When a client appoints a broker, they are getting far more than someone to purchase insurance for them. They are also getting themselves a powerful advocate when a loss occurs and a claim is made.
As one of the chief times in which a broker shows their value, getting the claims process right is vital.
Expert claims preparation can help the insured get back to business quicker, especially when it comes to complex claims, or claims related to a major catastrophe.
It also helps to streamline the process and gives clients confidence a claim will be managed in a professional manner.
There are two approaches to the way claims preparation works.
Some broking houses have internal claims preparation teams. Others outsource this part of the process to external specialists.
There are pros and cons to both methods and it’s worth understanding what these are.
Upping the ante
So what types of losses usually require specialist claims preparation?
LMI Group Founder Professor Allan Manning commissioned research last year and found brokers were most likely to call on his firm’s services for complex or high-value claims, although high-profile claims and claims in areas unfamiliar to the broker were also likely to trigger a call for a specialist.
Mark Ronan, Chief Claims Officer for Aon Risk Services Australia, says around 80% of claims preparation work is for property and business interruption claims.
Aon has a substantial in-house claims preparation capability, with 24 property valuers, five engineers, 12 forensic accountants, 20 insurance lawyers and 15 claims professionals.
“Business interruption claims preparation often presents the greatest challenges as you are estimating what would have been an insured’s income if they had not experienced the claim,” he says, and adds that internal claims preparation is also invaluable when it comes to substantiating claims related to fraud.
“Our forensic accounts have great data-mining skills which enable them to trace the often faint footprints left by defrauders.”
He says having an internal team with legal qualifications is also useful when an insured is faced with a directors and officers or professional indemnity claim.
But when there’s an accident, it’s best to bring in a specialist who does nothing but claims preparation to provide advice on how clients can receive their full entitlement.
“We make sure our clients are fully compliant with their obligation sunder their insurance policies when faced with directors and officers claims or professional indemnity claims.”
This is because an unintentional breach of a policy condition could jeopardise the cover, as these types of claims can be very legalistic.
Ronan says one of the major benefits of internal claims management is that it gives clients comfort.
“It’s incumbent on the insured to prove the loss,” he says.
“Unfortunately most clients are not au fait with how to quantify a loss from both a practical and technical perspective.
“So having us prepare the claim speeds up the claims process and provides clients with access to timely progress payments.
“This enables them to focus on what they know best, running their business.”
Calling in outside help
Sometimes, however, a broker will go beyond an in-house claims team and call in specialists, such as LMI.
“You can think about brokers being like medical GPs,” says Founder Allan Manning.
“They help keep clients’ health protected. But when there’s an accident, it’s best to bring in a specialist who does nothing but claims preparation to provide advice on how clients can receive their full entitlement.”
Paul Minett, Director of claims preparers Martin Minett, says in terms of the process, the insured will firstly contact his or her broker to advise a loss has occurred.
Minett says the broker will then send a client claim notification to the insurer, outlining the circumstances of the claim and what caused it.
“The insurer will then appoint a loss adjuster, unless it has taken this in-house.
The broker will then recommend the appointment of a claims preparer; some policies require the approval of the insurer for this,” he says.
Generally, there will be a provision in property policies for a specialist claims preparer to be appointed, which is usually subject to a sub-limit.
Once he has been appointed, Minett explains he will then look at how the policy is likely to respond to the claim.
“But the most important thing early on is to agree communication protocols for all parties working on the claim. Our role is to also clarify anything ambiguous.”
He says with large consequential losses, it’s the norm to set up an electronic data room.
“You might have up to 3000 documents in there. Generally, part of our role is to look at document flows and manage when information will be provided by the insured.”
The next step is to determine a schedule for progress payments.
“Even if the loss is small, this can be vital, especially for a small business with limited cash flow. So we establish a process so the insured party receives funds to help reinstate the business,” Minett says.
The claims preparers will then be able to advise the insured, or the broker, of the entitlements under their policy.
“In some situations we have to advise the insured that certain elements of the claim are not covered.”
“Our focus is being fair; we’re not there to get money from the insurer to which the insured is not entitled.”
Minett says he always tries to make ‘outside of the square’ suggestions to clients.
“For instance if the business is operating in a declining industry, we might be able to pick up a distressed business or some of their machinery [with the proceeds from the claim] to reinstate the assets the insured needs to restart the operation.”
“So when we’re looking at ways to mitigate the loss, there are a variety of different things we can do.”
The key to working with claims preparers, says Minett, is to ensure they are called in early.
“So many times we’re called in when the process has been derailed, usually through lack of good communication, which can lead to a breakdown in trust.”
“It then takes substantial time to unravel what’s happened.”
As LMI’s Allan Manning notes, claims preparers work as an extension of the broker’s team.
“It’s a team effort and it’s essential to ensure we’re involved early to achieve the best result,” he says.
Cutting out the middlemen
QBE has a delegated settlement authority system that allows brokers to lodge, fulfil and pay claims under $5000.
They can select a property adjuster directly from its preferred supplier list, speeding up the process.
If it is a straight-through process claim, the broker has the authority to finalise the claim and generate payment for the customer.
Aside from delivering quicker results for clients, brokers remain the sole contact for their client, overseeing the entire claim and providing a true end-to-end service.
There are business rules built into the system to automate a referral to QBE claims management for complex claims where a broker might require assistance.
“As with all of our processes, we are still very conscious of ensuring responsible payment of claims so we have sophisticated audit controls in place that allow us to confidently provide this value-add service to our brokers,” says Tony MacRae, QBE Australia’s Intermediary Distribution Executive General Manager.
McRae says the fact the system enables after-hours claim lodgement is a huge advantage, particularly during catastrophes.
“The reality is that, at times of a catastrophe, brokers with this facility are able to process claims quicker and place their clients at the front of the queue.”