HomeInsuranceThe evolution of the insurance claims adjuster

The evolution of the insurance claims adjuster

An illustration of a red arrow breaking down walls as it does through a white maze. With the increasing pace of change, claims adjusters now find themselves polarized with both extreme challenges as well as tremendous opportunities. Credit: Mego-Studio/Adobe Stock

It’s the early 2000s, if you were working in EC3 you might remember the sight of claims brokers queueing, with vast claims folders under their arms, patiently waiting to see the Lloyd’s syndicate or insurance company claims adjuster, to discuss the finer details of their clients’ claim. Each step of the claims process was discussed and recorded in those cumbersome files, from first notification of loss to final settlement. If the file was lost or damaged there was a major problem. The broker was beholden to the timetable of the claims adjuster – if the adjuster had an early finish the broker would simply have to return the following day and start the process again. Even though we were in a new century little had changed since the beginnings of specialty insurance in a London coffee house in 1688, when everything was done on paper and within a 9 a.m. to 5 p.m. window.

Needless to say, in the past, customer outcomes were not always a priority, and for all the power the adjuster wielded over the broker, within the insurance company the claims function was marginalized. Claims adjusters held little, if any, sway over risk management, underwriting decisions or business development in general.

The introduction of the Electronic Claims File (ECF) in 2006 was a key milestone in claims evolution. The initiative was met with some resistance in the early years but once adopted claims adjusters could look at their workflow on the ECF system, review files and communicate with brokers digitally. It reduced the need for face-to-face discussions and with it, potentially the need for both parties to be based in the capital, brokers were smart to this. It also created a digital audit trail for each claim and meant for the first time that the clock was ticking against the insurer, rather than the broker, shifting the customer service emphasis entirely. The system generated management information that had never existed before and helped make claims central to the insurance service proposition.

A 2010 Lloyd’s initiative, the Claims Transformation Programme as it was then, enabled lead underwriters to handle standard claims up to an agreed value, including on behalf of the following market on the same placement. This threshold was increased during COVID to ensure faster customer outcomes. This increased further under the recent Lloyd’s Claims Lead Arrangement (CLA) initiative, which raised the thresholds for claims defined as complex and ensured faster and better customer outcomes. Electronic processing of claims certainly made this more streamlined.

The increase in the complex financial threshold was an important evolutionary step in the claims handling process and other initiatives regarding standard claims have undoubtedly created a better, more streamlined process for the customer, with progress set to continue under the Lloyd’s Blueprint Two strategy, to deliver profound change in the Lloyd’s market through digitalization.

With the increasing pace of change, claims adjusters now find themselves polarized with both extreme challenges as well as tremendous opportunities. Market modernization will sweep away the low-level “in-tray to out-tray” nature of their work and change the way they must add value, forever.

At the same time, technological transformation has created a source of claims data that is hugely valuable for both internal and external stakeholders alike. Once, claims adjusters were often marginalized technicians, with their days structured around waiting for new claim notifications. However, they are now working with underwriting, reserving, exposure management, MI, pricing and outwards reinsurance teams making a significant contribution to portfolio management and sharing valuable claims insights with colleagues, plus brokers and clients. With claims now seen as a key differentiator in the service model, silos between departments have broken down, and over the next five years, claims adjusters will play an ever-more pivotal role. In an increasingly uncertain world, where the potential for natural and man-made losses seems to increase in frequency and severity, claims adjusters will also reap the benefit of their unique touch point with brokers and customers. Claims adjusters have finally ascended from the metaphorical dark basement and are confidently striding into important client meetings.

With these developments, the skillset required of the claims workforce has changed. In the last few years, there has been much talk of, as well as papers on, emotional intelligence. In the new era, this will be a key requisite of a claims professional, with the quality of the claims experience likely to have a major impact on business retention and growth. Empathy has become a key skill when dealing with claims, as it could be the most distressing moment the policyholder faces.

It is also a certainty that technical claims handling skills for complex and higher-value claims will remain critical, putting paid to fears that claims departments will automate themselves out of existence.

There is now greater emphasis on data insights through data analytics which will be a core growth discipline. Technology and data analysis are the immediate future, to improve the customer experience and service proposition. At IQUW, we are leveraging technology and data analytics to enhance our operations in conjunction with essential human collaboration with our underwriting, pricing, exposure management and reserving teams. This is all part of the IQUW claims service that will benefit both internal and external customers. For our external customers, alongside data insights, external stakeholder engagement is a core strategic priority for 2024. We have developed a claims Management Information (MI) dashboard and a claims operations dashboard. Both built entirely in-house, these tools offer real-time data insights, allowing for self-service access for underwriters and other internal stakeholders.

Over time, the evolution of a claims adjuster into a claims analyst may be inevitable, and with this, it will attract candidates with diverse backgrounds, mindsets, skillsets and outlooks, and may help address the industry’s long-standing recruitment issues. IQUW will embrace this change, and our latest key hire to the claims team will be a claims analyst, with a job description commensurate with the spirit of this transformation.

Notwithstanding the significant changes that have already taken place, we need to be ready to adapt further and quicker. Advanced technologies including AI will increase the pace of automation. Anyone hoping that a specialism, whether it be offshore energy, aviation or cyber, will be out of reach and protected from AI is likely to be disappointed. AI, over time, will learn the intricacies of these complex lines and ultimately take on a significant share of claims processing. However, no matter how much technology evolves, it will never replace the need for human input and creative problem-solving. The technology will complement and enhance the human experience and should be embraced.

Change is a constant, and companies and their people refusing to engage may be left behind. Traditional claims adjusters will gradually evolve into versatile specialists uniquely positioned to make sense of a tidal wave of information, with the people skills to communicate with external and internal stakeholders. Claims handling, as a profession, will become more appealing than ever before and customers will reap the benefit.

Gavin Williams is head of claims at IQUW Syndicate 1856.


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