Claims – do you need an advocate?

The Importance of Claims Advocacy

Last month, we published an article by Airmic technical director Paul Hopkin on why large claims fail. Here, Miles Banks of Willis argues that claims advocacy from a trusted intermediary can help the process and reduce costs.

Claims Advocacy is possibly the most important element of any broker’s offering to a client, along with ownership of the claims process from initial notice, through to the successful settlement and conclusion of the claim.

Speed of service is the current focus of the London Bureaux Markets, (Lloyd’s and the IUA) with an emphasis on electronic claim files (ECF) and prompt settlement of claims. This works for what I would describe as “vanilla” claims, where a light touch is preferable, no coverage questions arise and the goal for everyone is speed of payment to the client. However, it is all too easy to forget that ECF is purely a medium for the transfer of data and does / should not preclude face to face negotiation between the broker and insurers. ECF has all but eliminated the need for brokers to carry arm-fulls of claim files around the London Market, a significant saving on shoe leather and back pain for the broker! But it is vital for both brokers and insurers to recognise that ECF is not the be-all and end-all. It is all too easy for anyone to “hide” behind a computer screen and type in “no” or indeed respond in a similar fashion on the telephone. Complex claims should always be discussed on a face-to-face basis between the broker and insurer, and this is where clients benefit from claims advocacy.

A broker should nurture and develop a close working relationship with insurers, something that takes time and should never be under-estimated. These relationships will prove invaluable in a client’s hour of need, when a claim arises that might not necessarily fall within the four corners of the policy. Paul Hopkin’s recent article “Why do big claims fail?” points to a number of key areas that insurance buyers should focus on when purchasing their policy. However, unexpected, complex and challenging claims occur, which is where the true value of claims advocacy comes to the fore.

All too often, insurers rely on external advisors, often resulting in unexpected and unwelcome news for the insured. In many cases, clients reach for their own external advisors and before you know it, there are two firms of lawyers throwing very expensive “rocks” at each other. A key function of the Claims Advocate is to parachute into the middle of this situation and facilitate a face-to-face meeting between the insured and their insurers. The goal of this meeting is to restore a fractured relationship and explore an amicable resolution of a claim, which is infinitely preferable to one that is settled after protracted and expensive litigation.

The ability of your broker to escalate discussions with insurers is also a vital ingredient when resolving problematic claims. All too often, the claims adjuster and broker become so embroiled in the minutiae of the claim that neither can see the wood for the trees. At this stage, it is critical for discussions to be elevated to a senior claims advocate and his or her opposite number. Should these meetings fail to gain traction, then there should always be a fall-back position where the heads of claims can meet and explore a resolution. However, each of the above steps can only occur if strong relationships, based on mutual trust, have been formed between the broker and the insurers.

A recent case in point demonstrates the value of claims advocacy. A major insured suffered a large claim in 2008 that was disputed by insurers, numerous experts were involved and the claim was heading for litigation. A mediation was proposed and took place last year where, after days of debate and negotiation, it was finally settled for US$ 667,500,000.00."

Miles J. Banks is Chief Claims Officer, Global Group Management at Willis