Lloyd’s CEO Richard Ward is a man in a hurry. He wants fundamental changes in the way Lloyd’s does business and he’s not prepared to wait. In a speech sponsored by the Insurance Institute of London earlier this week in Lloyd’s Old Library, he warned that quick fixes weren’t enough, especially in the clams handling area. “We need to change fundamentally the way we think, act, and treat each other and our customers. Without this transformation we will simply over-promise and under-deliver on our Three-Year Plan,” he told his audience.
The UK’s Chartered Insurance Institute (CII) was listening. The day after Ward’s address the organization released details of “a far-reaching review on the role of the claims professional in the London Market.” The CII’s initiative has broad support from the Lloyd’s Market Association (LMA), Lloyd’s and Xchanging, the service provider responsible for integrating electronic processing into Lloyd’s systems.
The CII said its “proposal sets out various options that will enable claims-handling skills in the London Market to be radically improved, a key demand of both the regulator and policyholders.”
All the players recognize that improving claims handling isn’t just a hardware/software problem. “We are currently facing a severe skills shortage that has the potential to undermine our recent reform efforts,” Ward noted. “Our progress can only be maintained if we recruit world class talent. For example, there is currently a huge shortfall in recruiting claims professionals in the London market.”
He also recognized a fact of life that the insurance industry frequently forgets, when he reminded his audience “that our claims are the shop window for the industry for most of our customers and we are judged by our customers on our claims record, this is an extremely serious issue.”
Chairman of the CII London Market Faculty David Gittings described the problem all too well – stating: “Claims handling is not seen as an attractive career proposition in the London Market. The lack of training has led to an overall skills shortage and this dearth of talent is undermining succession planning.”
He indicated that the “project in collaboration with the CII will go a long way to giving claims personnel the encouragement, technical backing and road map to professionalism that they need.”
The CII noted that to date the scope of work completed is as follows:
– A Competency Framework for Claims which redesigns the needs of the London Market, identifies key job profiles and links training and other services to four levels of competency
– Straw Man document and Product Definition which set out the role the CII can offer the London Market
The next steps of the four phase implementation plan will begin with the release of London market claims web pages and the competency framework.
CII chief executive Sandy Scott added: “The importance of an effective claims professional to the reputation of a company cannot be over-emphasized,” citing Ward’s remarks. Scott stressed that the CII “needs to support the efforts of the LMA by providing a framework for developing skills and bridging the skills gap, and with these proposals the CII’s London Market Faculty and Faculty of Claims can provide the support that is required and enable claims skills to be boosted.”
Ward’s figures make the need for those improvements all to clear. “Currently just less than 50 percent of all inscope claims are now being processed using the Electronic Claims File, a total of over 10,000 claims since last September. If you look at Accounting and Settlement, just under 40 percent premium-related transactions are now being processed electronically.”
When Ward sets deadlines, the London market pays attention. So when he stated: “We want all premium related documentation processed electronically by the end of March 2008,” his audience knew he wasn’t kidding. Then he added: “I think everyone in this room also knows that we want all new claims processed electronically by the end of the year.”
However, Ward recognizes that electronic processing is only part of the solution. The CII’s initiative will help, but Ward also noted that “our attempts to recruit are not helped by the serious image problem that our industry has.” He pointed out that the UK’s “insurance industry alone is worth £100 billion [$203.7 billion] and is our second largest export. The sector employs over 330,000 people in a diverse range of roles and an additional 1 million people in related fields. Yet nearly 90 percent of graduates won’t consider a role in insurance and 75 percent of recruiters in the industry struggle to attract quality talent.”
Solving that problem, has long been a priority for Dr. Scott and the CII, who have now been given a further incentive and one hopes more power to correct a situation that undervalues the insurance industry -and not just in London.