Modern Insurance Magazine Issue 32

32 Issue

ISSN 2515-3803

In the past […] insurers have dealt with the symptoms of a broken system

A changing landscape

Tom Gardiner, Aviva

Building a stronger future Kirsty McKno, CHO

The Fraud Roundtable Carpenters Group

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MODERN Insurance

Editorial Contributors Allistair Hunter Managing Director Direct Solutions

Marc Lafferty Chief Revenue Officer EDAM Group

Daniel Chesney Commercial Director S&G Response

Michael Lewis CEO Claim Technology Ltd

David Williams Technical Director AXA Insurance (UK)

Paul Tasker Managing Director REG UK

Donna Scully Managing Director Carpenters Group

Paul Taylor Managing Director, Operations Plantec Assist

Gilles Normand Chief Executive Swinton Group

Richard Taylor UK Business Director GT Motive

Harriet Conway Business Insight Manager Allianz

Rupert Armitage Managing Director Auto Windscreens

Professor Hugh Koch Clinical Psychologist and Director Hugh Koch Associates

Shaun Smith Sales Executive EMEA Iovation

Jason Tripp Operations Director Coplus

Sophie Timms Head of Corporate Affairs Zurich Insurance UK

Jonathan Hewett Chief Marketing Officer Octo Telematics

Steve Pratt Interim HR Director LV= General Insurance

Katherine Best Clinical Operations Manager Unite Professionals Ltd

Stephen Marshall ACII Managing Director Insure Apps

Keith Tracey Managing Director Aon Global Professionals

Steve Thompson Director Industry Insights

Nik Ellis Managing Director Laird Assessors

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

WELCOME here are many words that can be used to describe fraud: deception, deceit, scam, cheat, fake, con, extortion and double-cross, among others. And there are many areas that fraud can affect. However, the most talked about is whiplash fraud as it continues to present a threat to customers, not just in terms of pushing up premiums, but by fraudsters putting motorists at risk. There was surprising unanimity as all sides seemed to welcome the recent delay to the implementation of the Ministry of Justice’s whiplash reforms to April 2020 - more to come on that in the next issue! However, as mentioned by Tom Gardiner, Head of Fraud and Recoveries at Aviva (p10), as the reforms close in, fraudsters have started to move into other industry spaces and towards other products: holiday sickness claims, pension scams and cyber are just but a few. This will be the next challenge for the insurance industry – making sure that the tools we have already developed stay relevant for the new fraud landscape and that we are one step ahead of our opponent.

T

Our coverage of the Carpenters Group Fraud Roundtable conversation flittered between the reforms and CMC’s, with many having mixed revelations about the reform’s implementation, as is apparent throughout this edition of Modern Insurance. Carpenters Group’s supplement also features alongside this issue. After undergoing a re-brand, Carpenters Group discuss their next steps and how they are planning on continuing to thrive and grow.

Collaboration continues to be a major talking-point throughout the industry; as stated by Kirsty McKno, Chair of the Credit Hire Organisation (p15), who delved into the world of credit hire and the challenges that they are facing as an industry. She hopes that the CHO will continue to collaborate to not only lobby against fraud and its prevention but to encourage innovation and new technologies; look out for their conference in November, which will highlight how credit hire companies can better invest in technology. Alan Wardle, Association of British Travel Agents (ABTA), continued on with the theme of collaboration as he addressed the staggering increase of holiday sickness claims and explains how the industry needs to come together in order to challenge this rising form of fraud.

Make sure you check out our fantastic experts on the editorial board panel and features such as the Credit Hire Virtual Roundtable and this issue’s Industry Innovators Interview with Wrisk!

I hope you enjoy this issue, and if you have any comments or feedback, then please do get in touch via the details below.

Issue 32 ISSN 2515-3803 Co-Editor Poppy Green Project Manager & Events Sales Rachael Pearson

Modern Insurance Magazine is published by Charlton Grant Ltd ©2018

Poppy Green, Co-Editor, Modern Insurance Magazine.

01765 600909 @Modern_Poppy poppy@charltongrant.co.uk

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.

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Modern Insurance 03

MODERN Insurance

Issue 32 | ISSN 2515-3803

07 10 15 38

47

58

Innovation in Information Get the essential insights you need to more accurately price and underwrite risk

contributors

from LexisNexis Risk Solutions.

Combining cutting-edge technology, unique data and advanced analytics, LexisNexis

04 Modern Insurance

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

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MODERN Insurance

NEWS 07 Alan Wardle talks news

Alan Wardle, Association of British Travel Agents (ABTA), addresses the staggering increase of holiday sickness claims and how crossindustry collaboration needs to challenge the issue in order to see positive change.

INTERVIEWS 10 Tom Gardiner

Modern Insurance spoke to Tom Gardiner, Head of Fraud and Recoveries, about the effects of the whiplash reforms on fraudulent behaviour in the industry as well as what preventative measures we need to start focusing on and implementing.

15 Kirsty McKno

The Chair of the Credit Hire Organisation, Kirsty McKno, stresses the importance of collaboration as she delves into the world of credit hire and the challenges they are currently facing as an industry.

EdiTorial Board 21 How should the industry look to tackle dual pricing?

David Williams, AXA Insurance (UK)

21 Connecting with the customer

Richard Taylor, GT Motive

23 Collaborative fraud fighting in a post GDPR world

Shaun Smith, iovation

23 Striking the balance

Paul Taylor, Plantec Assist

25 The next steps for autonomy

Nik Ellis, Laird Assessors

25 The changing nature of the client

Keith Tracey, Aon Global Professions

FEATURES

29 Consider the customer

Jason Tripp, Coplus

31 How important is the investment in people in a business?

Steve Pratt, LV= General Insurance

31 Enhancing communication between departments

Professor Hugh Koch, Hugh Koch Associates

33 What are the next steps in tackling fraud in the insurance industry?

Donna Scully, Carpenters Group

41 Sector Soapbox

44 Industry Innovators Interview: Wrisk

Sophie Timms, Zurich UK

35 Harnessing AI

Michael Lewis, Claim Technology Ltd

35 The relationship between customers and vehicles

Steve Thompson, Industry Insights

36 The ethos is inclusion

Stephen Marshall ACII, Insure Apps

36 How important is the investment in people in a business? 30k important

Rupert Armitage, Auto Windscreens

37 Branding – the missing link?

Harriet Conway, Allianz

38 Seizing the opportunity

Experts in the industry answer questions addressing the credit hire industry.

56 The importance of building a complete and single view of data for insurers

Rodrigo DeCossio, MarkLogic, discusses the increasing level of data in the insurance industry and how insurance companies should start implementing new ways of managing it.

57 Just a thought from Eddie Longworth

Allistair Hunter, Direct Solutions

38 SME - overcoming underinsurance

The Fraud Roundtable, sponsored by Carpenters Group, recently brought together leading figures in the industry to discuss the key challenges surrounding insurance fraud.

54 Credit hire – virtual roundtable

Katherine Best, Unite Professionals Ltd

37 We must stop the blame game

Niall Bartin is the CEO and CoFounder of Wrisk, a start-up that wants to provide customers with new ways of managing and reducing risk.

47 Carpenters Group’s Fraud Roundtable 2018

33 A modern approach

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

Fraud is a consequence of institutional contempt

10 MINUTES WITH 58 10 minutes with…

Neil Ingram, Direct Line Group

Gilles Normand, Swinton Group

39 The 2020 Vision

Marc Lafferty, EDAM Group

39 Rising to prominence: RegTech

Paul Tasker, REG UK

27 Putting the employee front and centre

Dan Chesney, S&G Response

27 Changing relationships

Jonathan Hewett, Octo Telematics

29 A world of opportunity

Trevor Lloyd-Jones, LexisNexis Risk Solutions

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right people. right skills. right technology.

www.carpentersgroup.co.uk

END-TO- E N D CO M P L E T E C L AI M S & L E G AL SO L U T I O N

NEWS

Holiday sickness fraud Alan Wardle TALKS NEWS Alan Wardle, Association of British Travel Agents (ABTA), addresses the staggering increase of holiday sickness claims and how cross-industry collaboration needs to challenge the issue in order to see positive change. ver the last few years, ABTA members started to see a steady increase in the number of customers claiming that they had suffered from severe sickness whilst on holiday.

There were a number of common factors linking these claims.

Customers were often claiming for instances that had occurred up to three years in the past; they had been on an all-inclusive holiday and no complaint had been made previously, particularly in resort.

The next common factor was that the vast majority of these claims were driven by Claims Management Companies (CMCs) together with firms of solicitors they worked with.

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By 2017, ABTA members had seen a staggering increase of over 500% in customers claiming that they had fallen ill on holiday. Over the same period, customers reporting in resort that they had fallen ill had remained either steady or fallen. Tour operators servicing other European markets reported that no other nationalities were claiming in such large numbers, so clearly something did not add up.

The root of the problem goes back once more to 2013, when the Government put a cap on the level of legal fees that could be charged relating to personal injury cases. This was to address the problem of unscrupulous firms of solicitors and CMCs encouraging people to claim for “whiplash�, which have cost the motor vehicle insurance industry enormous sums of money.

By capping legal fees, the main financial incentive for these companies was removed. Unfortunately, the cap only applied to personal injury claims occurring in the UK, so creating a legal loophole, since fees were not capped for injuries occurring overseas. CMCs have aggressively exploited this loophole,

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Our research shows that 1 in 5 people in Britain have been approached about making a claim for a holiday sickness

Modern Insurance 07

NEWS

The root of the problem goes back once more to 2013, when the Government put a cap on the level of legal fees that could be charged relating to personal injury cases targeting customers who had taken an overseas all-inclusive holiday. Our research shows that 1 in 5 people in Britain have been approached about making a claim for a holiday sickness.

Why only target all-inclusive holidays? These claims relate to holiday sickness and it would be much harder to prove negligence on the part of the hotel if the customer had eaten in other outlets such as local restaurants while on holiday.

CMCs targeted customers in resort and more recently on social media and through cold calling. They can be very persuasive, telling people that the travel industry has created a fund because of the “problem of wide spread bad hygiene practices” and that customers are “entitled” to compensation. This is totally untrue and is used to dupe unwitting customers into submitting a fake or exaggerated claim. These customers may be unaware that by submitting such a claim they are committing fraud with potentially very serious consequences both in the UK as well as in the country where the holiday took place.

Historically speaking, the travel industry has rarely defended holiday sickness claims, partly because the level of claims were not particularly significant. Courts would often only require very little proof from the customer but a much greater level of proof from the tour operators defending the claim, which could substantially increase their legal costs. However, by 2017 the problem had increased so significantly that ABTA and its members launched its Stop Sickness Scams campaign to clamp down on this practice.

As part of the campaign, ABTA needed conclusive, compelling evidence as to the scale of the problem and so set about collating evidence from its members relating to the level of the growth in claims. This was essential in convincing the Ministry of Justice that action needed to be taken to close the legal loophole and include overseas sickness claims within a fixed legal cost regime.

ABTA also referred unscrupulous CMCs and solicitors to the Claims Management Regulator and Solicitor Regulatory Authority.

Lobbying also went on behind the scenes with MPs and key decision makers.

The campaign also sought to raise public awareness, as to the scale of the problem and the fact that if they were tempted to submit a fake sickness claim they were committing a form of fraud, by running social media advertising and creating animations highlighting to holidaymakers the risks of a claim. ABTA has collaborated with a number of national newspapers to help make the public aware of this issue, and achieved significant supportive coverage, at last count, over 500 separate articles and broadcast pieces. Some travel companies have successfully pursued private prosecutions against people they believe are submitting a false claim. In October last year, a couple from Merseyside received prison sentences after making a false claim. Cases in the last few months saw holidaymakers ordered to pay thousands of pounds in costs to their travel companies after being found guilty of fraud. There has also been a noticeable shift in the attitude of the courts, which are now much more likely to look with suspicion at a claimant who has very little evidence to support their claim.

It has subsequently damaged the reputation of UK holidaymakers.

Spain has seen the majority of these claims, simply due to the size of their all-inclusive market but they have also affected Cyprus, Greece, Portugal and Turkey. This has been widely reported in the Spanish media, described as the “latest British scam”. There are also instances of prosecutions abroad - currently two British citizens are on trial in Mallorca for running a ring encouraging UK holidaymakers to submit fake claims. If found guilty they can expect to spend a substantial time in a Spanish jail.

ABTA has been working with the authorities and businesses in destinations where there has been a particular rise in claims, involving them in our lobbying work and helping them to defend claims. We’ve also been sharing the developments of the campaign with stakeholders and the media in these destinations – to show how seriously the industry takes this problem, as well as the widespread upset felt by the vast majority of British holidaymakers who would not make a false claim.

The Foreign office has issued warnings in its travel advice to Spain and other affected destinations, about the dangers of submitting fake claims and ABTA’s CEO Mark Tanzer was contacted directly by the Foreign Secretary, Boris Johnson, giving his support.

The campaign has delivered results for members and our partners overseas. Earlier this year the Ministry of Justice announced its commitment to including overseas personal injury claims within a fixed cost regime and this came into effect on 7th May – ahead of the main holiday season. Public awareness of the problem has grown significantly and there should be very few illusions about the risks of submitting a false claim. The practice of CMCs cold calling the public will is to be banned, this will take effect in April 2020.

Not all sickness claims are illegitimate and ABTA would encourage anyone who does fall ill on holiday to inform their tour rep or hotel manager who will help them obtain medical assistance and they will also have very clear evidence to back up any claim for compensation.

ABTA and our members will continue the fight against fake sickness claims through work with the relevant authorities and raising public awareness so that this reprehensible practice is stamped out once and for all.

Alan Wardle is Director of Public Affairs at ABTA.

The rise in sickness claims has not just been costly for UK travel companies, it has also caused significant financial costs for overseas hotels. The Mallorcan Hoteliers Association has stated that in 2016 alone, it cost their members 50 million euros.

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Issue 32

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INTERVIEW

A changing landscape Interview with

Tom Gardiner

Modern Insurance spoke to Tom Gardiner, Head of Fraud and Recoveries, about the effects of the whiplash reforms on fraudulent behaviour in the industry as well as what preventative measures we need to start focusing on and implementing.

Q

Q

A

A

How has insurance fraud developed in the last few years, and how are fraudsters responding to measures used to combat them?

We have seen fraud move away from just being predominately a whiplash problem. The organised fraudsters have been attracted to whiplash fraud but with the threat of the reforms, we have seen them move into other sectors and towards other products. There has been a rise in holiday sickness claims and there has also been a move into pension scams, and anecdotally an increase on whiplash claims in Scotland; so as we clamp down on them in England and Wales, they are reappearing somewhere else.

Historically, we have always talked about fraud being a personal lines and personal motor problem, but we have seen it move into commercial lines, particularly over the last five years. For example, at Aviva we screen all of our motor business at the point of sale, whether it is commercial or personal, broker or direct, and what we have seen is the same risks that have declined in our personal lines book suddenly appearing in commercial lines. These fraudsters are very agile and they will use any front door to access insurance or products they are not entitled to, or to go on and commit fraudulent claims.

Q A

Will the personal injury reforms have a positive effect on fraud in the insurance industry?

It is worth reminding ourselves that the primary purpose of the Civil Liability Bill is not just to tackle fraud, but to tackle the compensation culture, the excess cash in the system and make motoring more affordable for customers. But without doubt, I believe this will be a game changer in terms of tackling whiplash fraud.

What has happened in the past is that insurers have dealt with the symptoms of a broken system and we have tried to detect and avoid fraudulent claims, but what these reforms do, and Aviva was at the front in terms of calling for them, is strike at the root cause of the problem by tackling the excessive cash and disproportionate costs in the system - as that is what is attracting the fraud in the first place. I genuinely think it will be a game changer.

While fraudulent behaviour continues to be an issue in personal injury, where do you identify behavioural issues among those working in the sector?

If we look at whiplash fraud, without doubt, the easy access to high compensation and disproportionate costs and fees in the system has attracted unscrupulous behaviour and profiteering.

Another aspect of that is that it has attracted criminals who are trying to illegally access personal data so that they can profit from the whole claims farming system - and that has been largely responsible for literally millions of nuisance calls that we all suffer, as well as breaching people’s personal data rights.

It has brought out a lot of bad behaviour, but if I flip it, what it has done positively is brought the industry together more than ever and the level of collaboration to address a common problem and to fight fraud for customers has brought out the very best in the industry.

it has brought the industry together more than ever and the level of collaboration to address a common problem and to fight fraud for customers has brought out the very best in the industry

But does fraud go away or go somewhere else? That will be the next challenge for insurers, to keep vigilant and to keep all of the tools that they have built relevant to the new fraud landscape.

10 Modern Insurance

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INTERVIEW

One of the big challenges is insurers keeping their fraud controls relevant through a changing external market

the UK is a hotspot when you look at it against other countries

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INTERVIEW

what these reforms do […] is strike at the root cause of the problem by tackling the excessive cash and disproportionate costs in the system

Q

What is the public’s attitude towards insurance fraud and how can awareness be raised in areas it may be lacking?

A

I do think this is changing but I still think that insurance fraud is generally seen as socially acceptable. I still think it is seen as victimless. And in many areas it is not seen as a crime, so that is a huge challenge for us.

Where it has changed, and where insurers have done a really good job of changing public attitudes, is whiplash fraud. Public opinion and attitude has turned against people committing whiplash fraud and society is no longer tolerant of that kind of behaviour because they recognise the danger associated with people who cause those accidents and the cost that it is driving for genuine customers. The challenge now is building on that to make insurance fraud generally more widely unacceptable. The ABI have already got a group working on a fraud communications strategy, which is trying to do two things: they are trying to look at how we can encourage honesty, discourage fraud and educate customers in our day-to-day transactions with them, and then longer term, they are looking at the scope for a longer term communication strategy that will start to tackle public opinion and attitudes.

Q A

Does the volume of fraud differ regionally throughout the UK, and what do you attribute any differences that are apparent?

Ten years ago, the North West was the whiplash claims capital, but that has changed now. Instead we still have hotspots, which typically map to large towns and cities; it is less marked regionally.

What I would say is if you put a different lens on the question, what stands out geographically is that the UK is a hotspot when you look at it against other countries. Our Group CEO has gone as far as to say that whiplash fraud in the UK is a national disgrace and frankly it is. If you look at the frequency of whiplash claims and fraud in the UK compared to other countries it is shameful. Aviva commissioned a di study a few years ago and we found that over an eight year period the number of road accidents fell by about 40% but the number of whiplash claims went up by 90% - you have got to question why that is happening?

Q

How might developments in technology aid the insurance industry in combatting fraud and improving the claims experience?

A

You’re right to bring them together because combatting fraud and delivering great service go hand in hand. I think they’re complimentary, it is not a choice.

In terms of fraud prevention, what we’re doing is screening over 60% of our GI new business to stop fraudsters accessing our products in the first place and going on to make fraudulent claims. In our retail business we are doing that real time at point of quote. In terms of detection, we have got some fantastic score cards, analytics and network tools that will help us spot

12 Modern Insurance

opportunist, serial and organised fraud. And if I think about investigation, there are some amazing online tools and software that is improving the quality and the speed of our investigations.

Technology has also helped the rapid sharing of information, both internally and across the market, and it has improved the speed of decision making.

But why is that all good for the customer? There are less false positives, less innocent customers getting caught in the fraud net, we are making better decisions quicker, and what technology has done is help to free up resources that were previously investigating and fighting fraud to focus on genuine customers. If you do it well, fighting fraud and delivering great service are two outcomes of doing the same thing.

Q

How can the sharing of data and intelligence be better utilised by insurance industry stakeholders in the fight against fraud?

A

It has definitely got better. Five years ago most of the data and intelligence sharing by the industry was about claims and about personal lines.

The Insurance Fraud Bureau (IFB) have recently expanded their role from predominately motor to property and liability products. They have also got propositions and capabilities around policy fraud as well as claims fraud, which they didn’t have five years ago.

There are three areas where we could still improve. One is that we have got a good track record of sharing information about proven fraud but we haven’t yet got a mechanism for sharing intelligence and suspicions. Secondly, we could be sharing data outside the industry with other sectors and markets, including govt.

And thirdly, not everyone is playing still. The good news, if you take the Insurance Fraud Register, that is about 70% of the market contributing, but the flip side is that a third of the market isn’t.

Q

Are there challenges and opportunities currently present in Aviva’s international markets that the UK industry could learn from when tackling fraud?

A

Aviva has got significant interests in a number of markets and is a composite insurer writing GI, Life and Health business.

But interestingly, back to the UK being a national disgrace in terms of fraud, despite our footprint and presence, the UK probably still represents the biggest insurance fraud exposure for the group. Because of that, we have also built some of our best fraud capabilities in the UK.

Q A

What is Aviva doing to combat fraud in the insurance industry?

I am really proud of what Aviva do in terms of protecting customers and fighting fraud. For example, we were leading the call for the whiplash reforms and it would be a fantastic landscape-changer if they are implemented effectively.

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INTERVIEW

combatting fraud and delivering great service go hand in hand. I think they’re complimentary, it is not a choice

If I go to “prevention”, we are screening the front end of our business to stop fraudsters accessing our products. And on “detection”, we are detecting more Claims fraud, and have some fantastic people and tools – includes 25 people dedicated to tackling organised whiplash fraud. And on “investigation” we have significantly strengthened our Special Investigation team to make sure that there are more consequences for fraudsters and that there is a deterrent. Last year we achieved custodial sentences of over 140 years, so we are really trying to ramp up the consequences.

And we are doing this for our customers: to protect them and their identities; defend them at court against spurious third party claims, disrupt gangs causing accidents on our roads, and trying to keep premiums low for genuine customers.

Q A

How do you foresee fraud evolving in the future, and how should the insurance industry be preparing for this?

One of the big challenges is insurers keeping their fraud controls relevant through a changing external market, and a great example of that is the whiplash reforms. These reforms will strike at the heart of whiplash fraud, but do I think that fraud will go away? No I don’t. Insurers will need to be vigilant and keep their radars and controls relevant to that changing landscape.

Tom Gardiner Head of Fraud & Recoveries (UKGI) ACII, Dip Mgmt (Open), CIRM, SIRM Tom is responsible for Customer and Broker Fraud across all of our UKGI products – incl sales, underwriting and claims.

His role includes setting fraud strategy and direction, defining best practice, leading strategic change and delivering new initiatives, and working closely with the market to achieve Aviva’s lobbying goals. He is also now responsible for Recoveries across UK GI Claims.

Before that, Tom was Head of Loss Prevention, with responsibility for Claims fraud, 1st Line Risk management, governance and assurance across UK & Ireland GI Claims.

Previously, Tom spent nine years in operational roles leading property, motor and casualty Claims centres in various locations across the UK.

The other trend is digital. As well as insurers using technology, consumers’ preference for digital interaction presents a real challenge. It could potentially open the door to fraud and it could potentially make some of our old controls and practices redundant, so keeping pace with customer preferences and digital ways of doing business is going to be key.

Tom Gardiner is Head of Fraud & Recoveries at Aviva UK GI.

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INTERVIEW

Building a stronger future Interview with

Kirsty McKno

The Chair of the Credit Hire Organisation, Kirsty McKno, stresses the importance of collaboration as she delves into the world of credit hire and the challenges they are currently facing as an industry.

Q A

What do you identify as the biggest challenges facing credit hire companies (CHCs) and how are they responding to these?

The credit hire industry is a rollercoaster ride. There are always challenges but ironically one of the biggest is how you approach them. For example, new technologies are an everyday occurrence and as a result, our sector is changing all the time. For the industry, one of the key things that we need to understand is how we can embrace technology and work with it to the mutual benefit of everyone we are dealing with, and build a stronger future. Technology plays into how we communicate with one another, particularly post GDPR, and we need to use platform systems between credit hire companies and insurers effectively and efficiently to improve customer outcomes.

Q A

What is the value of collaboration in the credit hire market, and how does the CHO enable this for members?

Although it is important that parties in dispute are able to litigate, I believe that going to law must be the last resort.

Within the CHO we work in a very collaborative way at all times –

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the GTA is a particular example of that. The GTA is the mechanism by which a group of insurer and credit hire stakeholders come together to reduce friction in the market and create better customer journeys and outcomes. That involves us working together and cooperating to get the right framework for that to happen. The aim of the GTA is to embed best practice and minimise friction on all levels. At the CHO we take that collaboration one step further. It is really important for us to also collaborate with other trade bodies and suppliers, so we have a strong associate membership, including amongst others salvage companies, engineers and telematics companies, who together help our member companies deliver high quality customer service in their hour of need.

A good credit hire company needs to be constantly innovating.

It shouldn’t sit still

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INTERVIEW

I want to change the perception of credit hire, increase the awareness of the benefit of credit hire and make sure there is more transparency around how it works

Q

Where might friction exist in the relationships between CHCs and other industry stakeholders, and what is the CHO doing to address any issues that are present?

A

Traditionally, the recovery of credit hire has always been adversarial - I don’t think we will ever get to a point where there isn’t litigation, but by the same token, litigation should become an exceptional outcome in the future. Even now, less than 5% of all credit hire cases are concluded via the Courts. At the moment the CHO are considering whether arbitration would work within the credit hire industry, which would immediately make better use of technology. And arbitration makes sense for customers – it means that they don’t have the stress of going to court; it means that you agree to go into an arbitration process with your opponent and to be bound by the outcome. It is a key potential development over the next year or so.

Q

How has the presence of fraud in the credit hire market evolved in recent years, and what steps can CHCs take to mitigate its impact?

A

Part of my role as Chair has been to consider how the credit hire industry is perceived and action required to change that.

Just as in any industry, there will be a small number of operators who push the boundaries of acceptable business practice, but our members are often victims of fraud too. In recent months the CHO has engaged with the Insurance Fraud Bureau (IFB) and the IFB’s Chief Executive, Ben Fletcher, with the aim of becoming an affiliate member of the IFB. Collaborating on the fight against crime, for example by sharing data, is the way forward.

16 Modern Insurance

There was a system called Netfoil – it was an insurance fraud database where credit hire companies and insurers provided data and receive fraud alerts. Netfoil went out of the market over Christmas last year but separately, the CHO has been working with Verius who have launched an insurance fraud database that enables credit hire companies to provide data and receive alerts in a manner better tailored to their operation.

Within our new CHO website we have a GDPR compliant and safe intelligence sharing portal that enables CHCs to work together. If we are aware of fraud we don’t become victims – quite often you find that staged crashes, or using vehicle for drug dealing and other serious crime becomes a pattern and if one credit hire company is hit by it then others will be affected too. One of our biggest difficulties is the lack of resource within the police. Often we would be in a position where we could set up a sting for them but there isn’t the capability to carry out the arrest. We have had conversations with the police on this and understand the difficulties that they face. After all there are other higher profile crimes that deserve attention. Collectively as an industry, we need to lobby the government to put more resource towards fraud and the prevention of fraud.

Q

How have customer needs and expectations of credit hire changed in the last decade, and are CHCs meeting these needs?

A

In credit hire there are certain behaviours that are expected of us, particularly those companies that subscribe to the GTA. Technology has changed the claims journey. Customers are now used to using their mobile phones, an app or a 24/7 service and that is one of the ways that credit hire companies have adapted over time. I don’t think they are having to change in terms of the level of service provided, because service quality has always been a top priority, but rather it is the way that we provide that service that has changed.

Issue 32

INTERVIEW

At the moment the CHO are considering whether arbitration would work within the credit hire industry, which would immediately make better use of technology

Q A

What forms does innovation take in the credit hire market?

Technology innovation is vitally important. In terms of fraud, for example, how do we use technology to become more efficient? How can we cut costs and manage regulation? How do we respond to market change; how do we take referrals work and how do we work effectively with insurers? It is about taking the lead and finding a solution. A good credit hire company needs to be constantly innovating. It shouldn’t sit still and assume change and finding new ways to enhance their business isn’t a necessary part of the job.

Q

How is technology impacting CHCs, and how can they capitalise on the opportunities provided by new and emerging technologies?

A

One area of interest for the CHO is being able to improve the way we use technology and innovation to gather data. It is a very complex industry and much larger than people realise; the volume of data is similar to the data sets in insurance companies, and the complexity means it is more difficult to understand the value chain in credit hire. It would be really interesting if we could exploit data analytics to understand the market better and identify the specific value that we provide to our customers. Telematics, for example, are a perfect tool for a credit hire company to capitalise upon because telematics allows us to track vehicles and understand the driving behaviours of customers. Technology will always be on my ‘to-do’ list and I am very much looking forward to our CHO conference in November, which will give delegates a real eye-opener on how we can better invest in technology in credit hire companies.

Issue 32

Q A

How might the utilisation of data facilitate greater transparency and collaboration in the credit hire space?

The fraud prevention database is an example of our members working collaboratively, particularly if we get our affiliate membership with the IFB. It creates absolute transparency and provides a collaborative point where we can share our data with insurers for the benefit of both credit hire companies and insurers, as that will help prevent fraud.

Q A

What are your primary aims as Chair of the CHO to improve the market for CHCs and their customers?

For me, it is about having a business model that has an absolute focus on the consumer and that we can work with insurers to ensure that their policyholders don’t suffer.

An investigation by the Competition and Markets Authority in 2015 found that credit hire costs less than £3 per policy, which is pretty good value for customers needing to get back on the road while their vehicle is being repaired or replaced after an accident. I want to change the perception of credit hire, increase the awareness of the benefit of credit hire and make sure there is more transparency around how it works. We are considering a CHO kite mark for our members, where there is a lot of audit involved, to ensure that they are adhering to the right behaviours and presenting themselves as the exemplars of the industry.

Modern Insurance 17

INTERVIEW

It is a very complex industry and much larger than people realise; the volume of data is similar to the data sets in insurance companies, and the complexity means it is more difficult to understand the value chain in credit hire

Q A

How else do you predict the credit hire market will evolve in the next few years?

In the next two years, it will need to respond to the Civil Liability Bill, and the government’s proposed reforms to personal injury. Currently, credit hire aligns to the personal injury process. If there is a requirement for credit hire, it may have to be included in a personal injury claim. With fewer lawyers to advise clients through the personal injury journey that will bring changes, such as the growth in companies bundling claims services. How and where credit hire will fit within a bundled offer will be an interesting development.

Kirsty McKno Chair of the Credit Hire Organisation Drawing on 20 years’ experience as a solicitor in the credit hire field, Kirsty has been The CHO’s chair since 2016. Dedicated and driven, Kirsty has represented the industry with the CMA and in front of both the MoJ and Transport select committee, making her a natural fit for the task of representing the interests of The CHO’s membership.

Until we have gone through the reform process – and it is by no means certain that the government will not have to make further concessions - it is difficult to see how our market will shape up in the longer term. What I do know is that credit hire is the ultimate marmite business – you either love it or you hate it and it goes without saying that I love it!

Kirsty McKno is the Group Recoveries Director at Kindertons Accident Management and Chair of the Credit Hire Organisation (CHO).

18 Modern Insurance

Issue 32

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EDITORIAL BOARD

How should the industry look to tackle dual pricing? ual pricing seems to be getting increased media coverage, to good and bad effect. Bad in that it shows insurer behaviour at its worst, causing tremendous damage to our reputation as an industry, but good in that (hopefully) it might force people to do something about it!

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For the uninitiated, insurers will invariably offer a much cheaper price at new business stage than they will at subsequent renewal, and as the years progress, that differential will grow, leading to valid accusations of punishing rather than rewarding loyalty, and being, I think, the major factor in why the public say they don’t trust insurers.

Now speak to an advocate of this dual pricing approach and they will tell you that they have to offer discounted rates up front to attract the business, and the only way to afford this is to claw back the first year discounts with later year price rises. I get that, and so does the competition and markets authority and other regulators, as they have previously investigated and decided that overall it’s just part of what makes such a competitive market, and that market is actually very good for the consumer. As long as they shop around!

The problem is the excess of the practice, 10% discount upfront followed by a couple of 7% loads in the next two years is defendable, but not when the loading drift into 50% plus territory, or where we are dealing with vulnerable customers. One issue is that even in my ‘acceptable’ scenario, it’s not explained to the customer so looks underhand when it happens.

Fortunately, the Association of British Insurers has just launched its ‘guiding principles’ on retail pricing, and the action points call for clarity, pointing out discounts are included and are for the first year only, and also a commitment to outlaw ‘excessive’ differentials. There is still some work to do; one firms ‘excessive’ might be another’s good use of price elasticity modelling, but the intention is clear and insurers have signed up to comply.

Much better than our usual excuse of ‘first mover disadvantage’, and just in time as the FCA is taking another look at pricing, and if we don’t get our house in order first, I can see something far less appetising being mandated.

Connecting with the customer How can digital collaboration tools be used more effectively when engaging customers? igital collaboration opens up a whole new aspect in engaging with customers for the insurance market. As technology continues to change, the customer will be given the ability to be involved in processes such as crash notification.

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One area where there is a great example of where this happens is within the household insurance claims process. We are seeing companies who now communicate with the customer directly through video streaming technique solutions whereby the customer can report the claim in real time with claims adjustors.

Throughout the life cycle of the claim, especially motor claims where the availability of the vehicle is important, being kept up to date with the repair progress and any potential delays or issues is key.

Digital collaboration platforms allow for real time communication between the customer, the repair and the insurance company and extending it further to other suppliers such as parts and vehicle rental.

Engaging with social networking, such as Facebook, Twitter, Whatsapp and many others, opens new opportunities to better engage and service customers in an environment that is now common practice to many, this helps to build closer and stronger relationships between the insurer and the customers.

As a great example of this, we have developed a consumer self service module for reporting accidents at the earliest point, this allows the users to improve on the repair cycle time and more importantly, gather detailed information of the claim at the very earliest stage.

This kind of digital collaboration allows the consumer to be fully involved and engaged and gives them the freedom to access information about their repair as and when they want to.

Evolution and the adoption of digital collaboration platforms will continue to expand further, the industry and industry in general needs to quickly adapt to this trend.

Richard Taylor, UK Business Director, GT Motive.

David Williams, Technical Director, AXA Insurance (UK).

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Modern Insurance 21

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EDITORIAL BOARD

Collaborative fraud fighting in a post GDPR world

Striking the balance

n the fight against fraud, analysts maintain a delicate balance. Whilst stronger regulations and policies protect customers’ data, fraudsters become more aggressive and sophisticated.

I

Nevertheless, one of our premier UK insurance clients managed to collaborate with another insurer to detect a ghost broking ring, which led to several prosecutions.

Over a period of 25 months, someone or some group, had incepted and then cancelled 83 new motor insurance policies as soon as they had converted.

Whoever was opening and closing these policies was meticulous.

Among those 83 applications, very little key data was repeated.

The applicants incepted only four or five motor insurance policies per month.

This level of diligence would normally have slipped by undetected.

But by using device intelligence, our client could see that only two devices (both with true IP addresses in London) were submitting the applications, some of which listed residences hundreds of miles away.

The extra detail framed the core question: Why were these policies being incepted and cancelled so quickly?

Our client used unique, persistent identification numbers assigned to the two suspicious devices to query peers in a global fraud consortium. Sure enough, analysts at another insurer had seen the same devices applying for policies with them also.

Whilst adhering to UK privacy laws and their companies’ privacy policies, the two insurers pooled their observations. Confident that they were discussing the same devices, they shared information such as the number of policies incepted, the average time before the policies were cancelled, and the reasons given for those cancellations.

They concluded that the fraudsters were using the first insurer’s cancellation letters and no-claims bonuses to get cheaper policies with the second insurer. The cheaper policies (their premiums lowered further with false information about the drivers) were then sold to unsuspecting victims.

How are changing customer expectations encouraging more engagement and innovation in the industry?

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one are the days where brokers and insurers could rely on the loyalty of a customer simply by offering a good price and paying claims promptly.

The pace of technology change in the world has gone into overdrive and is fuelling a huge increase in the expectations of consumers when it comes to the service they expect to receive - and insurance is no different than any other sector. Whether it be a new quote in twenty seconds, a mid-term adjustment at four o’clock in the morning or a decision on a claim as soon as it happens, the world of insurance is stepping up to deliver a new kind of engagement to digital-age customers.

The digital revolution is being embraced by many insurers, brokers and claims suppliers with some fantastic innovations to solve the 24/7 instant demand of customers. The problem is that heavily regulated insurance absolutely needs interaction with an expert provider, someone who knows what they are talking about.

Insurance is essential and protects most of society from the consequences of unplanned loss. It is therefore imperative that we continue as an industry to provide expert support and advice through qualified professionals who can also deliver service and empathy with a smile on their faces. At all times of the day.

In the motorcycle world, we see first hand that our customers feel a genuine emotional attachment to their machines and as a result, expectations are quite rightly supremely high. Quality and speed remain critical factors; but so too does live interaction with the qualified technician who is repairing their bike, engagement with drivers offering a seven-day delivery service or speaking with a dedicated claims handler for expert advice to secure the best possible outcome for their claims.

So, in summary, it is great to see new innovations emerging to meet the new level of expectations, but I also advocate continued investment in the expertise of our people across the industry to make the digital engagement happen successfully - even if that is sat behind a live chat screen pretending to be Alexa!

Paul Taylor, Managing Director, Plantec Assist.

Equipped with this insight, our client supplied New Scotland Yard with concrete device data that proved essential in the successful prosecution of the ghost broking ring.

The consistent device ID allowed the fraud analysts to keep their balance and obey privacy regulations in their fight against fraud.

Shaun Smith, Sales Executive EMEA, iovation.

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Modern Insurance 23

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EDITORIAL BOARD

The next steps for autonomy hange has a habit of striking fear into the hearts of people.

I never understood the phrase “if it ain’t broke, don’t fix it”; it’s the antithesis of evolution. If we all thought that way then we wouldn’t have progressed from horses to cars. As we stand on the eve of the forth industrial revolution we have a choice to either embrace the newly emerging technology or stay on our horse as cars pass us by.

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The automotive industry is at the forefront of this new world with an ever accelerating raft of tech pouring into new cars.

Autonomous cars have been all over the news as they progress from passive safety features, up the six steps to full autonomy.

Unfortunately a minute number of self-driving cars have been involved in accidents, some fatal, which draws a great deal of attention from the press. The technology is not perfect and there are very rare occasions when it fails; overall it appears to be saving rather than causing accidents. Seat belts were not widely accepted by drivers, with claims that they could trap passengers. Whilst this was true, seat belts are recognised for saving significantly more lives than the deaths they cause.

So we have the technology, but what of the ethics? What happens when an impact is unavoidable but there is a choice of collision target; for example, a child runs out from between rows of cars?

There is an oncoming car with a family on board. Hit the child or risk hurting or killing more people in a frontal impact? How to distribute risk between drivers and pedestrians, other road users, cyclists, and even property, is tricky to teach a system.

How do we write into the software decisions that may minimise risk to life by breaking road traffic laws? Most of us wouldn’t think twice about crossing a double white central line to avoid a collision with a pedestrian. We rely on common sense to override the legal implications in some cases.

We do not have many of the answers yet, but I hope that we are able to develop ethics to be embedded in the very DNA of autonomous cars. They may never be perfect but if we can evolve significantly more efficient, safe and environmentally less damaging autonomous cars, the world our children grow up in will be just that bit better.

Nik Ellis, Managing Director, Laird Assessors.

The changing nature of the client Is insurance dealing with the changing nature of professional firm risk in a digital economy? he effects of technology on professional service firms, their operation and cultures are much discussed. Opinions vary as to the degree and timing of the changes that will result. From the perspective of the insurance coverage, there are a multitude of risk issues.

T

Experience will vary within the professions as to the degree and nature of change depending on the discipline, firm size, market sector, client needs and indeed the availability of investment funds. Competition from traditional and non-traditional sources will play a major role.

To examine briefly one sector, management consultants are providing digital transformation services as a direct response to client demand. Thus, in many cases the nature of the engagement is changing. New services are being provided to new sectors in some cases. Assignments may involve leaving a software tool behind, raising licensing and intellectual property issues.

Software development and distribution also means that more than one client could be affected by any issues arising, since the same core solution could be used with multiple clients. Such activities may involve teaming up with technology providers, who may have different risk cultures and standards for compliance.

The nature of potential new services, or the way in which traditional services are delivered, require that more varied expertise is involved in risk assessment and mitigation. In the tolerate, treat or terminate decision process, new lines may have to be drawn about what is allowed, may be allowed or is not permitted.

Turning to transfer, we can expect the professional indemnity market to be stable around traditional risks and responsive to change. The range of risks is different but not necessarily more severe. Close attention to coverage grants within wordings and other terms is advisable.

PI wordings tend to be very broad for regulated professions but in other areas, coverage written around specific activities may contain limitations that restrict cover in the new economy.

There are other potential claims sources; cyber and business interruption to name two. The complexity of the risks and their potential interdependencies, through Cloud services for example, further complicates the analysis.

Longer term we await the effects of advanced data analytics and AI. How will the quality of service and decisions be judged? Who did what and who is responsible? These are subjects for future consideration.

Keith Tracey, Managing Director, Aon Global Professions.

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EDITORIAL BOARD

Putting the employee front and centre How important is the investment in people in a business?

“C

lients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.” Richard Branson.

This quote has been a guiding principle in many businesses; businesses that recognise where true value and investment must be placed. At S&G Response, we too believe that our most important asset is our people and the investments we make to continually support our team is crucial for the success of the business in both the immediate and long term future.

Everyone knows that happy, motivated employees can lead to a productive workforce. Putting employees at the heart of the business through the creation of a supportive and learning environment delivers a product or service that is far beyond the expectations of your customers, and will create a positive and empowered culture.

Defining values and behavioural traits, setting clear expectations, sharing a common goal and empowering employees can not only help to deliver an exceptional level of service and consistency, but it can also foster an environment of innovation and creativity, which is priceless in any fast moving market. All of these actions require investment, either in the time to implement and define or expenditure in learning and development.

Living out and truly demonstrating company values is also fundamental to supporting a company’s culture, so too is creating a framework of competency for growth and progression.

Implementing a competency framework ensures that every employee has a clear and defined career path with achievable goals and incentives to encourage their personal and professional development. Giving clarity to employees on their role and desired attitudes and expected behaviours supports corporate objectives, enable further delegation, improves performance and ensures a first class customer journey.

Investment into your people should be high on your agenda, however, the sole factor for success is understanding where the investment needs to be made to have the best impact. In any business, the one issue that continually dominates the agenda is communication and an area that some businesses fail to balance; encourage two way communication, listen to your people and give them a voice.

Changing relationships How are customers’ relationships with their vehicles changing and how should vehicle and mobility providers respond to this? ur relationship with our cars is changing. Innovations that enable the sharing economy, and an increased willingness to share our cars and rides, means that we have a much less personal relationship with our cars. We see them as just a way to get from A to B, rather than an extension of our homes or even our identity. But, how can vehicle and mobility providers respond to this shift in attitudes?

O

The first step is to be aware that the new generation are more interested in a mobility solution, rather than owning a vehicle. Car manufacturers need to respond and protect their future business by investing in being an operator, rather than a seller, and provide mobility solutions that cater for a variety of uses and drivers. A good example is a business such as a DIY store that operates a fleet – a driver that can’t fit their goods into their car can rent a van for a few hours. With multiple drivers, the driving experience must be customisable.

It’s never been more important to know your customer. Vehicles must be kept in the right locations, be of the right specifications and, in the case of electric vehicles, have the right range. Electric vehicles are seeing heavy promotion from cities that want to be environmentally-friendly and are therefore providing premium parking spots.

Technologies such as telematics, and the resulting big data analytics, means that we’re able to draw a much better picture of our customers than ever before. Being able to gather data from each trip in a car, rather than tied to one operator, means that manufacturers, insurers, car club operators and fleet managers can understand usage patterns. Telematics providers are able to gather the data and then break it down into actionable insights for all their customers.

As our relationship with our vehicles continues to evolve, it’s crucial that manufacturers and all providers throughout the chain focus on building a relationship with drivers on a personal level. Some, like Tesla, are already doing this by providing fully customisable screens as a starting point. However, to fully develop that relationship, we need to go much further and really get to know our clients even more closely. Using the full capabilities of big data analytics means that we can finetune and customise approaches and keep a customer for life, no matter which, or whose car they’re driving.

Jonathan Hewett, Chief Marketing Officer, Octo Telematics.

Dan Chesney, Commercial Director, S&G Response.

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Modern Insurance 27

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EDITORIAL BOARD

A world of opportunity

Consider the customer

How is the traditional business model being reshaped to fit customers’ expectations and changing technologies?

Where does the government’s focus need to be in regards to insurance in order to improve the industry for both the insurer and their customers?

f we think about insurance and digital disruption, the world of apps and one-touch data, the industry looks rather like a three-handed clock. We see the long ‘digital’ hand of the clock whizzing round at high speed, then the insurers’ core systems and technology, the short hand, is speeding up, but still going much more slowly. In the middle there is the insurance business interaction, finding its place in terms of innovation and connecting with customers.

I

A recent KPMG survey on innovation and automation questioned 100 global insurance CEOs on how they view the current business changes. Most insurance leaders said that they are confident in their ability to manage digital disruption, and to be a part of it, but they agreed more must be done to bridge the gap between ambition and inaction.

Over half (51%) of insurers said they are concerned about the integrity of their management data. Another 43% are concerned that a lack of quality customer data is hindering the depth of their customer insights. Only 48% said they are planning to increase their investment in innovation over the coming three years.

Process automation could be the answer. In many aspects of insurance processes such as pricing, quoting, underwriting and claims, automation can help with processing errors and increasing speed, reducing costs, introducing personalisation in the way insurance intersects with the daily life of customers.

As a data exchange and data aggregation company, we are working on some important data enrichment projects and data platforms such as the Global Telematics Exchange and Home Prefill, which will support future automation and a better customer experience.

The part of risk that can be modelled and automated is improving all the time. There is pressure to compete and reduce response times in underwriting, and with that comes a drive to reduce the human factor, to reduce any unnecessary complexity of the product.

As a whole, the industry needs to look at the place of data and analytics, and new ways of delivering the aspect of risk advice, risk mitigation and new ways of pricing it for the connected world. It adds up to a world of opportunity.

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

‘A

sledgehammer to crack a nut’ is a phrase heard often in relation to the government reforms to personal injury claims but it need not be the case with a more focused approach.

The stated purpose of the reforms is to ‘disincentivise minor, exaggerated and fraudulent road traffic accident related softtissue injury claims’, but although these reforms have been on the government’s agenda since November 2015, any real benefits to the customer (excepting the ‘promise‘ of reduced premiums) are not apparent.

Whilst trying to ‘fix’ the problem of whiplash fraud and exaggeration, the reforms will have a detrimental effect on genuine claimants who will find it harder and more expensive to claim.

So what could the government do differently?

The government needs to foster collaboration in this industry, the adversarial for and against approach suggests there can only be winners and losers, whereas working together on specific issues like identifying fraudulent claims and developing non financial based solutions like rehabilitation, could deliver benefits for everyone, not least the customer.

Another way the government could improve the claims industry is a more holistic approach to compensation claims. The proposed personal injury reforms will mean someone who has suffered a soft tissue injury, confirmed with a medical report, which may affect them for up to six months, could receive less compensation than someone whose flight is delayed. This does not seem equitable.

Yes it will disincentivise claiming for the soft tissue injury as per the government’s objective, but is it fair?

Crucially the customer perspective doesn’t seem to be very well considered by the government’s reforms. With the Civil Liabilities Bill, the mechanism for delivering part of the reforms, now on pause over the summer, are clearly some way from this legislation being finalised. This is an opportunity for the government to consider how it can ensure this reforms do help customers, and a key area is going to be education and communication.

The current regime has been in place for almost twenty years.

A customer who has an accident is not going to understand the small claims process and how they go about making a claim.

The government should now be thinking about how customers experience this new process to ensure those with a genuine injury get the help they need.

Jason Tripp, Operations Director, Coplus.

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Modern Insurance 29

EDITORIAL BOARD

How important is the investment in people in a business?

Enhancing communication between departments

f you truly want your organisation to gain and retain a competitive advantage then investing in your people at all times is vital. And it becomes even more important when the organisation is seeking to grow or change rapidly.

onnecting with the many professionals and departments in any one insurance company is a huge challenge. There is no one unique structure of such a company, but typically a department might be client/customer facing or, alternatively, ‘back-office’ operations (with, for example, insurance experts in claims investigation, compliance, audit etc.). The quality output of both types of department rests on their technical strength and competence but throughout the company, communicating a positive culture and communicating effectively at a face-to-face level are both crucial to reinforcing these technical strengths.

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At LV= General Insurance, we are looking to transform our business by adopting and embracing digital technology. However, achieving this sort of transformation doesn’t just happen simply by clicking your fingers – although I wish it did! In order to bring about that kind of change, investment is required in our people to become conversant with the changing requirements and develop knowledge.

That’s why we have recently launched our Transformation Academy, an internally focused programme, which encompasses a series of opportunities to help our employees learn new skills or gain qualifications within the technology and digital sphere.

As part of the programme, we’re offering our employees apprenticeships, internships, secondments and technical and professional qualifications. The apprenticeships and internships cover a range of roles including Software Developers, Software Testers, Business Analysts, Project Managers, Content Producers, Digital Marketers, Data Analysts and Data Scientists.

Meanwhile, on the technical and professional qualification front, we’re offering the opportunity for employees to attend a mini MBA course called “Leading Digital Transformation”. Designed by the University of Salford in Manchester, the programme aims to help business leaders deal with the wide range of challenges and opportunities associated with digital transformation.

What’s more, we’re also giving our employees the chance to attend Squared Online, which is the digital marketing course developed with Google, and gain an Agile Project management qualification.

We view this investment in our people as critical to our success. If we truly want to embrace digital and ensure our company creates great products and services for our customers, then we need our people to thrive.

The way we see it, our digital journey will only succeed if we invest in our people and help them to become our true agents of change.

Steve Pratt, Interim HR Director at LV= General Insurance.

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It is essential that the purpose and values of the company are agreed, made explicit, and are there to inspire and guide all members of staff.

A leading insurer described their core values as: • Care more – about our customers, our communities and each other • Kill complexity – making things simple for customers • Never rest – thinking bigger and do better • Create legacy – positive ways forward These values link to the widely accepted Total Quality value of ‘meeting and exceeding customer expectation’ and ‘putting them first’.

Another leading and relatively new insurer described the best thing about their company was that ‘the people are great’. What does this really mean? This brings me to the second aspect of effective communication – face-to-face interpersonal ‘people’ skills. Irrespective of the every day pressures on all of us at work, one of the keys to effective operations is the ability we all have to listen and talk in positive and effective ways to each other, whether by telephone, faceto-face or through emails and letters. When we learn to communicate, we see the importance of verbal and non-verbal listening, the sharing of the conversation space (e.g. talking 50% or less of the time each), using summarising to ensure mutual understanding; focusing to maintain the point of the conversation; and then being able to influence a conversation towards a ‘win-win’ outcome.

Reflecting on our own communication style does not have to be hard, embarrassing or a distraction from ‘real work’ – any company and any good manager with a ‘bias for action’ can apply this to encouraging junior, middle and senior staff to look at their faceto-face communication skills and even provide simple training or CPD opportunities to polish up their micro-skills in communication.

When ‘people are great (communicators)’, the operational side of any insurer will be boosted and become more effective.

Professor Hugh Koch, Clinical Psychologist and Director, Hugh Koch Associates and Professor in Law & Psychology, Birmingham City University.

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Modern Insurance 31

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EDITORIAL BOARD

What are the next steps in tackling fraud in the insurance industry? ooking beyond on what the Government is currently proposing, there is too little focus on building upon many of the sensible recommendations from the Fraud Taskforce. The Government needs to create a credible and fully resourced legacy vehicle to tackle the fraud agenda and its constantly changing face. Closer collaboration, sharing data and intelligence, for instance, by extending AskCUEPI, is essential.

We need to continue working on strengthening ID checks and verifying legitimate claims. We need to ensure that any issues around retaining personal data for fraud busting are overcome.

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The new regulatory regime for CMCs after the transfer to the FCA needs to be robust. I continue to worry that the process of reauthorisation for CMCs, and the significantly higher costs of regulation, may drive many CMCs underground and so the new registration fees need to be reasonable. I’ve heard from many in the insurance sector that there is a considerable risk of a high proportion of CMCs going rogue. Ministers need to get on with publishing part 2 of the reforms so that the process can begin.

We need to provide a unified front to challenge the cultural perception that fraud is a victimless crime. We also need to put further pressure on the SRA to get even tougher with the minority of errant solicitors.

The goal of reducing fraud, however, must be balanced against protecting the rights of the majority. Any steps should be proportionate to the scale of the problem and evidence-based.

The Government could introduce all the proposed structures and mechanisms without doing real and lasting damage. It could deliver on its manifesto commitments to crack down further on exaggerated and fraudulent whiplash claims. It could introduce a tariff and raise the small claims limit, but set the rates and limit at more reasonable and justifiable levels. It could develop a new enhanced Portal that more effectively interacts with MedCo and other systems. It could still be open to Litigants in Person, allowing them the option of whether they wish to retain external support or not. All of these steps would still help tackle fraud, without effectively wrecking the market and opening up new risks of fraud for the insurance sector.

Donna Scully, Director, Carpenters Group.

A modern approach How are insurers embracing diversity; is there still room for improvement in attitudes towards inclusion? ith diversity and inclusion now a growing strategic item on many board agendas, companies are recognising that creating a truly inclusive culture is not only the fair and right thing to do but a business imperative.

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Certainly external standards and reporting requirements such as the Gender Pay Gap and the Women in Finance Charters are making a difference, but there’s also overwhelming evidence that greater diversity brings better business results and returns.

At Zurich, we’re committed to improving diversity and inclusion across our organisation, ensuring that every employee has the opportunity to fulfill their potential. We’ve worked hard in recent years to put strong foundations in place creating employee networks, achieving external recognition for our efforts, including being the first insurer to achieve Disability Confident Leader status under the auspices of the DWP scheme.

More recently, Zurich, together with Lloyd’s, has spearheaded the launch of the Inclusive Behaviours Pledge, designed to change behaviours and create a more inclusive work environment across the sector, with fifty firms signed up so far.

The Pledge addresses all forms of potential discrimination in the workplace, whether on the grounds of age, disability, gender reassignment, marriage/civil partnerships, pregnancy/maternity, race, religion/belief, gender or sexual orientation. It sets out a clear framework of desired behaviours for leaders and their employees in the workplace and with suppliers and customers.

We also work with organisations and networks such as the Association of British Insurers, the Gender Inclusion Network, the Employers Network for Equality and Inclusion, Stonewall and the Business Disability Forum, sharing best practice and sponsoring industry initiatives such as the Dive-In Festival 2018, the annual festival for Diversity and Inclusion in Insurance.

Many organisations are working hard at diversity and inclusion but we believe the sum is greater than the parts. Collaboration across industries or sectors is vital for creating the lasting cultural and societal change. The modern world requires a modern approach; one that is dynamic and reflects the societies in which we live and work and where there is equal opportunity whatever your background.

We hope the Pledge is a catalyst for greater collective action and that others sign up soon, helping us to create a truly diverse and inclusive industry, welcoming people from different backgrounds and valuing the contribution they can make to our industry.

Sophie Timms, Head of Corporate Affairs, Zurich UK.

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EDITORIAL BOARD

Harnessing AI What implications could adopters of developing technology and artificial intelligence face, and what issues may this present? any companies struggle with the right places to include Artificial Intelligence and Machine Learning. Ensuring you have a deep grasp on your industry and its underlying pain points can make a real difference. For me, insurance is about protection, so getting into the mindset of the customer and understanding their unique needs is key.

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Take a road accident for example. This could happen to anyone at any time, leaving them feeling exposed, overwhelmed and often alone. If AI can be harnessed to expertly guide the customer on the essential steps they need to be taking in real-time, as well as assure them that everything will be ok, this creates a powerful personal touch, which currently does not exist.

Personalisation is essential to making this work, counterbalancing the idea that automation and AI are stripping away the human touch. AI should be able to ask customers specific questions about their habits and risk factors, easily view data from connected devices through IoT, and give support to customers by analysing and responding to uploaded photos or documents.

Adapting your service models through technology can also help individuals feel more supported. Today’s customers expect more than a 9-5 call centre. They want 24x7 access across multiple devices. The right technology can build you an omni-channel, ‘always on’ customer service model.

We can already see AI making a real difference with hard skill tasks, but it’s true that many essential soft skills, which are usually associated with humans, will be harder to simulate. While guidance and support can be automated, empathy, leadership and creativity are more difficult shoes to fill.

Embracing a hybrid solution can fill these gaps, allowing customers to reach out for live support where necessary, or proactively offering this when your AI recognises customer frustration. Our technology for automating claims allows empathy and support to become a value add for your business, leveraging your human staff to be the face of your AI.

The relationship between customers and vehicles o one knows disruptive times better than the automotive industry. We face a continual stream of fast and changing technology, which is influencing a huge shift and change in the relationship we have with our vehicles.

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As a teenager growing up, owning my own car felt like real a milestone, a rite of passage, the “done thing”, however the so-called millennials of today are starting to question the ownership model.

Consumer attitudes towards ownership are changing to the point where the entire purchasing model is being upended. Buying figures, which have boomed for years, are now starting to show a downward turn. Predictions state owning a car by 2048 will be as common as owning a horse! Granted, this is a pretty extreme view and that of my own is that there will still be millions of people who take pleasure from their “pride and joy”, however, with the cost of insurance and the war on pollution forcing the (more expensive) electric models upon us, alternative options are becoming more prominent.

New mobility models are becoming more accessible, the rise in booking apps such as Uber are making it almost as cheap to order a taxi as it would be to run your own car. Car sharing, bicycle lease and pay per use are also revolutionising city centre life. With autonomous cars predicted to rule the road by removing the need to actually drive, we are headed into change, in which will bring new challenges ahead from an insurance claims perspective.

Car users are demanding connectivity. We are seeing partnerships form that are going to open a whole new range of possibilities, take Ford and Alexa or BWM and Cortana for example. Over the past decade, we have seen telematics rise within the industry and through InduSTry Insights’s consultancy work with ThingCo; I have witnessed how telematics can positively impact all elements of the supply chain from the point of FNOL. Whether a customer owns or leases a vehicle, the in-car technology is transforming the risk for insurers – there is a real need for insurers and supply chains to leverage data and connectivity to better serve customers.

Steve Thompson, Director, Industry Insights.

Acknowledging and supporting your customers unique pain points and providing best in class customer support, ensures that rather than strip away the human touch, you are utilising technology to build unparalleled customer loyalty.

Michael Lewis, CEO, Claim Technology Ltd.

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EDITORIAL BOARD

The ethos is inclusion What steps can be taken to prevent digital exclusion as technology proliferates in the insurance industry? n September 2018, the microchip that you will find in your smartphone, laptop, IPad and much more will be celebrating its 60th birthday. Since it’s creation, growth has been so explosive that Intel Co-Founder, Gordon Moore, has stated; “If the auto industries advanced as rapidly as the semiconductor industry, a Rolls Royce would get half a million miles per gallon, and it would be cheaper to throw it away than park it”.

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While insurance might have been seen to be “lagging behind” in technological development compared to other sectors, you can see technology investment occurring throughout the industry.

With the InsurTech investments and blockchain revolutions that are talked about, how on earth are the non-tech savvy not going to be marginalised?

How important is the investment in people in a business?

30k important he primary motivator for all employees is to earn a living.

However, this is never enough to keep good employees within a business. So, identifying the reasons that good employees leave a business is key in developing the right kind of investment to retain a workforce.

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Research by Age UK shows that over five million people aged 65 and above have never used the internet. This could lead us to believe there is no way they would interact with app technology, or any further developments in technology in insurance…

Exit interviews rarely provide honest feedback on the reasons for leaving a company because the employee is aware that they will need a reference and no one likes to burn employment bridges.

From twenty years of management experience, the main reason people give for leaving a job is essentially to start a better one.

Usually it is better paid, has more responsibility or autonomy, and is more interesting and demanding. So the obvious conclusion to staff retention is to make sure the job they’re doing is a better job. Finding out what frustrates people about their existing role is a good starting point and the opportunity for regular one to one sessions with a line manager is essential.

Furthermore, it could lead to the fear that “digital exclusion” means that a significant minority of people are getting less competitive deals in the insurance market, purely down to the growth of technology outstripping their understanding.

A recent report carried out by Oxford Economics reveals that, on average, replacing members of staff incurs significant costs for employers, which they calculated as £30,614 per employee. There are two main factors that make up this cost:

However, if you make the user experience simple and intuitive, you’ll find the bar to entry is lower and digital exclusion is lower.

Over one third of users on our claims apps are over 50 and we’d like to think this is partly due to an easy to understand interface and design.

• The Cost of Lost Output while a replacement employee gets up to speed • The Logistical Cost of recruiting and training a new worker i.e. advertising, recruitment, HR costs, management interview hours and lost work hours.

So, to drive a modern car do you need to understand how it all works? No, you just need an interface that you can operate – pedals and a steering wheel. The same applies in technology, make the interface simple and you are halfway there.

(http://www.acas.org.uk/index.aspx?articleid=4857)

I remember learning that insurance was about the “premiums of the many paying for the claims of the few”. This ethos is inclusive and for the good of all, we must make sure that we embrace and deploy technology with this ethos in mind.

Stephen Marshall ACII, Managing Director, Insure Apps.

As the majority of our staff at Unite Professionals work remotely, we set up peer support groups regionally in order that lone workers had the opportunity to feel part of a team; bring problems to the table and discuss solutions. This works well, but there has to be support from the wider management team in effecting change where issues are brought forward, otherwise disillusionment will quickly set in with a mind set of “what’s the point”. Feeling, as an employee, you have identified a problem and contributed to the solution in a way that benefits the organisation is rewarding for the employee and beneficial for the organisation. This is investment in employees – it is not financial or just about training but is an investment of time and belief in their ideas and as instigators of change. In turn, employees invest in the success of the company.

Katherine Best, Clinical Operations Manager, Unite Professionals Ltd.

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EDITORIAL BOARD

We must stop the blame game here is no doubt that the way we drive will change in an unprecedented way in the near future. When I passed my driving test, without giving away my age, suffice to say there was no power steering or such a thing as ADAS (Advanced Driver Assistance Systems). However, it won’t be long until my teenage children start to learn. Just like we take power steering for granted now, they will take lane assist and assisted braking for granted, regarding them as ‘the norm’.

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Whilst this is a fantastic way to aid safety on roads, I believe that it is also dangerous for users who have little to no experience of driving without these features if they happen to fail.

There is currently a gap where vehicles can do ‘some’ of the driving for us but not all, leaving ambiguity over the ultimate responsibility of who’s in charge behind the wheel, which is why vehicles with ADAS features must be repaired and functioning correctly.

We know that our customers will become over-reliant on ADAS. It’s therefore our responsibility to know about this spiralling technology now. The problem is that unless people are working with vehicle manufactures (like us), they are maintaining these features using technology that is out of date or reverse engineered to repair customer vehicles.

Auto Windscreens was headline sponsor of a recent event, which addressed the ‘motor insurance revolution’. Clearly motor insurers are having to navigate a plethora of technological innovation requiring process changes and a review of the way they deal with underwriting, risk management, claims and repair.

An interesting element of the conference was a perceived divide between the insurers and the vehicle manufacturers, with a significant proportion of blame put squarely on vehicle manufacturers for ‘withholding information’.

Firstly, I do not believe that manufacturers, who have spent millions investing in their marque, model tech and innovations, should simply hand over all their information as a matter of course but the ‘divide’ cannot continue.

Branding – The missing link?

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s a business we all believe that it’s only the major players that have the resources and finances to create a good brand; well you are very much mistaken!

With a bit of time, and thought, any company can create both a digital (website, Facebook, Google etc.) and a conventional media (TV, radio, adverts) brand; technology has made this process not only possible but also important.

The six key reasons for a strong brand are; improved recognition, creates trust, supports your advertising, builds financial value, inspires employees and finally generates new customers. So the question is, why wouldn’t you build your brand?

Let’s start with the logo; does it encapsulate the service or product that you are selling? Does it have a strapline that reinforces the message? Once this has been agreed, is it used in a consistent manner: look at Apple, Nike etc., the colours, font and sizing are all the same whatever the context that the logo is used in.

Next, how do we create the trust? With so many media outlets at our disposal, it is difficult to know which way to go. Start with your existing clients and get some feedback. Follow this up with prospects you have been speaking to and finally get it on social media and let your friends and contacts spread the word. Ensure your website is updated and the look reflects the branding. Make sure that people know what message you are looking to get across; what it stands for and the benefit for them.

Finally, get your employees to buy in to the brand. Tell them what you are looking to achieve; a brand that they can trust, a company that they want to work for and a company that is going to be successful. By adopting these various elements not only will your brand get recognised, it will also create additional value on your balance sheet and make life far easier when you are looking to generate new customers, which with such a challenging environment, is surely a good thing?

Allistair Hunter, Managing Director, Direct Solutions.

It’s not good for the customer and it’s not good for the industry.

The perception that there seems to be a way to work ‘around’ the manufacturers is dangerous. At some point all of us will need to work very closely together or we will be putting our customers at risk.

Rupert Armitage, Managing Director, Auto Windscreens.

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EDITORIAL BOARD

SME – overcoming underinsurance C

heapest is not necessarily best. That’s certainly the message coming through from SMEs when it comes to their insurance needs.

A 2018 report of 500 SME business leaders commissioned by Allianz revealed that 75% prioritise breadth of cover above price and other factors such as claims handling, when choosing their insurer and product. Further, most decision makers expressed they’d be happy to pay more for their insurance if they were advised their existing cover was inadequate. It seems that more often than not, this is the case. A review led by the Financial Conduct Authority (FCA) in 2015 found that in a number of cases SMEs’ sums insured were inadequate to cover the loss sustained.

Seizing the opportunity How is the traditional business model being reshaped to fit customers’ expectations and changing technologies?

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he shifts in the insurance industry during recent years are well documented and driven by changes in customer behaviour and expectation for immediacy and convenience.

There are lessons for our industry to learn from those businesses in other sectors that have capitalised and responded most effectively to similar demands. Disruptive digital-first brands like Amazon not only offer choice and ease, but guide their customers to the products that are right for them through clever algorithms, recommendations and peer reviews.

This issue is seen primarily in the area of business interruption insurance, where terminology can be confusing and the calculation of the ‘gross profit’ sum complicated. Crucially, an insurer’s definition of gross profit differs from that of an accountant’s, and needs to consider turnover over a fixed time period and projected revenue, plus any future trends, such as inflation and interest rate changes. Undervaluing the gross profit sum can be detrimental to a company in the event of a business interruption event; potential consequences include a slowdown or complete halt in business operations, loss of revenue and reputational damage.

But the Amazon story has come full circle. Having once decimated bricks and mortar bookstores who simply didn’t have the infrastructure to compete on price or scale, the ecommerce giant is now opening physical book shops in the US. It enters the market armed with invaluable customer insight and data gleaned from years of operating online that will underpin good in-store service.

Another pitfall is opting for too short an indemnity period; the period of time an insurer will pay for losses following the event, which gave rise to the claim. With many businesses choosing a default indemnity period of twelve months, SMEs are also urged to consider longer periods, such as 24-36 months. The indemnity period needs to allow for any repairs and rebuilding, for sourcing equipment and recruiting any additional staff. It may also take time to re-establish a pre-loss customer base.

By contrast, brokers have a far stronger customer relationship platform, built on years of engaging with them through different channels – whether face to face or over the phone. Brokers who capitalise on this, and invest in the right technology to leverage it and digitise their operations, pose a massive threat to aggregators as their digital capabilities catch up with their customer service credentials. In this way, the insurance story will come full circle too.

It’s recommended for SMEs to regularly assess their existing cover against emerging risks and discuss potential loss scenarios with their broker or insurance professional. Undertaking risk assessments and implementing pre-loss measures is also important, and using these in conjunction with a robust business continuity plan.

No SME wants to experience an event which disrupts their business. However, having confidence that adequate insurance is in place for such a scenario can offer considerable peace of mind.

Harriet Conway, Business Insight Manager, Allianz.

Brokers have a similar opportunity to meet the challenge from aggregators. Online-only operators have undoubtedly disrupted the traditional market but often fall short on customer service.

Brokers occupy a privileged position in the customer-underwriter relationship. They are perfectly placed to provide the information that customers need to make the right decision about their cover and avoid risks of underinsurance, a perennial issue for the industry.

We can also share data with the underwriters, which will benefit the customer and in turn, generate a better loss ratio. To most effectively underwrite risk, you need both a relationship and history with customers. As little more than technology platforms, this relationship is difficult for aggregators to develop.

No one is denying that insurance is a digital-first industry now. But the success stories that emerge from the current headwinds facing the industry will be those that seize the opportunity to bridge the gap left by the rapid digitisation of insurance. There will always be a need for a guiding hand to steer customers towards the products that are right for them.

Gilles Normand, Group CEO, Swinton Group.

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EDITORIAL BOARD

The 2020 Vision How important is the investment in people in a business? eople are key to the success of any business and we believe that high performance can only come from engaged employees who enjoy what they do. As an investor in people, we are a firm believer in developing, supporting, retaining and growing our team. Last year we set ourselves an ambition to double the size of our business by 2020 and this would not be possible without the efforts of an experienced yet ever-expanding team.

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As part of our continued investment in people, we launched a bespoke internal initiative that invests in people while engaging staff and enabling the achievement of results. The ‘2020 Vision’ has been implemented to position us as the market-leading service provider in credit hire and post-accident services while shaping the initiative around business growth targets.

As part of our investment in people, we have identified necessary key steps to implement the ’2020 Vision’. The people development aspect of the initiative creates a framework that allows our team’s performance to be measured. In analysing the results, we can grow our teams and help each person to realise their potential accordingly.

In developing our leaders, we are enhancing leadership behaviours alongside improving skills and knowledge. This addresses gaps identified in working patterns or training required. This part of the project is designed to help articulate the expectations of leaders within the business, providing a programme of support.

We are addressing our talent development process; in how new talent is brought in, how existing employee skills are developed, and how to create a succession plan. We have innovative plans in place that we hope will improve the calibre of job applicants, reduce time to hire, increase retention levels and improve recruitment KPIs. Placing an emphasis on staff benefits, alongside recognition for achievements and milestones, will lead to increased employee engagement. We are a growing business and aim to reward our staff, so we must have the confidence that our salary and benefits packages are able to attract and retain a team who can help deliver business objectives, while remaining fair for a diverse workforce.

Marc Lafferty, Chief Revenue Officer, EDAM Group.

Rising to prominence: RegTech With increased regulatory emphasis on counterparty oversight, how are firms addressing their responsibilities? egulated firms have always been subject to numerous compliance and due diligence requirements around the business they undertake and the way they carry out their trade. Naturally as the burden of compliance continues to grow, so do the associated costs, the time required to meet obligations and potentially increases in impediment to doing more business.

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Regulated industries have been employing continually evolving strategies and processes to manage the responsibilities being placed on them by regulators. Those who have been most effective have done so by embracing and embedding RegTech solutions into their day to day operations.

A growing focus for FCA authorised firms is the management of counterparty risk. Within insurance, an industry that by its very nature is fraught with risk, where failure to conduct appropriate due diligence on trading counterparties can lead to regulatory failure. The FCA is placing increased emphasis on the oversight of all firms, not just risk carriers, and participants are asking themselves if this is realistically achievable or fair. There is a challenge for management teams to establish if they have robust compliance strategies to meet these requirements.

A key consideration for all firms involved with insurance provision or intermediation is the efficacy of other firms they trade with. The FCA principles refer to this; firms are required to recognise and manage the risks that face businesses.

A misconception has often been that these principles pertain mainly to the efficacy insurance suppliers. However, as the overarching aim of the principles are to protect the end customer, brokers and other intermediaries also have an obligation to carry out due diligence on those with whom they arrange policies, including managing general agents (MGAs), wholesale brokers and scheme operators.

The only way to ensure end to end oversight is to clearly establish and understand the full chain of distribution, from risk carrier to policyholder. As distribution in the UK market is multi-channelled, often complex and has many participant types only businesses using real time data and on demand tech solutions will be able to achieve full coverage.

RegTech enables immediate delivery of numerous due diligence data points, including legal, regulatory, credit, sanctions and PEP surveillance all coupled with digital document exchange to crystallise trading relationships.

Paul Tasker, Managing Director, REG (UK) Ltd.

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Sector Soapbox

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

Increasing consumer trust in insurance ncreasing consumer trust in insurance is a priority for the ABI. While of course insurers do a great job for their customers, providing peace of mind and financial help when they most need it, the industry needs to do better when it comes to those loyal customers who get charged much more for their cover than new customers. This issue is under scrutiny in the media and with policymakers. The market of course is not unique here - as with other competitive markets, there is much competition to attract new customers with enticing initial deals.

But we recognise that when it comes to insurance this issue has a serious reputational impact that needs to be tackled. This is why, together with BIBA, we recently launched a set of Guiding Principles and Action Points for key personal lines insurance products such as motor, home, and travel insurance.

By implementing this, ABI and BIBA members can expect to see an improvement in the outcomes for long-standing customers.

The ethos and approach to better outcomes for long-standing customers will be formally incorporated into firms’ procedures for determining the premium at renewal.

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Key under the Principles are that ABI and BIBA members will make it clear in written, online or verbal customer communications that the new customer premium only applies for that year and subsequent renewal premiums may be higher, and ABI and BIBA members who impact the final premium paid by customers should review their pricing approach for customers who have been with them longer than five years and assess whether this approach delivers a fair outcome. The ABI and BIBA will publish a report in no more than two years’ time that demonstrates how ABI and BIBA members have sought to tackle excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers.

These Principles highlight how the industry can work together for the collective good, as everyone in the industry benefits from increased consumer trust in it.

Rob Cummings, Assistant Director, Head of Motor & Liability, Association of British Insurers (ABI).

Misconduct in costs proceedings n 21st June 2018, the Court of Appeal handed down judgment in the case of Bamrah v 1) Gempride Ltd and 2) Lawlords of London Ltd. The case represents a watershed in the conduct of costs proceedings, with implications for solicitors, their agents and insurers.

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Representing herself through her own unincorporated firm, Ms Bamrah successfully pursued a personal injury claim. She then served a bill (prepared by Lawlords) totalling approximately £200,000, in which an hourly rate was claimed in breach of the indemnity principle. Later in the costs proceedings, Ms Bamrah certified replies to points of dispute (also prepared by Lawlords) to the effect that she had no BTE LEI when in fact she did. Upon discovering the misrepresentations, the defendant applied for an order that Ms Bamrah’s costs be disallowed on the ground of misconduct under CPR44.11.

Master Leonard at first instance found there had been misconduct and imposed a sanction that Ms Bamrah’s profit costs be limited to litigant in person rates. Blaming Lawlords, Ms Bamrah appealed.

HHJ Mitchell allowed Ms Bamrah’s appeal, primarily on the basis that it was all Lawlords’ fault. The defendant appealed.

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The Court of Appeal allowed the defendant’s appeal on all grounds. It was held that, under the law of agency, Ms Bamrah was responsible for the actions of costs draftsmen she had instructed.

Whilst being bound by HHJ Mitchell’s findings of fact that Ms Bamrah had not been deliberately dishonest, they found that there was unreasonable and improper conduct, she was responsible for it and a sanction should be imposed. The Court of Appeal have decided that the appropriate sanction is for 50% of her profit costs (of the personal injury claim) to be disallowed.

As well as re-emphasising the importance of the accuracy of pleadings in costs proceedings, which will have a significant and positive impact on how parties to costs proceedings conduct themselves, the judgment is unequivocal that solicitors are responsible for the conduct of their agents, including ‘professional costs draftsmen’. This has obvious implications for insurers of solicitors and of costs draftsmen, including that if the latter makes a mistake, any claim on their policy by the solicitor may be mitigated by the greater responsibility imposed upon the solicitor as officers of the court.

Stephen Hines, President of the Forum of Insurance Lawyers (FOIL), Consultant at Taylor Rose TTKW.

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FEATURES

A good start; more to follow! n my last piece in this publication I provided a wish list from BIBA based on the 2018 BIBA Manifesto. Now six months into the year the success we have had in key areas of our focus has been really encouraging.

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And recently the introduction of the Counter-Terrorism and Border Security Bill 2018 will pave the way for non-damage cover to be included in the scheme in the near future.

An area where we have lobbied for change is in relation to Pool Re Terrorism cover. Even before 2018 we raised the issue that things had moved on with both Government and Pool Re. We highlighted that the scheme needed revision as it was originally devised to deal with terrorist acts that caused widespread property damage.

Further changes to the way claims such as the Westminster Bridge and Nice attacks, where vehicles were used as weapons, are currently being discussed by MIB signatories as members recently voted in favour of considering how such losses can be spread amongst all market carriers, rather than as single carrier as in the case of Westminster Bridge.

Take up of cover beyond the major conurbations was low and the nature of attacks we saw in London’s Borough Market, Westminster Bridge and Manchester Arena attacks endorsed the view of a changed emphasis. Denial of access and non-damage business interruption was now a real risk due to the breadth of cordon around these incidents, which was not originally part of the Pool Re remit.

BIBA continues to promote market improvement and challenges Government in a constructive manner on issues such as Brexit and with MP support, other issues of relevance. In early June, Craig Tracey, APPGI Chair, tabled a question to ask exactly what the Treasury has done with the 2% increase in IPT?! Perhaps I will cover the answer in my next contribution as, in part, the response remains “pending” at the time of going to print!

It is pleasing to see that BIBA’s representation on these issues along with calls from others has been addressed. Rating changes were effected to encourage greater take up outside the conurbations along with the introduction of cyber damage in April.

Andrew Gibbons ACII, MIOD, Managing Director, Mason Owen Financial Services Ltd, Chair, Industry Claims Working Group.

The war is far from over ith characteristic clarity, Lord Woolf eloquently summed up the Government’s plans: “There has never been a case where legislation deliberately introduces injustice into our law.” To those of us actively campaigning against the Government’s proposed whiplash reforms, it does indeed remain astonishing that it is the explicit intention to deliberately discriminate against honest and legitimate claimants following a motor accident.

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of Justice was forced to hastily publish draft regulations ahead of the Committee Stage. Those same draft regulations were then plundered for Government amendments, putting the definition of whiplash into the Bill, for the Report Stage. The intervention of such intellectual heavyweights as the aforementioned Lord Woolf, Lord Judge and Lord Pannick undoubtedly added to the intensity of the Report Stage and the narrow defeats on two amendments on the tariff and raising the small claims limit.

Nevertheless, that remains the position. After three months of consideration in the House of Lords, there is now a long wait over the summer until possibly September, definitely by October, when consideration of the Civil Liability Bill will kick-off in the Commons.

Whilst the champions of the reforms undoubtedly breathed a big sigh of relief at the Bill departing the Lords largely unscathed, the war is far from over. The Justice Select Committee’s devastating critique of the proposed increase in the small claims limit and growing unease at the sheer unfairness of the proposals on the Conservative backbenches suggests that there could yet be several twists in this saga before anything is decided. And I haven’t even mentioned the development of the LIP-CMC Portal.

The passage of the Bill through the Lords was considerably tougher than had been anticipated by its champions. Certainly, Lord Keen of Elie did not anticipate significant opposition when MASS met him in late March. Contrast DAC Beachcroft’s Lord Hunt of Wirral at the Bill’s Second Reading predicting that “the reforms in the Bill are in no sense controversial” to his acknowledgment at Third Reading that: “Part 1 has indeed proved to be more contentious than many of us expected.”

Simon Stanfield, Chair, Motor Accident Solicitors Society (MASS).

Severely criticised by the Lords’ own Delegated Powers and Regulatory Reform Committee for being “skeletal”, the Ministry

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FEATURES

The act of loyalty ifferent people have different ideas about fairness. For some, it’s all about transparency - giving people a chance to make an informed decision. For others, it’s about process - making sure decisions have been scrutinised by the right kind of experts.

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wants to commit fraud hatch a plan that involves paying insurance premiums for many years beforehand?

But for large numbers of people - perhaps the majority transparency can be bewildering and processes always seem to get hijacked by articulate people with money and influence.

That is why the practice of routinely increasing premiums at renewal is so damaging to consumer trust. Not only do people feel that they have been left out of pocket when they realise what has happened, but they go on to think, ‘if this is how I’m treated when I’m being a loyal customer, how will I be treated when it comes to making a claim?’

In these circumstances, people reach for older ideas of fairness, based on loyalty to things that are longstanding and familiar - the kind of relationships that are built around family and community.

The ABI and BIBA principles around pricing for new and existing customers are a hugely important step in tackling this issue, and they deserve to be reinforced with ongoing action from regulators.

This has important implications for insurance.

For this to happen, regulators will have a difficult choice to make - prioritising the loyal customer over the more sceptical, transient customer that is more likely to stimulate competition.

Here customers want to know that an honest claim will get paid.

However, they also know that the rules around paying claims are long, complex, and inevitably fall short of addressing ambiguous situations that can only be dealt with after the event - ‘I know I have to lock my front door, but what if I left a tiny window open overnight and a burglar squeezed in?’

But if loyalty is what works for the public, we must respect that.

Dr. Matthew Connell, Director, Policy and Public Affairs, Chartered Insurance Institute (CII).

So they rely on loyalty. They feel that if they build up a relationship with an insurer over several years, they should earn the right to the benefit of the doubt - because why would someone who

A bill to cut insurance premiums ny concept of fairness, compassion or support for genuinely injured people has been sacrificed in the Civil Liability Bill, which the Government has openly called ‘a bill to cut insurance premiums’.

Some insurers have even admitted that personal injury claims are not a concern. In its latest published financial results, Admiral referred to “notable reductions in bodily injury claims frequency” and “marketwide favourable experience on bodily injury frequency”.

It is hard to understand how the Government can refuse to accept the evidence to discredit the bill’s foundations.

Let’s also not forget that a doubling of the insurance premium tax rate, from six per cent to 12 per cent in less than two years, has probably been passed on to consumers.

A

When the Civil Liability Bill was published, the Association of British Insurers (ABI) made a great deal of noise claiming that bodily injury claims are the biggest contributor towards the expense of claims to insurance companies. It is particularly frustrating for such clamour to be given any airtime or column inches when the figures used, as in this case, are three years old.

The latest figures did not fit the ABI’s aims, of course. In reality, repairing vehicle damage made up half of motor insurer spend on settled claims in 2017, up from 41 per cent in 2013. The correlation between vehicle damage and rising premiums is blatant. Since 2013, the cost of vehicle damage to insurers has increased by 20 per cent, and, coincidentally, the price of insurance premiums has also increased by 20 per cent. During the same period, the annual cost to motor insurers of settled bodily injury claims actually fell by 21 per cent.

Issue 32

As the Civil Liability Bill goes through the House of Commons, MPs must be made to realise that the idea that motor insurance premiums will be reduced by the reforms is naïve at best. Even if it happens, the action taken in the Bill is wholly unjustified and misdirected.

People should not be injured needlessly. That is the problem. As much effort should be put into reducing needless harm as there is into reducing the burden of it on those who are responsible.

Brett Dixon, President of the Association of Personal Injury Lawyers (APIL).

Modern Insurance 43

FEATURES

Industry Innovators Interview: Wrisk Niall Bartin is the CEO and Co-Founder of Wrisk, a start-up that wants to provide customers with new ways of managing and reducing risk.

Q A Q A

How would you describe Wrisk in three words?

Simple, transparent and personal.

What makes Wrisk different from traditional insurance businesses?

Wrisk is giving insurance a long overdue digital upgrade. You can manage different types of insurance seamlessly through a single app, understand how you’re priced and what you can do to reduce your risk. Wrisk is insurance for the connected generation.

Wrisk is about more than just buying insurance – it’s about managing and understanding your risk. Developed using advanced data science and actuarial techniques, our unique Wrisk Score is like a credit score for personal risk, enabling better, more transparent pricing.

We are also changing the way people pay for insurance by using top-up and balance. Our perpetual policy, billed monthly (like Netflix), allows customers to change or cancel without penalty.

Wrisk will roll out its contents proposition nationally later this summer (which is currently in beta) and we will expand our service to cater for other insurance needs, like car, home, and travel bringing everything together into one simple plan that grows with our customers.

Q A

What would you identify as the gap in the market that Wrisk aims to fill?

A whole generation seems to distrust insurance, but being uninsured leaves them vulnerable in emergencies:

• 61% of people who rent don’t buy insurance • 31% of millennials who travel never buy travel cover • 30% of millennials who drive are not the main policy holder It doesn’t have to be this way. Through challenger banks and budgeting apps, people are more ready to engage with financial services than ever, on their terms, if we make it easy and accessible.

Strive to be ethical and fair. Build and maintain an open, responsive dialogue. Focus on people, not policies.

By engaging people through their phones and providing holistic cover, Wrisk will make it as effortless as possible for as many as possible to get the insurance they need, meaning fewer end up in long term hardship when the worst happens. Beyond this, prioritising convenience and a fresh approach to transparency has the potential to engage brand new customers – kick starting an entirely new mass market for insurance.

44 Modern Insurance

Q A

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

1. Getting authorised to do business Operating in such a complex and highly regulated domain is not easy. Getting FCA authorisation, launching our beta and becoming “post-product” have been huge milestones for us.

2. Finding the right partners Additionally, we have partnered with industry heavyweights Munich Re and Hiscox, and have commercial agreements in place with the likes of BMW, with whom we are soon to deliver insurance for cars sold in the UK. 3. Raising funding It was only last summer when Wrisk secured £3m in seed investment with Oxford Capital, which has been followed by two very successful crowdfunding rounds on Seedrs. Raising capital is hard. However, we have achieved success by having a solid product and being transparent about what we aim to deliver. Our investors certainly think so; we just closed our Seedrs round at 200% funding in three weeks.

Q A

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

Due to a high barrier to entry, incumbents have become accustomed to very little threat of change. Legacy systems and weak technical infrastructures limit their responsiveness. Most are large, slow-moving, and by necessity, more concerned about safeguarding the status quo than reinventing themselves.

Given the size of the prize, the insurtech start-up landscape is unsurprisingly busy. However, insurance as a domain has a high barrier to entry, and start-ups face specific challenges getting: 1. Support from insurance company partners 2. Investment for a product with a long lead time before launch 3. FCA authorisation 4. Top-class tech talent into the insurance sector Many hone in on narrow slices of the insurance value chain, in contrast to Wrisk’s holistic approach. By offering such a differentiated service, we believe that Wrisk will be able to take market share from the incumbents and co-exist peacefully with specialist competitors.

Wrisk is giving insurance a long overdue digital upgrade Issue 32

FEATURES

Without strong loyalty, customers switch easily between insurance companies, led by price and with little understanding of other differences between products or providers

Issue 32

Modern Insurance 45

FEATURES

Like any start-up, we become better from learning from the past and our mistakes; everyone is encouraged to try something new

Q A

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

At present, many buy the cheapest insurance possible through comparison websites. Without strong loyalty, customers switch easily between insurance companies, led by price and with little understanding of other differences between products or providers.

Wrisk’s dialogue with its customers is totally different. Our beta customers are helping us to show Wrisk is well placed to win customers who are motivated by user experience and customer service, as well as price.

Q A

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

Encouraging folks to manage their insurance through their phones has an added benefit that these devices are alwayson and context-aware. Push notifications can be used to gain the customer’s attention at key times. In certain situations, and with the increasing adoption of IoT, Wrisk has the potential to alert customers to incidents before they actually become problems.

Q A

What’s unique about the culture of Wrisk?

Wrisk’s culture is continually evolving with the addition of staff and as we embrace each stage of growth. The team are fully focused on the core business goals, and without much

46 Modern Insurance

direction, people re-organise themselves around what needs to be done. There is a true sense of camaraderie and belonging - and if something goes wrong, it’s all hands to the pump, which sounds cliche but is very true. Like any start-up, we become better from learning from the past and our mistakes; everyone is encouraged to try something new. Test and learn is what we have been built on.

Q A

Where do you see Wrisk this time next year?

We hope to have closed our Series A by this time next year and be looking forward to growing Wrisk’s distribution, hopefully internationally.

Q A

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

The easier route is probably to create a service to sell into the incumbent insurers, thus a B2B product, as it needs no FCA authorisation. We say “easier”, but worth bearing in mind that a young company selling services into a large established company has its challenges.

The harder route for a start-up trying to disrupt the insurance industry is to form a business (agency or insurer) and because of its services, will need to be regulated by the FCA or PRA. Higher barriers to entry exist in this area, but then the prize is bigger.

Niall Barton is the CEO and Co-Founder of Wrisk.

Issue 32

FEATURES

Fraud Roundtable 2018 The Fraud Roundtable, sponsored by Carpenters Group, recently brought together leading figures in the industry to discuss the key challenges surrounding insurance fraud.

Donna Scully (DS) (Chair) - Director, Carpenters Group Alan Hayes (AH) – Chief Legal Officer, Carpenters Group Ben Fletcher (BF) - Director, Insurance Fraud Bureau Clare Lunn (CL) - Director of Fraud, GI Claims, LV= Clinton Bond (CB) - Insurance Fraud Enforcement Department, City of London Police David Hertzell (DH) - Chair, Insurance Fraud Taskforce David Purcell (DP) - Chief Operating Officer, Netwatch Global Mark Allen (MA) - Fraud Manager, Association of British Insurers Matt Currie (MC) - Managing Partner, Irwin Mitchell Nick Kelsall (NK) - Fraud and Technical Claims Manager, Allianz Paul Holmes (PH) - Partner, DWF LLP Steve Jackson (SJ) - Head of Financial Crime & MLRO, Covéa Susan Brown (SB) - Director, Claims Portal, Medco and MASS Bureau DS. How has insurance fraud evolved in recent years?

BF. As insurers have evolved their controls and models, so too have fraudsters and they are often more sophisticated than some may think. There is far more internet enabled fraud than we have seen in the past as insurers increasingly look towards digital channels. The reality is that fraudsters are tenacious and will not disappear when a process changes, they will simply look at a new way to try and circumvent it.

DS. Anti fraud professionals have a good instinct, so you lose that when you take that human element away.

BF. Anti-fraud professionals still have a key role to play, but the fraudsters will seek to exploit digital channels. We also need to remember that technology, more broadly, is an enabler for fraud in so far as fraudsters can share information about ways to operate illegally, far more easily than they could have in the past.

DH. The Insurance Fraud Taskforce found that in opportunistic fraud, people are more likely to steal from a computer than a person.

MA. A smoother customer journey inevitably means quicker decision-making and less time to spend checking for fraud.

PH. In the legal space we are also seeing many one-man bands popping up. This represent yet another challenge for insurance and the utilisation of data and screening to identify where the fraudulent claims may be presented, because the claims now have a much greater spread. Insurer’s not alive to the latest intelligence and data on this will have significant leakage. Many of these companies are connected to other firms, current or defunct and they appear to be set up to avoid insurer’s scrutiny.

Issue 32

SJ. We can’t measure fraud or its consequences with the level of confidence that we’d like because it’s hard to track all of the victims and the impact on them.

CL. We’ve seen a surge of ghost broking and ID fraud because most insurers now have effective controls that are hard to get through unless you have a genuine ID. If you Googled how to make a claim, a ghost broker will be the top result.

DP. It’s a bigger problem in today’s world where everyone wants everything instantly and they expect things to happen straight away. They’ll go to the first Google result and won’t question whether it looks genuine.

DS. In one of the MoJ meetings they Googled ‘road traffic accident’, and the first 48 of 49 results were CMCs. SJ. When they click on that URL, all they get is a telephone number, and they’ll tell you anything on the phone just to reel you in.

NK. The internet is rife with it. There’s a website around how to pick the best occupation to drive down the cost of your premium.

SJ. So many people refer to something like lying on your application as ‘soft fraud’. It’s fraud.

CB. We’ve just had a case in which a car hire company claimed on an ordinary personal policy, and the judge’s words were that it was basically just ‘a cost cutting exercise’ and gave them a lenient sentence.

DS. Telling people you’re using AskCUE PI makes them think twice.

CL. It’s making sure you use the right tool at the right time, but

Modern Insurance 47

FEATURES

you still need to train your own people; the tools are only as good as the people using them.

DH. The New South Wales equivalent of the IFED went after the professional enablers because it disincentivised others from deciding to take part in fraud and reduced overall fraud claim levels.

SJ. It does appear to mostly be the opportunists, often brought about by word of mouth; I recall a huge problem with fraud at one airport that had been perpetuated by a union representative.

When you look into these big companies, they could do a lot more to mitigate against opportunistic fraud.

DH. There was a very successful press campaign to raise awareness of fraudulent holiday sickness claims that let people know their holidays were about to become a lot more expensive as a result.

MA. One of the reasons the campaign was so successful because the tour operators were on the hook themselves so invested a lot of resource. Claims often fell within the excess of the liability insurance policy.

DP. There are adverts on the radio that signpost to customers the money they could make from a claim even before they go away on holiday; it legitimises the fraud.

AH. Prosecution is a deterrent. There’s almost a perception that there are no consequences in motor fraud.

DS. I think too many motor claims are settled because that’s cheaper and easier, but that sends a message out that it’s really easy to make a claim. To me the work of the Insurance Fraud Taskforce has been really helpful in the fraud space.

DH. To support the IFT recommendations, the idea was that the Treasury would be involved and would produce a report every year, but the problem is the delay in getting the reports published.

It’s not top of their agenda right now.

DS. Did you envisage the treasury would drive the recommendations, because there has been mention of a legacy vehicle to do this?

48 Modern Insurance

There were moves to begin a more structured dialogue between consolidated claimant firms and insurers, but along came the Civil Liability Bill and its stop start progress has affected the willingness of each side to talk to the other

David Hertzell, Chair, Insurance Fraud Taskforce

DH. We planned that the people tasked with doing things wouldn’t be inclined to slide away because the treasury was involved. People have by and large undertaken the recommendations they were asked to, and there’s been a huge improvement in communication.

Recommendations around aggregators and increasing SRA powers still need work, but the willing participants have done a great job.

DS. Are we making more progress on getting stats for fraud?

MA. Reporting on and measuring all cases of fraud encountered by insurers presents challenges. The ABI is transparent about its methodology for identifying estimated levels of fraud, which are intended to provide an indication of the levels of fraud detected by the industry. The ABI constantly reviews its fraud statistics.

We’re looking at where the gaps in the data are. We’ll never know whether we’re getting better at detecting fraud unless we know the levels of undetected fraud.

SJ. I wonder if we’re missing out by not measuring the consequence of fraud.

DS. I accept that there is fraud, but how can we base reform on something we don’t understand?

Issue 32

FEATURES

BF. It is important that we have reliable stats, but that should not stop us dealing with problems that we all know exist. To the best of my knowledge nobody is suggesting that fraud is not a significant problem.

NK. As an industry we’re still not really sharing data as much as we could, and we’re using fraud as a competitive advantage. Until claimant and defendant stakeholders change that, I don’t think we’ll be able to tackle the societal problem.

MC. It’s about the credibility of the industry. When we still have genuine claims being denied, we need industry agreed statistics that everyone can stand behind.

PH. Whilst dialogue with the correct parties is good, this needs tight control. If we start sharing too much information it could end up in the wrong hands; for example some law firms are so closely aligned with the bad CMCs and credit hire companies that it could be very counterproductive unless we are very careful.

BF. I agree that there is far more that we can do to work together, but we also need to be realistic in what is achievable and I would question whether all parties agreeing with all industry statistics is a sensible target. Especially when we all agree already that fraud is a big problem and one that needs to be dealt with.

DH. The trouble with fraud is that the entire point is that it isn’t detected, so you’ll never really get certainty on the numbers.

DS. Quantifying suspected fraud could be dangerous. I don’t mind reforms that fights a real issue, but when the IFT said there are lots of other things we can do constructively, the government said that’s not what they want.

MA. We’ve never said the reforms are about fraud per se, we’ve said they’re about removing the perverse financial incentives that can then drive fraudulent behaviour. If you remove these, then there should be a positive knock-on impact on levels of fraud.

DS. We’re not sorting out credit hire, repair or rehab so we’re not taking the incentive out.

CL. If you compare the volume of whiplash claims in the UK to the rest of Europe, then it’s obvious the UK has developed a compensation culture that is out of control. Some people wouldn’t have ever thought about making a false claim for injury, but some CMCs tell people it’s their right to claim and they’re coerced into it and they don’t think about the consequences when they get caught. But I agree, we can’t try and fix one problem without considering the other elements.

DS. CMCs will still be there after the reforms because they’re not even interested in PI, they’re interested in credit hire, repair and rehab.

Issue 32

DH. There were moves to begin a more structured dialogue between consolidated claimant firms and insurers, but along came the Civil Liability Bill and its stop start progress has affected the willingness of each side to talk to the other.

DS. And we can’t stop fighting fraud just because we’ve got reforms. If anything, we’ll need to up our game, because I’d rather have a bad lawyer than a bad CMC; at least lawyers are more likely to be regulated and insured.

MA. ABI supports the recommendations of the Taskforce to strengthen the fining powers of the SRA and to review the standard of proof used in civil cases put before the SDT. ABI would support the SDT adopting the civil standard of proof, bringing it in line with the practice adopted by the Bar Council in 2017.

DS. The SRA got worried by the Taskforce because it said regulators aren’t talking to each other, but now they’ve gone quiet again.

NK. There’s a public perception that fraud is a victimless crime.

If you overheard someone in the pub saying they were going to exaggerate a claim you wouldn’t bat an eyelid, but if they lit up a cigarette there would be uproar. How do we tackle that?

MA. There are various things we do in this space. IFED are very good at publicising successful prosecutions, and we’re developing a communications strategy to try and reduce first party opportunistic fraud.

MC. When someone logs onto an aggregator website that’s where they should receive a fraud warning showing them the consequences of lying about their details. One of the best campaigns about drink driving I’ve seen was of somebody just

Modern Insurance 49

FEATURES

As an industry we’re still not really sharing data as much as we could, and we’re using fraud as a competitive advantage. Until claimant and defendant stakeholders change that, I don’t think we’ll be able to tackle the societal problem Nick Kelsall, Fraud and Technical Claims Manager, Allianz talking to camera explaining how their life had fallen apart as a consequence of drink driving.

NK. We go out to our brokers to talk to them about how things are going to change after the reforms.

DS. The sad thing is that the bulk of people persuaded to make fraudulent claims wouldn’t have done it were it not for that cold call.

CL. Brokers are very proactive. They’re looking into introducing their own tools, and some of them are ahead of insurers. They’re very keen to learn.

SB. Those companies will say things like, “It’s your duty to claim” or “You have an obligation to your children”.

MA. The ABI developed an effective counter fraud checklist aimed at SMEs, including brokers. This is essentially a toolkit to help them to develop their own counter fraud strategies and to help them raise the profile of fraud within their organisations and public awareness of fraud.

MA. We have evolved our consumer messaging; we used to focus on the amount of money fraud adds to average household premiums, but now we focus more on the consequences for the individual fraudster and the impact on wider society including the NHS. DS. The CMCs can’t operate if they don’t have people to prey on, so we need to get the message across to those people who are being used.

MA. We’re working with a firm of behavioural scientists to use nudge theory to change attitudes and behaviours towards insurance fraud by placing discrete messages throughout the customer journey. We’ve had some encouraging results from the testing.

BF. The research is really promising and has the potential to be a game changer. We will have to help manage expectations though, that results from such work are not instant and can take time to be realised.

DS. Where else have we seen successful collaboration in the past that we could learn from today?

BF. I think the IFB was a big step forward for the insurers. We have already started to build on that, and our strategy ultimately aims for the IFB to operate far more broadly.

SJ. We’re a lot more professional now. We spend a lot of time training and upskilling, and we need to work hard to keep that up.

DS. Is everyone looking at the reforms from a fraud perspective?

CL. LV=, as I’m sure other insurers are, are considering the potential impact of the reforms and how fraud types could evolve in the future.

DS. We have to move faster, because fraudsters are moving faster. I know everyone is trying, but collaboration could enable us to do it quicker.

SJ. There’s an element of the unknown, but we can’t forget that there will be benefits to the reforms as well, like an impact on opportunistic fraud.

BF. I think there’s a real opportunity for the claimant community to share their information more than they have been and really help here.

MC. To be fair, there’s no reason why I can’t come to you to warn you about some suspicious credit hire companies or medical experts.

DS. The reforms are going to take away legal fees so there may be less legal representation and more CMCs. NK. It’s down to insurers to understand that there will be litigants in person and to treat them fairly. Some might be represented by a CMC or have one in the background.

DS. The IFB isn’t the first port of call for a lot of people, and that comes back to the need for communication.

DS. CMCs want the credit hire, repair and rehab. If the reforms aren’t going to affect those then they’re not going to be good reforms.

50 Modern Insurance

Issue 32

FEATURES

PH. Farmed claims will probably reduce, because they tend to be past the date when you can claim for credit hire or repair, but with less friction in the system there may still be ‘skin in the game’ to farm claims still. I agree it is the credit hire and credit repair that is now driving most staged and induced accidents.

DS. In the new world, a lot of claims won’t be captured because there will be more litigants in person, so those claims are at large for the CMCs to get their hands on.

NK. Why wouldn’t insurers treat a non-fault customer like any other customer?

SB. If you’ve got LEI you might, but if there isn’t how can you?

Would you look after them for nothing?

DS. Insurers would need more staff because this is non-fault work they don’t currently do.

NK. There are efficiency savings elsewhere in the new process.

DS. Insurers need to be thinking of ways to keep these cases away from CMCs. If a client doesn’t have LEI they’ll go online and find CMCs. AH. It’s a big undertaking for an insurer to look after claimants without LEI to keep them away from CMCs; there’s a lot of cost to that, and it could erode the expected premium savings.

MC. I was at a meeting not long ago with a number of claims directors where they said that they were expecting claims volumes to be maintained and that they wouldn’t be able to effectively intervene after the reforms. So it seems to me there’s a fundamental disconnect between the claims teams and the fraud teams.

PH. Organisers of staged and induced accidents will I think be looking forward to reforms coming in. They can sit behind a LIP portal on a computer, processing claims with no input from CMCs or solicitors. Insurers won’t have the traditional data such as the solicitor and thus will find it more challenging on where to target its counter fraud resource. This could be a big leakage risk.

CL. The future FCA oversight of CMC’s will help improve standards and provide tougher restrictions on CMCs however there will always be an spurious element that will try and get around the rules.

DS. Will they all register? The big CMCs will pay the fees and become regulated, and that’s a good thing, but they’re probably not the bad ones.

BF. Whilst I agree there will be companies that try to circumvent regulation, there will be a collaborative responsibility on all of us to report them to the regulator. That is certainly no worse than where we are now and we know that the FCA are well experienced and well-resourced in this space.

We’ll need to up our game, because I’d rather have a bad lawyer than a bad CMC; at least lawyers are more likely to be regulated and insured Donna Scully, Director, Carpenters Group Issue 32

The Carpenters Group is one of the UK’s leading providers of insurance and legal services. We work in partnership with a number of insurers, brokers and MGA’s to deliver a variety of fully outsourced claims solutions. Our team has grown to approximately 1000 staff across five locations throughout the UK. We have sites in Liverpool, Leeds, Birkenhead, Haywards Heath and Glasgow.

Our team’s insurance experience combined with our legal expertise gives us the size, scale and strength to successfully work in partnership with any insurer or broker. Our longstanding relationships are testament to the quality of our service. Our focus is always on the customer and ensuring their claims journey consistently exceeds expectation.

DS. The point is to get prepared now. A lot of lawyers will leave the market, so you’ll be left with entities that have access to all the commission for credit hire, repair and rehab.

CL. Sometimes we have to look at why we got to this point. Some claimant lawyers, with the help from CMC’s, have driven up the volumes of injury and farmed claims and it’s driven this solution, which isn’t perfect.

DS. Law firms have to remain competitive, so they’ve had to find other ways to compete with those firms, for example through greater efficiency. But yes, as the IFT report identified, none of us have clean hands. It’s the wait and see approach that concerns me.

BF. It is not simply a case of doing nothing until those reforms have come in, the industry have good controls to deal with fraud on a case-by-case basis, the question is whether those controls are proportionate in the post reform era or not, but that will be under constant review.

DS. If the CMC market grows, that puts more pressure on everybody in the fraud space.

BF. That’s built on the presumption that CMCs will behave worse than those firms operating in the market today and nobody can know with certainty whether that’s going to happen.

PH. We might be placing too much emphasis on CMCs; you don’t need to be a CMC in organised fraud, and you could just have a person on the LIP portal putting claims in. There are plenty of positives to the portal, but that is a big risk.

MC. If personal injury isn’t lucrative enough for a CMC to pursue, the claim never even goes onto a portal. The valuable data that comes from the portal will be gone.

BF. The controls we’ve built in over the last few years are designed to find those claims. The only thing we can’t accurately know now is the volume.

DS. I hope I’m wrong, but I don’t want to see CMCs take over the motor market.

Modern Insurance 51

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FEATURES

Credit hire

virtual roundtable

Experts in the industry answer questions addressing the credit hire industry.

Robert James Commercial Manager Vision Vehicles

Q

Where might friction exist between credit hire companies and other industry stakeholders, and how can any issues be addressed should they be present?

A

Depending on the side of the fence you sit as a stakeholder, a credit hire organisation is either your best friend or worst enemy. For those that fall into the latter category, this is most likely to do with the viewpoint that we only exist to exploit vulnerable customers and do not add any benefit to the end user, an innocent party of a road traffic accident. That said, most who do not feel credit hire adds any value to the claims journey, often have an outsourced model to refer their own customers to a credit hire organisation when not at fault. If people were to look at credit hire in an alternate light and understand that we help the people who are legally entitled to such help, and that this is not currently being provided by anyone else, then we could start focusing on processes together that alleviate elongated hires and provide fair mitigation for all parties involved. It always surprises me that as a fault customer, there is a real focus on key to key times, however, when the opportunity to display to someone who is currently not a customer, how good your service is, they often fall down by not applying the same principles.

Q A

How have customer needs and expectations of credit hire changed in recent in years?

Having worked in FNOL services for many years, and speaking to customers who have been referred through a number of

54 Modern Insurance

different industries, it is certainly clear that a higher proportion of customers are aware of their entitlement following non fault incidents. Whereas before, customers were very happy to have any replacement vehicle, we see an increasing trends of the customer knowing their entitlement and having knowledge of other companies providing similar services giving them freedom to shop around. This has forced many credit hire organisations to provide variety of not only class of vehicle, but also brand of vehicle as well. A lot of manufacturers similarly are now seeing the benefit of providing an ‘Accident Management Programme’ to ensure brand retention for customers as well as having the vehicle repaired in manufacturer network repairers.

Q

What new and emerging technologies are now present in the credit hire market, and how are they making a difference?

A

A lot of the technology moving in to the Credit Hire World, similarly sits in the insurer world. With the current plethora of Dash Cams and ADAS systems, liability is becoming quicker and clearer to determine and this will only improve with time.

Autonomous cars are very obviously a sensitive subject currently however, will legislation be able to pass to identify negligence and if so who. It’s the same argument each time, did the manufacturer supply the right software, did the software company provide the right patches, did the owner update the software patches and so on. For me, until the arguments are clear, credit hire will remain largely unchanged.

Issue 32

FEATURES

Shaun Leonard Credit Hire Manager Allianz Insurance

Scott Hamilton-Cooper Director of Sales and Operations Accident Exchange

Q

Q

A

A

Where might friction exist between credit hire companies and other industry stakeholders, and how can any issues be addressed should they be present?

The credit hire landscape has changed over the years, with the introduction of the General Terms of Agreement (GTA), volumes of litigation, high profile legal decisions, and the introduction of protocol arrangements etc. The reasons behind such changes can be put down to a mixture of friction, frustration and a feeling of unfairness.

Have the changes had an effect? Does friction still exist or has the market built sufficient relationships between stakeholders that are transparent, honest, open and genuine? Currently the sentiment of the latter still feels far away.

Insurers will rightfully spend time investigating cases when presented with a credit hire claim where there appears to be an excessive hire period. The same would apply in cases where liability is disputed by the policy holder or where repairs appear to be unwarranted. Equally credit hire companies will look to justify the claims. As a result of such processes, there appears to be an underlying sense of doubt coming from both parties.

So what’s the solution? There’s a wide range of possibilities which would potentially help resolve these issues. These include legislative reform or regulation, an Independent Rate Setter, a new GTA, technology, portals, setting expectations or service level type agreements, banning referral fees. The list goes on, as does the frictional cost.

Perhaps the bottom line is that creating mutual respect and transparency between both parties needs more attention. This could lead to a much improved outcome, from claim lifecycle to improved cost.

The faster and more efficient contact between insurer and CHO means a driver is back on the road sooner without feeling like they are stuck in the middle between two businesses Scott Hamilton-Cooper, Director of Sales and Operations, Accident Exchange Issue 32

Where might friction exist between credit hire companies and other industry stakeholders, and how can any issues be addressed should they be present?

Historically, credit hire organisations and insurers haven’t always played ball, but the modern-day reality is that service level and professionalism have replaced conflict and litigation – delivered for a fair price.

Claims can be settled more quickly, while reducing the financial impact and providing a better customer journey.

The changing nature of the relationship can be seen at companies like Accident Exchange which is focused on evolving how the industry operates thanks to an overhaul of its philosophy.

The firm has the resources to tackle fraud with the very latest technology – easing the burden on insurers and police – and develop mitigation processes, helping foster a new level of transparency and cooperation.

Part of this is the protocol agreements that Accident Exchange now has in place with many insurers to increase trust and efficiency. The agreements help to minimise friction when a claim is received, and the approach has helped reduce the need for litigation and saved insurers time and money.

Scott Hamilton-Cooper, Director of Sales and Operations at Accident Exchange, commented: “Our philosophy has changed.

The focus has to be delivering a good service for a fair price without the need for litigation or conflict.”

Further emphasising how far CHOs can go, figures show Accident Exchange now closes 7% of claims before hire due to mitigation and halts even more due to suspected fraud through its anti-motor fraud arm, APU Ltd. In fact, over the last 24 months, APU has seen its fraud offensive reach new levels, helping to prevent £4.1 million in motor insurance scams while playing a pivotal role in the conviction of 29 active fraudsters and the breakup of organised crime networks alongside international crime-fighting organisations.

Ultimately, these new relationships mean better service for the customer. The faster and more efficient contact between insurer and CHO means a driver is back on the road sooner without feeling like they are stuck in the middle between two businesses.

To that end, Accident Exchange’s new philosophy led to a recent customer service award, with its exceptional care delivered at every stage following a non-fault accident receiving praise by the UK Customer Service Excellence Awards 2018.

Hamilton-Cooper added: “We have invested time and resource in identifying fraud early, developing a robust mitigation process and developing close and transparent relationships, through protocols, with a large percentage of the at fault insurers. In doing this, we have improved the customer journey, reduced the need for litigation and dramatically improved our cash profile.”

Modern Insurance 55

FEATURES

The Importance of building a complete and single view of data for insurers Rodrigo DeCossio, MarkLogic, discusses the increasing level of data in the insurance industry and how insurance companies should start implementing new ways of managing it. ata is a vital part of the insurance industry. This has been the case ever since 1744 when Alexander Webster and Robert Wallace of Scottish Widows approached a mathematics professor from the University of Edinburgh, Colin McClory, to calculate the policy prices to ensure they had the funds to pay any claims. Multiple data-points were considered to achieve this, but this does not even compare to a fraction of the current levels of data and analytics in the insurance industry today. Being able to collect, process and manage data has become more challenging as legislation has grown more complex and the understanding of risk and all the factors that influence a policy quote has increased.

As the level of data increases, so too does the need for systems capable of managing, interpreting and assessing it.

D

Being able to make the most informed business decisions relies on having a complete and single view of each customer’s data, and this is a challenge. All too frequently, the majority of this information is not in an easily-accessible or useable form, given that insurance companies suffer from a large paper-legacy of documents. What’s more, even if these documents have been digitised, this process often creates large amounts of siloed data between different systems.

Better business relationships with TPAs

One example of how data management can help is through enabling better business relationships with third party administrators (TPAs). Currently this is something that most Heads of Claims and frontline teams in insurance companies have little or no visibility of. Many TPAs hold substantial funds on behalf of insurers, which are often slow to be released or slow to be returned to insurers when it becomes clear they are not required.

Claims managers need a complete and single view of this process, which the mining, managing and processing of data effectively would give them. This would lead to heightened levels of efficiency in the relationships between TPAs and insurers, meaning cash management in large claims would be much more efficient and claims teams could interact with insurers confident that their expectations in terms of speed of payments and resolution of outstanding issues are being met.

‘Operational Data Hubs’ (ODHs) that will put data at the centre of their business rather than dividing it in two different groups.

This will allow for the ingesting of multiple data in structured and unstructured forms, essentially meaning that it comes in quicker and goes out faster. The main gain on the business side is that it lets you feed operational transactional applications in real time, support analysis directly and deliver data through bulk output to downstream systems. It also provides a genuine complete and single view of complex insurance portfolios, creating a powerful, pro-active tool for exploiting new business opportunities.

It is vital that insurance companies begin to implement modern approaches to data management, governance and analytics.

Failure to do so leaves you behind the curve and open to aggressive competition from those who have embraced new technologies. The insurance industry must continue to innovate, but this doesn’t just mean anything to do with buzzwords such as blockchain and AI, rather adopting data led solutions which are ready to be deployed today which will delivery immediate business value. It’s the companies with their data locked in silos which will find it very hard to react to changes at all.

Rodrigo DeCossio is the UK Insurance Lead at MarkLogic.

As the level of data increases, so too does the need for systems capable of managing, interpreting and assessing it

Using data for business operations and analytics at the same time

Enterprise data integration continues to eat large amounts of IT spend, and typically creates two (big) disconnected data silos: the operational - ‘run-the-business’ and the analytical - ‘observe-thebusiness’. When information is divided into these groups analytics always runs behind operations. This means that any insights gathered are ‘stale’ by the time you need to operationalise them and that as the data is duplicated for analytics, the challenge of maintaining compliance and quality becomes unmanageable. In real terms, this too often results in mispriced policies, delayed risk reports and uncompetitive response times.

Insurance companies should modernise and instead use new database technologies to create

56 Modern Insurance

Issue 32

Just a thought

Just a thought from Eddie Longworth Fraud is a consequence of institutional contempt

I

nflating or exaggerating the extent of an insurance claim is a crime’.

The statement above is the first line of a website counter-fraud page issued by the Insurance Bureau of Canada. No ‘ifs’, no ‘buts’ and definitely no equivocation. We all get the basic message.

However, putting aside the unique motivations of the professional criminal gangs driving much of the fraud activity, I find myself asking what is it that encourages the belief by more opportunistic policyholders that their criminal activities are somehow OK and acceptable.

My sad conclusion is that much of the responsibility for establishing and nurturing the compensation culture, which fuels this lower level but still costly, lies with the insurers and other financial institutions themselves.

PPI sets the tone

Who hasn’t made a PPI claim? At a cost of £30bn and rising, the whole of the financial sector has been rocked by one of the biggest scandals ever known. Dwarfing even infamous Ponzi schemes of the past the PPI ‘scandal’ has been a godsend to members of the public seeking easy money, and Claims Management Companies seeking to exploit the ignorant.

Who is responsible for this complete mess?

Why, the banking community itself, who knowingly sought to ripoff their customers. Much as I despise the CMC fraternity, do not make the mistake of shooting the messengers who have merely taken advantage of banking sector mistakes.

Of course, PPI is an extreme example of the way in which financial instructions (including insurers) have undermined the trust and respect of the very people that they depend on not to commit opportunistic fraud.

But it is not just events on the scale of PPI that destroy customer trust; • If premiums are calculated on a fair and consistent basis that accurately reflect customer circumstances, how is it possible to get renewal premium discounts simply by phoning the call centre? Aren’t you then guilty of seeking to overcharge me?

• Regular entreaties for policyholders not to make unnecessary or exaggerated PI claims will surely fall on deaf ears for so long as insurers themselves encourage those same claims when they are earning a commission – but deny them when they don’t.

• How is it ever logical or moral that existing loyal customers are required to pay higher premiums in order to subsidise the attractive discount offers made by insurers to potential new customers?

• Can we really justify the sales of policies such as LEI at massively inflated prices when the claims ratio is so low as to be barely noticeable?

Issue 32

My sad conclusion is that much of the responsibility for establishing and nurturing the compensation culture, which fuels this lower level but still costly, lies with the insurers and other financial institutions themselves In other words, if you treat your customers in ways that are deliberately designed to fool them and/or destroy their belief in your integrity and honesty then why wouldn’t they want to retaliate when making a claim? It may not be legal but it is certainly understandable.

By destroying community trust in our financial institutions we practitioners are the primary source of exaggerated claims. It may be individual policyholders that embark on this activity but it is we who establish the environment that encourages them.

For it is written that ye shall ‘reap what you sow’ and for so long as we continue to sow discord and distrust amongst our policyholders we can expect them to exact revenge when the opportunity arises.

Of course, the professional criminals are a completely different entity and, for them, fraud and the criminal consequences is merely the day job. However, do not make the mistake of tarring every claimant with the same brush. For so long as we continue to undermine the trust and faith in us of the ordinary and legitimate claimant then we can expect an uphill and unwinnable battle to resolve the problem of exaggerated claims.

Eddie Longworth is Director at JEL Consulting.

Modern Insurance 57

10 MINUTES WITH

Neil Ingram Q A

Has the industry changed drastically since you started working in it?

Yes, on so many fronts, but I will call out two. It is hard to imagine now but when I started in the insurance industry in 1999, regulation was effectively voluntary and this did not really change until the FSA started regulating insurance in 2005.

Regulation now plays a huge role in the industry.

I would say the biggest impact has been digitalisation, which has completely changed the landscape. When I started at Pearl Assurance back in 2000, I don’t think we even had a website, let alone an online quote and buy system.

Almost all general insurance sales were made either by phone or face to face but the internet completely changed that and enabled the development of Price Comparison Websites. Their emergence was probably the biggest revolution in the industry since Direct Line ‘cut out the middle man’ in 1985.

Q A

What has been the key positive or negative impact of change in your area of the market?

There has been a real shift towards focusing on the needs of the consumer and ensuring we deliver the right outcomes for them. It is no longer simply a case of taking customers’ premiums once a year and then writing them a cheque when something goes wrong. Now, most insurance companies recognise the need to go further than that and take a lot of the pain away right across the customer journey, from sale to amendment, renewal and, most importantly, when a claim occurs.

I am genuinely proud of the work we have done over the past few years at Direct Line to invest in our claims journey and capabilities, to really focus on looking after the customer and their needs when they have an accident. We have worked really hard to minimise the impact of an accident by reducing repair times and providing ongoing mobility.

The starting point is now always ‘what does the customer need?’ rather than focusing on minimising indemnity spend Instead, he dedicated himself to become the best footballer he possibly could be. He recognised that no matter how hard he trained he would never be particularly quick or great in the air so he focused on where he felt he could put himself above others.

He then showed phenomenal drive and dedication to work on perfecting those skills to the point where he became arguably the most important player for England for a four/five year spell.

He took the natural ability he had and squeezed every single drop out of it. Very, very few people can say that they have done that, and whatever you think of ‘Brand Beckham’, I have nothing but admiration for Beckham the footballer.

Q A

Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you?

I tend not to have just one specific mentor, but prefer to learn from as many people as I can; I genuinely believe that you can learn at least something from almost everyone. The best piece of advice I’ve been given is to focus on outcomes. Decide what you want a certain outcome to be and then work out what you need to do to achieve it.

The starting point is now always ‘what does the customer need?’ rather than focusing on minimising indemnity spend.

Too often the originally intended outcome can become lost or forgotten because so much attention is paid to the process of getting there. Process is only important as a way of achieving the outcome so remember to focus on the latter and be ready to change tack if needed. I apply this approach to almost everything I do, both at work and at home.

Q A

Q A

Who inspires you and why?

I really admire hard work and dedication, so I am going to say David Beckham (focusing on Beckham the footballer).

It always raises some groans when I say this but bear with me. I think he epitomises just how much can be achieved through hard work and dedication. He wasn’t the most naturally gifted footballer by any means and he could have simply been satisfied to be a reasonably good Premier League player, earning a good wage.

If you were not in your current position, what would you be doing?

Like many people, I didn’t grow up with aspirations of working in the insurance industry. I like to drive change and improvements, so it would definitely have to be something where I could do that. Thinking a bit differently, I’m going to say landscape gardener. I’m no expert but the amount of things you do with an outside space is almost limitless and I love being outside. Maybe I’ll have a crack at that when I retire!

Neil Ingram ACII is Head of Motor Product Management at Direct Line Group.

58 Modern Insurance

Issue 32

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