclipse’s Law Society Endorsed Proclaim Case Management solution was recommended to Bellegrove by a member of staff that had previously worked with the system. After an in-depth

ISSUE 32 ISSN 2050-5744

THE BUSINESS

OF LAW

, “Whereas before technology was something extra you could put into to a pitch or talk a client about, it is now key to a relationship with that client and how we deliver legal work for them”

KERRY ESTLardAND W Addleshaw Godd

“It’s fair to say that have other industries ological embraced techn the change more than legal profession”

MIKE TTER PO ard Addleshaw Godd

demonstration, the firm decided to implement Eclipse’s Proclaim claims management software to increase productivity and cope with an expanding volume of cases. The desktop application will provide a consistent platform for staff throughout every stage of the claims process, and its high level automation will save hours of administration time by providing staff with all of the necessary documents, produced at the click of a button. Furthermore, Proclaim’s market-leading range of toolsets will mean Bellegrove can ensure claims are driven forward in a cost-effective, yet personalised manner. Matthew West, Managing Director of Bellegrove Business Insurance, comments: “In such a competitive market, it’s crucial that we continue to stay ahead of the competition in terms of the service we offer our clients. Proclaim will be fundamental to our success, providing us with a system that has a natural fit for high volume work, and our clients will now benefit from even greater speed and transparency.” For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems, part of Capita plc, via darren.gower@eclipselegal. co.uk or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk

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