Modern Claims Magazine Issue 19 - Accident Management Supplement

Accident Management & Credit Hire Supplement 2016

ACCident MAnAgeMent: WHAt’s Around tHe Corner?

Public perception of credit hire sometimes gets unfairly associated with some of the issues of the CMC sector and claims farming Andy Whatmough, S&G Response

elcome to the latest of Modern Claims’ special supplements. It’s safe to say, if you’re involved in the accident management process or with credit hire specifically, recent years have been turbulent to say

the least. With the threats of the Office of Fair Trading (OFT) and Competition and Markets Authority (CMA) reviews taking a combined three years, the sector has been through a period of potentially huge change and uncertainty.

So, how is the sector fairing now the reviews have concluded? I spoke to the Director General at the Credit Hire Organisation (CHO), Martin Andrews, to find out his views on the preservation of the GTA, and his opinions on the government’s approach to credit hire. The full interview with Martin can be read from page 18 onwards. I also spoke to our cover star and Managing Director of S&G Response, Andy Whatmough, about his thoughts on the potential increase in the small claims limit, and overcoming negative associations of credit hire companies with unscrupulous CMCs (from page 6). Also in this issue, I speak to the CEO of

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group editorCharlotte Parkinson

Project ManagerRachael Pearson

editorial AssistantBrendan Gurrie

events salesMartin Smith

MSL Group and Financial & Legal Insurance, Nick Garner, to find out why technology should play a fundamental part of the first notification of loss (FNOL) process. The full interview with Nick can be found on page 14 onwards.

I would like to extend my thanks to S&G Response, who are our headline sponsors for this supplement, and also to all our other contributors (details of whom can be found below). I hope you enjoy this supplement and if you have any comments or feedback, please do get in touch with me via the details below.

Charlotte Parkinson,Group Editor, Modern Claims Magazine.

@[email protected] 600909

INTERVIEWS FEATURES6 Andy Whatmough Charlotte Parkinson, Modern Claims spoke to the Managing

Director of S&G Response about overcoming the negative association of credit hire companies with CMCs and claims farming, and why the devil will be in the detail if the proposed increase in the small claims limit goes ahead.

10 Michael Lee Charlotte Parkinson, Modern Claims spoke to the Managing

Director, Insurer Services, at Hastings, about how changes in the claims environment open up possibilities for agile insurers, and discussing opportunities within and outside the GTA.

14 nick garner Charlotte Parkinson, Modern Claims spoke to the CEO of

MSL Group and Financial & Legal Insurance, to find out about the challenges around the first notification of loss procedure for insurance claims, and why technology should play a fundamental part in the process.

18 Martin Andrews Charlotte Parkinson, Modern Claims, spoke to the Director

General at the Credit Hire Organisation (CHO), about how the outcomes of the Office of Fair Trading (OFT), and Competition and Markets Authority (CMA) reviews have impacted the credit hire market, and his plans for balancing “government’s understanding of ABI-sponsored ‘rhetoric’”.

24 Better together Mike Srokowski asks whether Credit Hire Organisations

(CHO’s) and Accident Management Companies (AMC’s) can truly work in harmony with insurance companies, and asks how big a part technology plays in the process.

26 Connected solutions - a new business model for Motor Claims supply

Steve Thompson outlines how a connected approach to Motor Claims Supply can deliver the best outcomes for clients.

28 the canvas of trust Supply chains are a crucial element of an insurer’s claims

proposition and as such, most claims customers are likely to interact with an insurers supply chain at some point during the claims experience, as Sarah Kenworthy reports.

30 Case study - s&g response Jewson select S&G Response for repair management

programme and see savings of 40%

Cover photo taken by Andrew Twambley

May 2016 Accident Management & Credit Hire supplement 03

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For the first time in twenty plus years, there has been a fundamental shift with demand in the repair supply chain outstripping supply

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We integrate with their systems looking to automate process wherever possible and manage through exception rather than bombarding our partners with individual claim specific queries

Andy WHAtMougH Charlotte Parkinson, Modern Claims spoke to the Managing Director of S&G Response about overcoming the negative association of credit hire companies with CMCs and claims farming, and why the devil will be in the detail if the proposed increase in the small claims limit goes ahead.

Q What are the specific challenges associated with operating in the repair management marketplace at the moment?

A For the first time in twenty plus years, there has been a fundamental shift with demand in the repair supply chain

outstripping supply. According to industry statistics, the number of bodyshops has reduced in the last decade by over 30% giving rise to a capacity issue. What was accepted as standard practice 10 years ago just doesn’t cut it today and the focus needs to be on sustainable relationships in order to mitigate increased downtime, stretched cycle times and leakage.

Q How does s&g work with its supply chain partners to improve its claims handling solutions?

A Collaboration through technology with a fair commercial package is the message to our partners. As we handle far

more fault claims than non-fault claims, we need our partners to be the best at delivering the processes, efficiencies and cost savings as required by our customers. We integrate with their systems looking to automate process wherever possible and manage through exception rather than bombarding our partners with individual claim specific queries. This allows them to get on with doing what we need them to do; being productive.

A key part of our proposition in the motor sector revolves around our approved repair network. We recognise that running a quality bodyshop is a tough job in today’s climate and candidly, we would always like our client’s repairs to be top of the list. So we structure our relationships to drive as much ancillary value into the shops as possible – for example, nobody is on greater than thirty day payment terms and there is higher than average incidence of commercial vehicles which don’t require the additional cost of a courtesy car. Some of our Principals demand more onerous terms than others but we believe that as a blended package the proposition works in the round.

Q How could the rise of autonomous vehicles impact accident management?

A On the face of it, we’re all endangered species working in what will become a reducing market. The possibility of

the connected car and self-driving vehicles has implications for the whole insurance model and the claims supply chain that sits behind it. On a product level, the current RTA insurance model

is called into question; at least one vehicle manufacturer has already said that they will pick up the third party liabilities from any incident involving one of their driverless cars. Are we looking at a new hybrid insurance model – something that might look like a cross between professional indemnity and RTA cover? And how does this then change the insurance sales and distribution model as vehicle manufacturers can sell insurance, but insurance companies can’t build cars.

Sitting behind all that structural change to the market are the implications for the supply chain. The single biggest change should be the reduction in claims frequency and with the consequent impact on repairers, the vehicle mobility sector, loss adjusters and law firms.

So technological changes to the motor sector are going to be the biggest challenge to the market over the next 10 to 20 years and the speed of change might be faster than most currently anticipate.

Q What do you make of the proposals for the Financial Conduct Authority (FCA) to regulate credit hire companies,

as has been mooted for claims management companies?

A It’s a good thing, although most credit hire organisations are regulated by the Financial Conduct Authority already.

Insurance claims handling is already a regulated activity and CHO’s do, in the main, provide a professional service that is unique, niche, and valuable at the point of delivery. They have to be; there is too much at stake financially if they get it wrong. The

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Accident Management & Credit Hire supplement 07

s&g response

We offer an enhanced customer experience, with the aim of achieving 100% customer satisfaction during a vehicle accident claim.

S&G Response understands the frustration and inconvenience that can arise from a road traffic incident, especially when it is not your fault! We assist drivers across the country after an accident, ensuring that there is minimal disruption to their lives.

We provide our partners with full support throughout the accident claims process. From immediate customer contact and roadside recovery after an accident, to offering like for like ongoing mobility and expert vehicle repair management through our network of chosen repairers. All overseen by our experienced claims executives who are always available to offer guidance and updates.

As current operators and practitioners will exit, there needs to be careful consideration to manage any unintended consequences such as a new unregulated sector rushing to fill the vacuum

Technological changes to the motor sector are going to be the biggest challenge over the next 10 to 20 years and the speed of change might be faster than most currently anticipate

CMA report into the provision of temporary replacement vehicles found that the profits in the sector were not abnormal, and certainly not excessive, and the return on capital employed is much lower than people realise. It’s not uncommon for several thousand pounds of working capital to be employed on each claim in return for an undefined return at some unclear juncture in the future. In many ways, it’s not the best business model in the world.

I also think that the public perception of credit hire sometimes gets unfairly associated with some of the issues of the CMC sector and claims farming. It’s a comparison that is unfair. CHO’s deliver a genuine benefit to the consumer at a time when they need the service most; in the immediate aftermath of an accident when they have a tangible need for ongoing mobility and vehicle repairs. There is just no place for the negative headlines around spam texting and cold-calling in a CHO business model and the sector needs to work harder on differentiating itself, and the value it brings, from other claims management models.

Q What impact could the potential reforms to the Pi sector have on practitioners, suppliers and consumers?

A The consumer detriment to the proposed reforms identified in the Autumn Statement cannot be understated. It is

inconceivable that a person should be entitled to compensation if, for example, their train is late, but denied access to restitution if they have been genuinely injured through another’s negligence. I don’t think anybody can argue with that as a premise.

However, one of the real causes of frustration is that the current debate seems to be argued in a fog bereft of facts that the various sides can hang their hats on. The insurance lobby state that their

position is rooted in reducing claims costs, driving out fraud and ultimately delivery premium savings to customers.

But there are no independently verified numbers to support this position. It’s no secret that the insurance sector is the largest source of non-fault work, but are the costs stated before or after the ancillary income is generated? The insurance funding model is also unique in that the consumer typically pays in full for a service that they hope to never need; you can’t evaluate the profitability of an insurance model without looking at the investment returns generated whilst they are sat on all that cash. Needless to say, since 2008 those returns have been well down.

The devil will be in the detail, but if these reforms go ahead, it is almost inevitable that there will be wholesale disruption to the current market on both the claimant and defendant side. There is almost no doubt that there would be terminal damage caused to a number of business models leaving the consumer with reduced choice and reduced access. As current operators and practitioners will exit, there needs to be careful consideration to manage any unintended consequences such as a new unregulated sector rushing to fill the vacuum.

Q What is in the pipeline for s&g in the short, medium and long term?

A There’s a lot happening out there at the moment and whilst it might look daunting, it does give rise to opportunity.

We’ve never viewed our core competence as being good at “accident management” or “credit hire”; we think we are not bad at managing a process. We define the start, define the end and the expected outcomes and build it from there.

When you view yourself in that way, the transferable value opens up a whole array of new opportunities and new markets. We’re building to make what we already do better in order to keep up with the competition but we’re looking at diversifying the business further. We started out back in 2009 as a provider of non-fault services and took the decision about 3 years ago to build a credible, scalable offering for managing our clients’ fault claim spend. I think we’ve proven our credentials there.

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INTERVIEW

08 Accident Management & Credit Hire supplement

Andy Whatmough

Andy has over 15 years’ experience in the outsourced claims handling sector with experience of managing all aspects of motor claims from FNOL to repair management, and third party costs containment to legal expenses provision.

As Managing Director of S&G Response, Andy is responsible for the overall strategy but takes a particular interest in both new product development and the sales pipeline of the business. This has seen the company grow quickly but organically from a niche provider of FNOL and credit hire and repair services to now offering the complete range of insurance back-office solutions including a fully contracted private car and LCV repair network, a separate HGV network, and a full third party claims handling function.

Andy is supported by the senior management team comprised of Nik Griffiths (Operations); Nick Stone (Finance); and an industry experienced non-executive board including Anthony Hughes, Ken Lane, and Steve Thompson. This team gives the business the management bandwidth to identify client specific solutions, and then innovate and implement to deliver results in the shortest possible timeframe.

E: [email protected]: 01625 415960W: www.sandgresponse.co.uk/site/about/meet-the-team/@sandgresponse.co.uk

The current debate seems to be argued in a fog bereft of facts that the various sides can hang their hats on

Public perception of credit hire sometimes gets unfairly associated with some of the issues of the CMC sector and claims farming

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Distribution has moved rapidly towards price comparison websites (PCWs) and this has changed consumer behaviour and expectations

We have invested heavily in counter fraud to ensure risk selection is accurate and we are able to deal with the challenges such as ghost brokers

Q How has Hastings coped with its considerable expansion, which has taken place ever since it was established?

A Since the management buyout (MBO) in 2009, Hastings has built its business in the way customers now buy general

insurance embracing the changes and challenges that the personal lines motor market has seen. Distribution has moved rapidly towards price comparison websites (PCWs) and this has changed consumer behaviour and expectations.

Many insurance providers resisted this change in distribution or weren’t agile enough to adapt to the new buying behaviour. Instead of trying to resist this powerful distribution model, we embraced it and set our people and systems up to maximise the benefits and now around 90% of new business sales come through PCWs.

We have invested heavily in counter fraud to ensure risk selection is accurate and we are able to deal with the challenges such as ghost brokers. We have moved to the front of the pack in data analytics for price optimisation, and data enrichment for sophisticated risk pricing.

Our focus on a single line of business has definitely been an advantage but we are now able to apply our strengths in the above techniques to other areas such as home insurance.

Q How did the recent Stevens v Equity case impact the market? What were the key issues raised by the decision in

the case?

A The Stevens v Equity decision provided clarity to the insurer on the issue of rate and how rates evidence should be

assessed. The decision provided the insurer with the ability to challenge the rate supplied by the credit hire organisation (CHO) outside of the General Terms of Agreement (GTA) and highlighted the ever widening gap between the GTA and the common law principles. The objective of the GTA is to resolve a claim promptly and amicably and the decision in Stevens applies to those cases that are either outside the GTA or fall outside the GTA following protracted negotiations or delays. We do expect to see an increase in litigation following on from Stevens, especially when coupled with the CHOs ability to remove a claim from the GTA after 60 days. This, as ever, will be dependent on the CHO appetite to commence legal proceedings.

MiCHAeL LeeCharlotte Parkinson, Modern Claims spoke to the Managing Director, Insurer Services, at Hastings, about how changes in the claims environment open up possibilities for agile insurers, and discussing opportunities within and outside the GTA.

The key factors in assessing the true impact of the Stevens decision is to understand the individual market share for each CHO, the GTA and non GTA market share, and the impact of any protocol agreement an insurer has in place and to fully understand the ability and appetite of a CHO to litigate.

Q What does the future look like for the gtA? do you think it has a viable future in its current form?

A The recent change to the GTA dated 1st May 2016 clearly outlines the need for a clearer/more defined process. The

clauses within the GTA that set out how the insurer and the CHO should liaise remain useful and the hire management practices required set out the relevant set of rules around the management of the hire period. The time frames set out within the GTA are suited to the agile insurer who has the ability to make liability and indemnity decisions promptly; in reality these practices hinge on a variety of factors:

• The speed of notification by the insured • The ability of the insurer to make an informed liability decision • The appetite of the insurer to subrogate and deal with the claim.

In its current format those subscribing insurers, agile enough to turn around a claim promptly and make an informed decision before the CHO, submits a payment pack benefit from the notification process outlined within the GTA. The difficulty is that the insurer must balance the customer journey with the need to satisfy the CHO. The key to any successful credit hire claim continues to be the new claim notification and the visibility of the incoming claim presented by the insurer to reduce indemnity spend.

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INTERVIEW


The clauses within the GTA that set out how the insurer and the CHO should liaise remain useful and the hire management practices required set out the relevant set of rules around the management of the hire period

It is widely accepted that where the CHO is monitoring the claim it should be monitored within the GTA and common law supports this

The GTA and common law principles around period remain relatively consistent and, provided the insurer is agile, indemnity savings can be delivered through efficient hire management. It is widely accepted that where the CHO is monitoring the claim it should be monitored within the GTA and common law supports this. The biggest challenge on hire period management remains where another insurer is dealing with the repairs to the claimants vehicle. The obligation on the CHO at this point is reduced and the consumer, whether they are a claimant or the insurer’s customer, can often be left in limbo, resulting in the CHO benefiting from and exploiting existing common law principles to recover excessive hire periods that are not within the control of the fault insurer or the CHO.

It must be said that the GTA document as a whole now has a significant number of contentious areas which both insurers and CHOs seek clarity and agreement on. The difficulty with the GTA is that the gap between the document and the common law principles set out continues to widen.

The recent decision in Stevens v Equity continues to highlight the issue around the discrepancy between the rates set by the GTA and the rates freely available to the consumer at the time of the incident. Clearly and rightly, the CHOs customer has a right to a vehicle following the non-fault accident and this should not be to the benefit of the CHO at the expense of consumers. The recent rate review conducted highlighted the deficiencies of the existing GTA and the challenges that face both insurers and CHOs around meeting a common/amicable position that suits the consumer.

It is clear that the GTA still has benefits to both the insurer and the CHO. However, it should be said that with the ever evolving common law landscape, the contentious nature of credit hire will further erode the impact and importance of an unregulated GTA.

Q How could the reforms to personal injury, including the increase to the small claims limit and removal of

compensation for soft tissue injuries, impact claimants, insurers and solicitors?

A At this stage, prior to the consultation process getting underway on specific points raised by government, the scope

for change is significant of course. We think the important issues to consider are:

• We continue to see significant volumes of claims presented to insurers that are speculative and opportunistic. They often disappear under robust challenge from an insurer. The validity of these claims needs to be challenged as well as the way that some of the claimant representative community continue to aggressively chase these speculative cases.

• Claimants who suffer genuine injury and loss should of course have recourse to pursue a claim against the fault party.

• If we look at these proposed reforms from a perspective of reducing premiums for the majority of consumers, it soon becomes clear that incurring any additional costs to defend spurious, exaggerated or entirely fictitious/staged claims is impacting insurers’ ability to provide an answer to reducing premiums. Claims inflation continues to drive rates.

• If any reforms are poorly or partially implemented, we can expect the claimant market to adapt and this will continue to impact insurers’ ability to offer consumers more affordable motoring.

Q How has the landscape for insurers altered over the last five years?

A The changes in the claims environment continue to provide opportunities for the agile insurer. An insurer that can adapt

to legislative reforms and consumer behaviour will always succeed. Quality MI and the ability to forecast claims inflation will ensure a smooth growth in operating profit. The market appears to be more sophisticated in its pricing and this should lead to a more shallow market cycle and less volatility in pricing for consumers.

That said, wider macro factors have definitely impacted the market over the last five years. Economic recovery has increased the miles driven on the UK roads leading to accident frequency increasing whilst improvements in vehicle safety/autonomy will gradually drive this down again.

Q How has the nature of insurers’ relationships with credit hire companies changed during this time?

A This depends on the individual CHO and the multifaceted relationships insurers and CHOs share. It is clear that certain

CHOs have more credibility than others in the market place and can offer more attractive propositions. The presence of outsource partners supporting insurers has helped develop a better understanding of individual CHOs behaviours and presented the insurers with greater transparency of their credit hire performance. This in turn allows an insurer to sit at the table with a CHO and discuss outcomes both within and outside the GTA to establish a better set of working practices.

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INTERVIEW


Michael Lee

Michael Lee is managing director at Hastings Direct (“Hastings”) and oversees the company’s claims; telematics and award winning counter fraud departments.

Before joining Hastings, Michael spent nearly a decade with Provident Insurance Plc working in marketing, product development, underwriting and claims management. A qualified chartered insurer, Michael left Provident to help establish a new insurance group.

Michael co-founded Southern Rock Holdings Ltd (SRHL) in Gibraltar and moved to Gibraltar as managing director of Southern Rock Insurance Company Ltd (SRICL) and from there developed the products and infrastructure of this new underwriter. The business grew quickly, following the successful development of eBike, eCar, eVan brands, and partnerships with Aviva and ASDA. Michael then began building a UK based insurance services company to insource all SRICL’s requirements. Eldon Insurance Services Ltd (EISL) was launched in April 2008 and Michael returned to the UK as managing director of Eldon to focus on this key venture for the group before joining Hastings in 2011 as part of the senior leadership team preparing the Company ahead of its planned IPO, which resulted in the private equity deal with Goldman Sachs in 2013.

Michael originates from Newcastle-upon-Tyne and divides his time between his work in Bexhill-on-Sea and his family in Huddersfield.

With the ever evolving common law landscape, the contentious nature of credit hire will further erode the impact and importance of an unregulated GTA

Recent cases during pilots of autonomous vehicles show...accidents will continue to occur

Q What are the biggest challenges/opportunities in the current marketplace?

A We only see opportunities. Any further changes in buying behaviour or the legal environment just mean the more agile

insurers succeed. We are set up to adapt rapidly to the challenges.

For an organisation like Hastings, our only challenge is maintaining that agility and retaining and recruiting more high calibre colleagues.

Q How could telematics and autonomous technology impact insurance claims?

A Autonomous technology is already built into our pricing structures as we see the impacts it has on vehicle safety

and reducing accident frequency. In the longer term, even with full vehicle autonomy, accidents will still happen and the current sophisticated, and most importantly, efficient motor insurers will still be the best placed organisations to deal with vehicle insurance and the accidents that occur. Recent cases during pilots of autonomous vehicles show those accidents will continue to occur.

Telematics already provides an enhanced ability to assess the real driving behaviour and helps educate motorists to improve road safety. The data is also extremely valuable in detecting fraud and assessing liability.

Q What is on the horizon for Hastings in the near future?

A We continue to invest in our colleagues so that they do the right thing for customers. We believe this will help us succeed

more than anything. We will also continue to invest in data analytics and enrichment for pricing.

Above all, we intend to hang on to the agility that has been key to our success as we grow.

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INTERVIEW


Making a claim can be a traumatic experience so it is vitally important that the FNOL team and the entire process support the customer throughout their claim journey

Technology plays a major part in both the FNOL and the claim resolution process in ensuring claims are handled swiftly and efficiently for the customers

Q Can you outline some specific challenges/complexities associated with the First notification of Loss (FnoL)

process?

A The First Notification of Loss (FNOL) process is an extremely important part of the customer experience. It is essential

that we put them at ease and try to minimise disruption to their everyday life, or livelihood, and provide an exemplary service.

The three key challenges in ensuring we provide this service are:

Ensuring staffing levels for the number of claims and calls are at optimum levels to make sure calls are answered immediately, which in turn reduces stress for our customers.

The knowledge and skill of our team is paramount. We have an excellent training programme that equips our staff with the skills they need to provide an extremely high quality of service, with the right level of technical knowledge for the customer. Our extensive training programme is regularly reviewed and delivered to ensure that our teams meet the standard required.

Systems and processes must be robust, reliable and meet the needs of our customers in providing a high quality, quick service and integrating with all internal and external departments so as to avoid any delay or confusion for the customer.

Q How can the FnoL process improve the customer journey?

A The FNOL process sets the tone for the entire customer journey. In that first call, the key is quick and accurate data

capture without duplication, hesitation or confusion. Once we have an accurate record, individual claims handlers are able to identify each customer’s needs and priorities. It’s for this reason that soft skills are critical in gleaning the required information; in order to gain the customer’s trust this must be done in in a friendly, professional and supportive manner. A large part of ensuring an excellent customer journey is regular communication with the customer whatever the product or service. This is especially pertinent when liaising with customers who are in a stressful situation, informing the customer of what will happen, when and by whom is vital. Making a claim can be a traumatic experience so it is vitally important that the FNOL team and the entire process support the customer throughout their claim journey.

niCk gArner Charlotte Parkinson, Modern Claims spoke to the CEO of MSL Group and Financial & Legal Insurance, to find out about the challenges around the first notification of loss procedure for insurance claims, and why technology should play a fundamental part in the process.

Q What part does FnoL have to play in the wider claims resolution lifecycle?

A Mistakes, confusion, delays and expectations not being met significantly undermine confidence in the claim service, which

invariably escalates to further delays and complaints. Gathering all the relevant information to enable the handler to make the right decisions quickly and accurately underpins the whole customer journey. The claim lifecycle could also be unnecessarily extended by not securing relevant information in the initial part of the claim whilst it is still fresh in the customer’s mind and may also affect liability decisions later on if an accident’s circumstances are not understood correctly by our teams, or witness information is not obtained. This is why having fully trained and passionate teams is essential in delivering this high level of service.

Q How could the current FnoL model/process be improved?

A It is important to continuously review and assess all areas of your business. For example, the IT systems show how the

customer requires you to communicate with them to ensure you are offering the fastest, easiest, high quality customer journey.. This is particularly important for the FNOL model which is the shop front of the company; this is where our customers get a lasting impression of how the experience was for them.

It is extremely important to remember that customers’ needs for communication models differ. From some customers preferring to text, to others preferring a call over email, all companies need to customise according to the customer needs.

Q Are there any advantages/disadvantages in outsourcing FnoL services?

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INTERVIEW


Having a good Customer Relationship Management (CRM) system ensures you are able to record all of the relevant information accurately at the FNOL stage whilst it is fresh in the customers mind

If you want to be ahead of the game, you need to be ahead with technology too

A As always, there are advantages and disadvantages of differing models, but a great advantage of outsourcing is that the

pressure to recruit, train and deliver exceptional service is managed by another company so that you can concentrate on other aspects of your business, leaving the day to day management of FNOL services to a company who is an expert in this. Outsourcing isn’t a disadvantage to your customers; we have found that white labelling an FNOL service with a company you trust creates a seamless extension of your own business as well as providing specialist, efficient service to your customers. Outsourcing can then reduce your operational expenses.

However, in the interests of balance, it would be fair to say that it can also be beneficial to keep FNOL in-house in order to retain control over the entire process. If you can’t find a company to deliver the FNOL service to your requirements then they ultimately won’t deliver the service you want for your customers. Many FNOL models now include a 24/7 service to customers so it is important to understand whether your own or an outsourced model can cope best with this level of service. At MSL, we operate in niche areas such as assisting driving instructors, taxi drivers and chauffeurs when they have had to make a claim, all of whom need the process to be efficient and convenient in order to honour their professional commitments. As such we feel it is important to be able to offer a 24/7 in-house FNOL model to our customers so we can get them back on the road as quickly as possible.

Q What part does technology have to play in the FnoL/claims resolution process?

A Technology plays a major part in both the FNOL and the claim resolution process in ensuring claims are handled swiftly and

efficiently for the customers. As I’ve previously stated, the ability to record data quickly and efficiently is key at the FNOL stage and sets the scene for the whole claims journey and resolution process. In addition, the processes and communication methods play a key part in handling the claim for the customer.

Having a good Customer Relationship Management (CRM) system ensures you are able to record all of the relevant information accurately at the FNOL stage whilst it is fresh in the customers mind. This can then be used by other people in the claims journey later on, for example, if there is a liability dispute. A slow or clunky CRM can also mean the customer is on the phone for longer periods of time whilst the FNOL handler waits for the system to catch up, or the claims questions do not flow in the best possible way, resulting in a less than satisfactory experience for the customer. Technology is also important if you need to export data from your CRM for reporting purposes, both for notifying others in the supply chain and also for producing Management Information (MI) throughout the claims process. An effective CRM translates into quick reporting of information which speeds up the process and also frees up resource. Field to field mapping between businesses is now used more often and technology is key to this. If you want to be ahead of the game, you need to be ahead with technology too.

Q Have there been any stark changes to the FnoL model recently?

A Every business has a different set up and FNOL model but I would say the most apparent change to general models is

moving to a 24/7 FNOL system. Claims capture is fundamental to most businesses in our industry and therefore having the ability to record and capture a customer’s claim as soon as it has happened is paramount. Given that a lot of customers find making a claim a traumatic experience, they want to speak to someone that can help them straight away, which is where having a 24/7 reporting line (where you actually speak to a skilled advisor) will help deliver an excellent claims experience.

Q How do you expect the FnoL model to evolve over the next few years?

A I would expect businesses to invest further in the technology side to ensure they are keeping up with their competitors and

providing the best possible service to their customers. Many will invest in expanding their FNOL offering to include a 24/7 coverage (either in-house or outsourced depending on their business set up) and to continue to push learning and development strategies across their business to ensure staff have the skills and experience to provide a fantastic customer journey throughout the claims experience.

We have passionate, energetic people at MSL who we value and who provide an excellent, high quality, transparent service to our customers, enabling them to be back on the road quickly.

May 2016

INTERVIEW


Claims capture is fundamental to most businesses in our industry and therefore having the ability to record and capture a customer’s claim as soon as it has happened is paramount

nick garner

As CEO of MSL Group and Financial & Legal Insurance I am passionate about leading and developing our people to provide future growth and opportunities for everyone. I qualified as a chartered accountant at PwC in 2003 before joining MSL and subsequently the executive team in 2007.

This exciting business centres on two groups of people; its customers and our fantastic team of people. We develop innovative insurance products and services to promote access to justice for individuals or businesses involved in a legal dispute. Our core values are Excellence, Flexibility, Integrity, Teamwork, Passion and most importantly our People who we place that the heart of everything we do.

I sit on the executive committee of The Credit Hire Organisation (CHO) and more recently Access to Justice (A2J), which has been established to promote the interests of the personal injury sector and legal profession. A2J’s current primary objective is to oppose the elimination of legal rights for 60 million people in England and Wales, which the government is proposing to do by fundamentally changing their rights to compensation in personal injury claims.

I am married with two young boys who provide me with endless enjoyment and never cease to amaze me! Outside of work and family life, I occasionally find time for the odd round of golf and enjoy exercising regularly to keep up with my kids.

May 2016

INTERVIEW

Modern Claims - Accident Management & Credit Hire supplement 17

The power of the ABI is significant, they are an extremely well funded (£20m per annum) organisation that has the ear of government

The tentacles of insurers run deep into the government, and ministers listen to what insurers have to say. [The CMA] did not take account of information that was provided to them in order to properly understand the service that credit hire companies provide to consumers

Q Can you outline the current position of credit hire companies in the accident management process?

A If a car is provided to a non-fault claimant, under Tort Law – not their insurance policy – they are entitled to a reasonable

replacement vehicle, to put them back into the position they were in before the at-fault person caused the damage. That also applies to the repair of their vehicle. Something that should be obvious from this situation is that the at-fault insurer is picking up the bill (when they really rather would not). Whenever anybody has an accident, the first phone call they make is most probably to their own insurance company, passing on the details of the other party. As part of this process, the at-fault insurer knows it is likely that the non-fault party may find their way into a credit hire vehicle. At this stage the at-fault insurer could act to provide the replacement vehicle itself because large insurance companies can enter into large procurement agreements with car rental companies, and on the promise of volume, can negotiate vastly reduced day rates for hire. The insurers could thereby control and eliminate the credit hire market if they wanted, by offering this service directly to every non-fault claimant. However, they don’t do that because the cost of doing that would outweigh the current cost of credit hire. This is the “gap in the market” the Competition & Markets Authority (CMA) acknowledged is provided to consumers by credit hire companies.

Q How has the credit hire market evolved in the last few years?

A The dynamic of what we do has been investigated by a number of different parties over the last number of years.

The Autofocus debacle has led in large part to where the industry finds itself today. In this case, insurers started to secure the help of so-called independent rate experts, who were tasked with undertaking sufficient academic work in order to come up with accurate day hire rates for specific vehicles, to provide clarity for Judges during the litigation process. The problem occurred when it was found that the so-called independent experts were quoting day rental rates for companies who did not have the vehicles in their fleet – in other words, Autofocus was making it up and doing so because it was being contracted by defence lawyers to provide information to show the credit hire rates were excessive. Autofocus had a fabricated database of hire rates that also deliberately excluded hire rate data that supported the credit hire rate. It was systematic fraud, which led to many influential people, judges and politicians included, believing that credit hire rates were deliberately excessive. Despite its exposure as fraud, the perception still rumbles on.

MArtin AndreWs Charlotte Parkinson, Modern Claims, spoke to the Director General at the Credit Hire Organisation (CHO), about how the outcomes of the Office of Fair Trading (OFT), and Competition and Markets Authority (CMA) reviews have impacted the credit hire market, and his plans for balancing “government’s understanding of ABI-sponsored ‘rhetoric’”.

Q How do you think credit hire is perceived by claimants?

A As the vast majority of our claims settle within 90 days under the GTA protocol (or some other similar bilateral agreement

with the at-fault insurer) and don’t require litigation, claimants are impressed with the level of service provided, as the considerable inconveniences that arise post accident are dealt with by someone with their interests at the core – although they may not wholly understand who is providing that service and do not attribute it to us. The difficulty comes in cases that do not settle, because the frictional consequences of litigation can be extremely inconvenient to the customer. Despite being delighted with the service 18 months ago the customer now suffers a deferred inconvenience, as they are sometimes put on the spot by defendant lawyers while assisting us during the litigation process.

Q Can you tell me about the CHos role in Whitehall and the relationship with government and the Association of British

insurers (ABi)?

A The power of the ABI is significant, they are an extremely well funded (£20m per annum) organisation that has the

ear of government. Their members buy government bonds! The tentacles of insurers run deep into the government, and ministers listen to what insurers have to say. The government’s

May 2016

INTERVIEW


The notion of fraud extends both ways – there are criminals who make claims for accidents that never happened and who set up and stage accidents. Credit hire companies can unwittingly be lured into these cases

The police are not interested in helping credit hire companies when they become the victims of fraud

perception after the credit crunch (remember the perceptions formed by the Autofocus fraud following the increased litigation to close claims the insurers chose not pay due to their own cash constraints) was that credit hire companies were nothing more than profligate excess claim merchants, and the industry got a very bad reputation. Following the credit crunch, David Cameron held an insurance summit, to which he invited the largest insurance companies, and asked what he could do to help. During this summit whiplash was the main area of focus, but credit hire was also mentioned, and the government began to take an interest in our industry. Ultimately, this led to an Office of Fair Trading (OFT) investigation, in which they called our market “dysfunctional”, in their preliminary report. By the time the OFT had concluded their understanding of the service we provide, they ceased referring to it as dysfunctional – recognising the gap that we fill, although the ABI still quotes it to undermine us.

Q Can you outline your thoughts on the Competition and Markets Authority (CMA) report into the credit hire market?

A I have been publically critical of the work undertaken by the CMA, and will be again because they did not take account

of information that was provided to them in order to properly understand the service that credit hire companies provide to consumers. They did explicitly write down that we fill a gap in the marketplace, because insurers have a financial incentive to not provide any service at all. The CMA did understand that the growth pre-Credit Crunch in volumes of credit hire came (in large part) from insurer-led referrals for which they received commission, which offset the industry’s cost of credit hire. There was a threat that referral fees for credit hire would be banned (as in the case of whiplash), however the CMA decided against doing this, which was the right decision. They made no recommendations regarding any changes to referral fees in relation to credit hire because, ultimately, it assists in us filling the gap in the market place and consumers getting what they are entitled to. The majority of the quantitative work that the CMA did was to compare the cost of credit hire against the cost incurred as if the insurer had provided the replacement vehicle themselves, which cannot be directly compared as large insurers are able to obtain considerable discounts in the case of direct hire. What the CMA should have done is to compare the cost of

our service against the cost of the consumer renting themselves. Towards the end of their two year enquiry, they did begin to understand that some rental companies were misleading the public, such as advertising low day rates on their web sites, only for customers to find no vehicle available at the advertised price. Often, the pricing advertised was also not the price the consumer ultimately paid. If the CMA had undertaken that research first, and then used these commercial rates as the comparator (and not direct hire rates unavailable to consumers) they would have come to a different conclusion in relation to an adverse effect on competition (AEC) as a consequence of credit hire. Even though it didn’t do the work properly, it still came to the conclusion that the consequences of the supposed AEC was so low that it didn’t require a different solution to the one that already exists – the pragmatic closure of claims via the GTA.

Q How did the CMAs enquiry directly affect credit hire?

A The existence of both the OFT and CMA enquiries - which took three years combined - put huge pressure on the credit

hire industry and on the survival of the GTA. For three years there was a risk that the CMA would take steps that would have made the existence of the credit hire industry potentially unsustainable, but it didn’t and the GTA’s benefits were referenced within the enquiry, which concluded in September 2014. In all of the working papers that the CMA prepared, nowhere did they mention anything about a change in the Law being beneficial. However, on reading their press release, they write, “the CMA is however, encouraging some action by those with the ability to make the market work better within the existing legal framework.” It is regretful that the CMA working papers did not merit this sentence nor allow us as an industry to counter its consequences.

Q What impact did the decision in the Stevens v Equity case have on credit hire?

A The Stevens judgement did not do all the things defence lawyers would have insurers believe it did. It did make

a change to the definition of a ‘reasonable day rate’ and the obligations that that imposes on the consumer. Stevens imposed an obligation on the claimant to secure the ‘cheapest’ day rate, for the ‘same’ car, on the ‘same’ terms and conditions, available ‘locally’ from a ‘well-known’ vehicle rental company – none of which are properly defined. Also, and unspoken, is the fact that that car needs to be available to rent. When the judgement was handed down in February 2014, the immediate reaction was disbelief that the Judge made that decision, but that it was perhaps understandable due to the pressures brought about by the CMAs press release. The onus following the decision was placed on the claimant – only in credit hire claims, and not any other Tort Law damages claims. The Stevens decision did help the credit hire market, because the issues around the ‘same’ car, on the ‘same’ terms and it being available, are important components to the cost comparator, thus triggering the memory of the Autofocus scandal because defendants are even today coming up with rates for vehicles that are supposedly available locally. The work we have done over the last twelve months has shown that the defendant reports insurers have been using are still not fit for purpose. No one has a problem with

May 2016

INTERVIEW


The GTA...is like a cork bobbing around in the ocean – it survives even turbulent times and does not sink

insurers defending claims, but I do have a problem with the ABI constantly making out that all our claims are either fraudulent or excessive because they are not. The Stevens judgement was not appealed, however a similar judgement, in the case of McBride was, and is due to be heard in the spring of 2017, meaning the current impact of Stevens could be reversed.

Q does the general terms of Agreement (gtA) have a viable future in its current form, or is a review required?

A The GTA is a voluntary protocol that is non-legally binding. Insurers and credit hire companies sign up to it, and when

organisations do choose to sign up, there are various obligations that need to be met, such as the need for credit hire companies to monitor the repair period for vehicles. These obligations require trained staff and incur internal costs. To become a GTA credit hire operator, credit hire companies also have to undergo a process audit, to check that they are acting in accord with the protocol, and most notably charging the appropriate discounted rates. The GTA removes the need for court-led action to arrive at a resolution for every claim and is best described as a pragmatic voluntary protocol for cost minimisation on claims settlement. Whilst the GTA obliges credit hire companies to charge a reduced day rate for vehicles, it is in exchange for insurers making prompt settlement. It was born out of the reality that frictional litigation increased the cost of claims disproportionally, and survived well until the Credit Crunch hit in 2008. Although we knew that the banks were in trouble in 2008, we had no idea as to the extent of their problems, with these same problems also hitting insurance companies (Direct Line owned by RBS for example). The claims settlement process was impacted as insurers chose not to close claims at discounted GTA rates, due to their own cash flow issues. Two years later thousands of claims entered litigation and district courts were engulfed by credit hire claims. During the Autofocus scandal, the GTA was under threat as the benefits were called into question. The GTA, however, is like a cork bobbing around in the ocean – it survives even turbulent times and does not sink. These turbulent times were reignited post the Stevens decision, as defendant lawyers and the ABI sought to reduce rates by 50 per cent. Their attempts failed because the information provided was again not fit for purpose. Their so-called rate evidence was flawed and ultimately, the chairman recognised this. All the way through last year, there was no conclusion to the annual 2015 rate review. However, this has now taken place, and the result is an acceptance by insurers that the GTA ‘does what it says on the tin’ – that it is a pragmatic, cost effective solution to the successful settlement of the vast volume of claims.

Q What was the outcome of the 2015 rate review?

A The GTA rates remained unchanged, but for payment in less than 30 days insurers receive an additional 2 per cent discount,

and for payments between 30 days and 60 days the late payment penalty increases by 2.5 per cent to 15 per cent. For claims over 60 days (unless both parties agree to remain in the GTA), the case will fall out of the GTA, potentially bringing the litigation process forward by 30 days. We have however proposed an arbitration process to be incorporated in to the GTA, a process that would precede and avoid consequent litigation, recognising that a pragmatic compromise is cheaper than a frictional litigated cost.

We are still advocating a pragmatic approach to claims settlement, in the form of the GTA, and are keen to engage with insurers about what an arbitration process might look like

the Credit Hire organisation (CHo)

The Credit Hire Organisation (CHO) was established in May 2010 from a merger of the Accident Management Association (AMA) and the National Association of Credit Hire Operators.

The CHO is now the official voice for the UK credit hire industry, providing services such as:

• Representing the industry in the public domain,

• Contributing to political debate on issues of interest to members,

• Helping to establish a favourable operating environment,

• Creating a forum for discussion on non-competitive issues,

• Providing information to assist them in their business.

The CHO is a trade body with c.66 members that represents the interests of credit hire companies (CHCs). CHCs provide temporary replacement vehicles (TRVs) to non-fault parties following road traffic accidents. Non-fault parties are legally entitled to be put back to the position they were in before the accident and under Tort law the fault party is liable to pay reasonable costs of so doing, should the non-fault party need a TRV (and to pay the repair costs of the non-fault party’s vehicle). A non-fault party does not have to make a claim on their insurance policy to obtain this right.

CHCs depend on being referred details of non-fault parties, having access to a fleet of vehicles, having experience to form an opinion as to fault given the accident circumstances, having knowledge of Tort and case law to contract (rental agreement) with the non-fault party and then to pursue the Tort law claim against the fault insurer. CHCs also need significant working capital as insurers can resist the payment of TRV claims, and they can take 18 months to get to court if not settled sooner. CHCs pay referral fees to receive details of the non-fault party.

May 2016

INTERVIEW


Q is there investment appetite for CHCs in the current market?

A There hasn’t been much appetite for investment for smaller credit hire companies over the last four years, but I am

now seeing an increased appetite for engagement and also an increased number of credit hire companies applying to join the GTA. Investment companies do not like the concept of volatility (given the OFT/CMA period) but pragmatic solutions (GTA survival) will increase funding appetite, although it is still early days.

Q do you think the industry is going about tackling fraudulent claims in the right way?

A I do not want to be associated with fraudulent credit hire companies and the CHO only wants to represent the good

ones. The notion of fraud extends both ways – there are criminals who make claims for accidents that never happened and who set up and stage accidents. Credit hire companies can unwittingly be lured into these cases. Information exchange could also be improved between insurers and CHO’s. Insurers have more data on suspected fraudsters than we do, but they do not share this intelligence with us, sometimes telling us after we have submitted a claim that they have no intention of paying due to unproven suspected fraud on behalf of the claimants. Another consequence of the power of the ABI, is that the police are not interested in helping credit hire companies when they become the victims of fraud. Instead, they refer the company to the Insurance Fraud Enforcement Department (IFED), which is funded by the ABI. We have been vocal over the last 18 months, particularly in front of the All Party Insurance Group, telling them we have little success with IFED investigating car theft relating to credit hire organisations. There have been some joint successes with IFED but it is difficult for us to get police interest when we are being attacked by fraudsters. Lastly, I disagree with the ABI’s message that fraud costs consumers £50 per policy, as I am unconvinced by their data that supposedly comes up with that figure.

Q What about the ABi’s calls for an increased regulatory regime for Credit Hire?

A At the moment, the singular activity of credit hire is not regulated. Regulation does come into force if firms do

things that will “almost inevitably arise from being a credit hire company” (such as assisting a client with an insurance matter or taking a First Notification of Loss (FNOL) telephone call), in which case we are already required to be regulated by the Financial Conduct Authority (FCA) or Ministry of Justice (MoJ). The vast majority of CHO trade body members are already therefore regulated by either or both.

Q What is on the horizon for the CHo in future?

A We are still advocating a pragmatic approach to claims settlement, in the form of the GTA, and are keen to engage

with insurers about what an arbitration process might look like. We will continue to work in Whitehall, although getting their attention at the moment is difficult with the EU Referendum on the horizon. We will continue to try and balance government’s understanding of ABI- sponsored “rhetoric”. Finally, we will continue to argue that the credit hire industry is getting a bad deal in relation to fraud. The credit hire industry has an acknowledged and wholly legitimate role to play in helping people get back on their feet again following an accident that was not their fault but that puts them at considerable inconvenience. We are very good at carrying out this task.

Martin Andrews

Martin has been the Director General of The CHO, the trade body representing the interests of credit hire operators in the UK since 2012. The CHO has c.66 members and an annual subscription income of £220,000 - and is the equivalent organisation to that of the ABI (the trade body that represents the interests of UK insurers and which has subscription income of c.£25 million).

Martin has a BSC Hons in Chemistry (Birmingham University) and is a qualified chartered accountant (PWC). On qualifying, Martin left audit immediately and joined County NatWest Investment Bank specialising in corporate finance (mergers & acquisitions and fundraising advice). From 1996 he became finance director of Protagona Plc, a fully listed (LSE) software and services company that grew rapidly in the UK and the USA. Subsequent to that he became FD of Diagonal Plc, another LSE-listed technology company specialising in SAP software and services. On the sale of that company he became FD of Accident Exchange Group Plc until approximately four years ago.

Over all of this time Martin was involved in numerous acquisitions and both equity, debt and derivative fundraisings in both the public and private arenas.

The role of DG of The CHO arose alongside the announcement of the enquiry into the UK private motor insurance market by the OFT and the retirement of his predecessor. The role so far has largely been that of educating interested parties of the consumer benefits of credit hire, which is a misunderstood service that insurers (who pay for it) would like banned. Educating the OFT, ministers, the press, media and now the Competition and Markets Authority (previously the Competition Commission) of the legal position and of the consumer rights and benefits of credit hire is central to the work effort undertaken by Martin.

Martin has lived in the Midlands (born Hereford) since attending Birmingham University in the 80’s. He has one son and his passions include skiing, golf and cycling.

May 2016

INTERVIEW


Imagine a world in which claims handlers on both sides do not need to make telephone calls, write letters or read e-mails in the vast majority of cases they handle

Fractious relationshipsIf we think about the nature of a commercial contract in which the existence of formal terms set the basis

of understanding between the parties, there are a number of common characteristics that govern the way each transaction is conducted, regardless of the type of business operation it applies to. With the underlying aim being to remove the unwelcome friction caused by the need to renegotiate terms in such circumstances, contracts should make reasonable provision for the emergence of unforeseen variables. Even with the best mutually agreeable terms and conditions in place, it does not always transpire that the mere existence of a formal contract is sufficient to prevent disputes from arising. What it does do, however, is to reduce the level of uncertainty, which has the positive consequence of allowing both parties to set their focus on and prioritise the real points of contention.

In the context of traditional credit hire claims, it could be argued that the absence of formalised agreements governed by contract has often led to the fractious relationships that exist today between insurers, CHOs and AMCs. It is now a well-documented and widely accepted principle that insurers do not feel that they should be liable for the cost of any ‘unrecoverable benefits’ that are associated with restoring the mobility of a claimant. However, CHOs would argue with equal zeal that these unrecoverable benefits form part of a valuable and essential service, regardless of whether it is governed by contract. It should therefore follow, according to the logic of many CHOs, that they should be considered as valued supply chain contributors.

Indeed, if the overriding aim was solely to introduce certainty for both sides as opposed to value enhancement or cost containment, the principle sounds great. However, even under the governance of quasi-contractual protocol agreements there remains a need for both sides to isolate and quantify the ‘unforeseen variables’, simply because these are the factors that have the greatest potential to drive up cost and reduce value. These are the critical success factors that apply to both sides of the claimant/defendant divide, so it stands to reason that the concept of being able to accurately confirm a mutual understanding of the relevant issues at an early stage of the claims process should be of benefit to both.

FrictionIn our industry the term ‘frictional cost’ has been widely used for many years. However, I wonder whether it means the same thing to all parties? I would guess that for most the term describes the hard-edged inter-party negotiation that is conducted pre-litigation, much of which is around the period of hire, the daily rate charged or the various extras that often form part of a standard credit hire payment pack. For many, the term ‘frictional cost’ is perhaps more relevant to the direct costs associated

Better TogetherMike srokowski asks whether Credit Hire Organisations (CHO’s) and Accident Management Companies (AMC’s) can truly work in harmony with insurance companies, and asks how big a part technology plays in the process.

with litigation. Of course, it’s quite true that these issues are by their very nature both contentious and cost-bearing, but actually there are a great number of other characteristics associated with the management of a credit hire claim that can be equally as detrimental to value creation, surprisingly for both sides.

Imagine a world in which claims handlers on both sides do not need to make telephone calls, write letters or read e-mails in the vast majority of cases they handle. Imagine a world in which the same handlers are able to obtain an update on the status of each claim simply by logging on to a virtual platform, so that immediate visibility of the next action required and the party with responsibility for completing it was evident to both sides. Imagine the amount of time, effort and money that has been wasted over many years because handlers have had to make repeated calls or have had to resend letters or emails in what were fundamentally fruitless attempts to obtain updates on a long list of typically basic claim variables. In truth, the countless hours spent making or dealing with enquiries in relation to liability, indemnity, file location, witness statements, repair status, storage, recovery, bodily injury or CDW is the prime causation of frictional cost.

remove it!The CMA Investigation into Private Motor Insurance identified a key point of commonality; essentially that all parties recognised the need to remove unnecessary cost from the claims process. The question is though, ‘how can this be achieved without compromising the commercial interests of one side over the other?’

Fundamentally, in place of trust there has over many years been a void, and moving forward it is difficult to realistically see how this could be established to a level that satisfies both sides. However, by introducing a platform through which the key fundamentals associated with each claim can be quickly established and agreed upon, there is a real opportunity to set a baseline. For both sides agreement on the extent of process control, the facilitation of un-ambivalent and consistent communication and the transparent use of accurate data analysis are all prime movers in establishing a level of mutual trust.

May 2016

FEATURES


The good news is that for those who really do subscribe to the notion of ‘peaceful co-existence’, cost-effective technological capability exists

so What now?Given the significant fragility of the gap that exists between insurers and CHOs, the ideal of agreeing on a truly common goal is possibly a step too far. There’s no escaping the fact that both sides are business entities in their own right, with their own profit and cost containment strategies, so on face value it’s difficult to see where their aims can really converge. However the concept of applying common data to effectively manage processes with the aim of improving quality and reducing cost is certainly one that would be more amenable to both sides. This is particularly true where fraud is suspected and having a platform that is capable of harnessing high-risk alerts across an industry blighted by fraud can be of equal value to both insurer and CHO.

Poor communication and slow payment are the most frustrating issues CHOs face when trying to progress their claims. Lack of access to and inaccuracy of information received from insurers often leaves CHOs with no option but to litigate, however this is an issue that can be easily resolved through the effective use of a portal. Workflow management functionality enables handlers to update their files easily and to coordinate in real time their data inputs with those of the TP handler.

Finally, the good news is that for those who really do subscribe to the notion of ‘peaceful co-existence’, cost-effective technological capability exists. Even for those who do not, the idea that manual touch points can be significantly reduced, as well as the need for handlers to spend their time making telephone calls, writing letters and composing emails should be enough of an incentive in terms of harnessing opportunities to reduce OpEx, regardless of whether they are insurers, CHOs or AMCs. Simple and effective technology in the form of verify™ is here now and is being used successfully to administer thousands of credit hire claims by insurers and CHOs, irrespective of whether those claims have been made under Common Law, the ABI GTA or protocols.

Through the use of neutral technology, which provides users from both sides with transparent management information, we have found that the process does actually bring claimant and defendant representatives closer together, albeit that some form of negotiation is quite often inevitable. On balance though, both sides realise that there is more to gain once friction is removed and that technology has the undoubted capability of helping them achieve a more harmonious working relationship.

Mike srokoWski is CEO of Validus-IVC Ltd, a provider of insurance claims technology solutions. If you would like to know more about the solutions Validus can offer, please contact Mike or Edwyn van Rooyen, Chief Operating Officer, on;Mike - Tel; + 44 (0)844 745 8267 or +44 (0)7950 307496E-mail; [email protected] House, 11-13 Princes Street, Norwich NR3 1AZ

Edwyn - Tel; + 44 (0)1225 904531 or +44 (0)7973 493 013 Email; [email protected] Queen Square, Bath BA1 2HA

May 2016

FEATURES


One of the many untapped resources that most people and businesses possess is ‘connectivity’

iregard myself as a straightforward guy. I enjoy the simple things in life and passionately endeavour to do my best in everything that I do. As I write this, I am a very proud

and, as a result of some exuberant celebrations, a very tired Leicester City fan. I can’t believe it really, that already ‘Leicester City’ is becoming a cliché for the underdog and the brave fighter. This is, of course, a proud moment and an accurate description of Leicester City’s achievements this season. I, however, would have chosen not to be the underdog, rather a mix of talent, experience and capability from the outset. Is this because I have self-confessed OCD tendencies (I don’t use the term ‘sufferer’, as put to good use it is surely a positive, not a negative!)? Is it because I am massively competitive? Or is it because I would have preferred my team to be the odds on favourite, without the stress of what in the eyes of the book makers was a lucky victory.

These thoughts very much remind me of why we built <Connected Solutions>. Our business InduSTry Insights, Motor Claims and Supply Chain specialists, has worked with several blue chip companies in the past year, all of whom want the best solutions for their business. This is not always evident, otherwise, in truth, we as a business would have no role to play. It is clear to us that building solutions is not always easy, but what prevents many companies from doing so are factors which are prevalent in most businesses today. I am talking about politics, bureaucracy, blurred vision and a varying lack of experience, capability and skill across all areas of the business. I think it is human nature that we would all want to be stronger and be able to deliver at our very best with no weaknesses or downfalls, but the reality is, that just doesn’t happen. We end up with a mixture of everything and a desire to do our best and often failing. As the bookmakers will tell you, the odds of Elvis being found alive were half that of my beloved football team’s recent victory.

supporting the fundamental principles How do we hedge our bets then? How do we reduce the likelihood of failure? Do we go out and spend lots of money? I would suggest the previously closed ranks at the top of the Premiership are currently reconsidering that strategy. When working with clients, InduSTry Insights seek to deliver solutions that balance a focused strategy with robust structure, significant skill, experience and the physical capability to deliver on its objectives. These are the fundamental elements that we fastidiously drive with all of our clients. We don’t have time or the appetite to waste energy on anything else that does not support core fundamental principles. One of the many untapped resources that most people and businesses possess

Connected Solutions - a new business model for Motor Claims Supplysteve thompson outlines how a connected approach to Motor Claims Supply can deliver the best outcomes for clients.

is ‘connectivity’. They possibly don’t know it, but we all have the ability to engage with others and quite often this is overlooked in terms of the collective strength we have when we work with other people. Whether this is simply working as a team with others in your office or working with other companies and then playing to your combined strengths. The result can only make you or your business more successful and actually more enjoyable too. It’s the old adage; two are better than one.

It may seem bizarre, but I was driving along one day in December last year and I had what could be best described as an epiphany! I thought to myself, our advice through our consultancy seems to work well and is well received, so why don’t we do the same with the Motor Claims supply chain? A connected solution that pulls together the very best in terms of experience, capability and skill in the provision of Motor Claims supply to Insurance Companies, Fleets and Manufacturers. Starting from the first notification of loss, accident management and repair, through to salvage, recovery and medical rehabilitation. The 15 links in the chain are provided by 13 companies, who represent the very best in their sector. This does not always mean they are the largest operator, but it does mean that they are, in our opinion, the best. Our partners range in size but there is no variance in capability. We have worked closely with our partners to ensure we have the strongest, most efficient and sustainable solution for their link in the chain. Several of our partners were already clients of InduSTry Insights prior to the launch of <Connected Solutions>, our earliest clients being Enterprise Rent a Car and Advantage parts. Core to our connected supply chain solution is the fact that we are involved with each business far beyond business development. Good examples of this are Fix Auto UK and S&G Response, with whom we work on a number of areas together, including customer service, training and business process. S&G Response are centric in <Connected Solutions> as they pull together any of our Insurer and Fleet clients that require a central point of contact for repair deployment. It does not stop there for S&G; using an integrated IT platform, they are able to manage the repair process very closely, ensuring that all other links in

May 2016

FEATURES


When working with clients, InduSTry Insights seek to deliver solutions that balance a focused strategy with robust structure, significant skill, experience and the physical capability to deliver on its objectives

the chain are delivered upon. As with many service propositions these days, some may brand <Connected Solutions> as a ‘one stop shop’, which ultimately it is. However, as I know from my many errands to the local Tesco, sometimes you want a loaf of bread and a pint of milk and other times you need a weekly shop (that’s the bit I don’t usually do). <Connected Solutions> offers the Insurance, Fleet and Manufacturer market the opportunity to engage with the very best in;

delivering commercial valueOr quite simply the items that you need right now. Other items on the list in our world may become more attractive when a full review of supply chain solutions is required, i.e. an RFI/RFP process. The real benefits of <Connected Solutions> will be realised when more of the chain is engaged. The strength of the solution becomes commensurate with its engagement, without any doubt. The ability to procure a wider range of services at one time and consolidate the supply chain, delivers greater commercial value to the customer (insurer/fleet), less heat from those involved in the chain with regard to adopting process (as they would have been part of building it with the other partners), and an enhanced journey for the end customer (Policyholder, Fleet driver). The value of leveraging the power of a collective team is, in our view, priceless and it’s very hard not to make reference to Leicester City here, as this is exactly what they have achieved to great effect. <Connected Solutions> has the advantage of combining the strengths of an already formidable and talented team, who were never underdogs, but are now connected in their approach to Motor Claims Supply and the delivery of the very best outcomes for their clients.

steve tHoMPson is Director at InduSTry Insights.

May 2016

FEATURES


A supplier who can flex with seamless agility will be extremely valuable to the insurer and more likely to be retained on a long-term basis

the claims supply chain needs to be efficient, dynamic and agile, ensuring a high performance experience whilst the claim is in process. High levels of automation and

technological interface are desired to facilitate the efficiency. Key to this are sophisticated levels of MI and analytics, so that the insurer and supply partner can check performance and through detailed analysis, strive for continuous performance throughout the supply chain.

Motor has a complex supply chain and there are often multiple suppliers involved in one claim, ranging from Approved Repairer Network, Bodyshop, Manufacturer, Parts supplier, Paint Supplier, Mobility supplier, Engineer, Glass supplier. Knitting all of this together to provide a seamless offering for the customer can be challenging and the insurer will use its highly skilled resources to constantly look at the efficiency of the solution.

Key to facilitating an efficient supply chain solution is the skill of the supply chain professional. Insurers are becoming ever more aware of the professionally qualified supply chain professional MCIPS, who can through their extensive skill set, develop a strategic supply chain, which delivers exceptional efficiency and value to the insurer. These individuals are highly qualified and those who operate at the very top of their industry will strive to achieve the ultimate supply chain solution.

Cost savings and streamlining There is no doubt that insurers are paying particular attention to their supply chains and the costs that are managed through this external process. When on boarding a new supplier, costs will form an important element of the sourcing decision, but this is balanced with the overall proposition from the supplier, considering other factors such as customer service, geographical footprint, technical capability, ability to service the portfolio, cultural fit and desire to form a strategic partnership. The Motor supply chain also requires suppliers who can work in partnership with other suppliers in the supply chain, to the benefit of the customer, and therefore streamlining and alignment to provide an exception service is key. Enabling this streamlining can be complex and all parties have to have the desire to collaborate, flex and tailor processes to achieve efficient solutions. This is sometimes challenged by different strategies and agendas in the insurers supply chain and the insurer requires skill and professionalism to manage this collaboration process.

What makes a good supply chain partner?A supply chain partner is an extension of the insurers business so ultimately a good supplier is one who can deliver on the challenge of how do I get the supplier to:

• think like the insurer• react like the insurer

The canvas of trustSupply chains are a crucial element of an insurer’s claims proposition and as such, most claims customers are likely to interact with an insurers supply chain at some point during the claims experience, as sarah kenworthy reports.

• have the outcome to be as important to the supplier as it is to the insurer

• have a seamless process for the customer• passionately want to work for the insurer.

Insurers want their suppliers to treat their customers with the care and attention that they do, so it is essential that the cultural alignment is there between all parties in the supply chain.

A good supplier will be in constant dialogue with the insurer, always checking that the service is right and seeking improvement. The supplier will also be innovative and bring exciting new opportunities for the insurer to consider. Sometimes these will be on an exclusive basis, as the supplier values the relationship so much. The supplier will be transparent on all matters and offer new opportunities to extract more value from the relationship. The use of training and other opportunities to bring the companies closer together will be frequent. If things go wrong, the partner will bring the matter to the insurer’s attention and proactively seek to bring the matter to a satisfactory conclusion, in collaboration with the insurer. This is seen as a joint exercise. The parties will then seek to look at any process improvements or training requirements and implement them speedily.

A good supplier will bring great value to the insurer and typically will sit in the top right hand box of the insurer’s Kraljic Matrix. Value is likely to be in cost, service, training, market dynamics and game changers, industry knowledge and know how. The supplier is likely to challenge the insurer on occasions where performance improvement opportunities have been missed and will be seen by the insurer as an asset to the claims proposition. The insurer will have the confidence to showcase the supplier to brokers and customers and be proud to have brand alignment. A great supplier is an incredible asset to an insurer.

What makes a bad partner?A bad supply chain partner is one who isn’t participating; they are passive and usually sitting on the side-lines, just going through the motions. Innovation isn’t happening and the insurer isn’t getting the value they could from the relationship.

May 2016

FEATURES


When on boarding a new supplier, costs will form an important element of the sourcing decision, but this is balanced with the overall proposition from the supplier

Through this lack of participation, it is likely that the supplier will lose insight into the insurer’s vision and it is likely that they are offering what they ‘think’ the insurer wants, or maybe just the supplier’s vanilla product. The outcome is misalignment and ultimately the insurer’s customer may receive a detrimental service. In this scenario, the supplier is likely to make too many assumptions as to the requirements of the insurer and no doubt these will be wrong. In these instances, the insurer has to work disproportionately hard to manage the relationship and manage KPI’s, drive innovation and performance. The likely outcome is the insurer will look to move to an alternative supplier if one is available, or encourage an existing stronger supply partner to diversify into this new area.

Meeting customer demand Key to getting this right is understanding the customer requirements, and this can be on a number of levels:

1. What is the predicted level of demand, so how many incidents are likely? The Supply chain requires the information so that they can plan accordingly. Capacity in this sector is constantly discussed and often quoted as having a lack of capacity; therefore detailed demand information is sought after. Not only is claims frequency information sought, but deeper analytics into vehicle make/model, accident circumstances, parts, courtesy vehicle requirements, etc are required. The more information the supplier can gain access to, the more likely they can predict the requirement of the insurer and be prepared and efficient.

2. What does the customer actually want from the claims supply chain? Insurers are engaging with their customers through feedback mechanisms and customer satisfaction teams, trying to get that all important feedback as to the specific service the customer wants. What’s the most important thing? Distance to bodyshop, cycle time, manufacturer approval, courtesy vehicle, customer satisfaction score and bodyshop reviews? Or maybe the ability to go online and see their vehicle through app technology as it travels through the claims process? Understanding the level of technological automation the customer is happy to accept is an interesting point. In keeping supply chains agile and dynamic, a higher level of automation will be sought. This agility will need to flex and change in line with differing customer demographics.

Once the insurer has the answer to the above, it can go about sourcing a strategic partner who can deliver an efficient, agile and dynamic supply chain solution. Agility is key, as the customer demand may change and the insurers requirement may also change. A supplier who can flex with seamless agility will be extremely valuable to the insurer and more likely to be retained on a long-term basis.

Facilitating the compliance processInsurers have detailed compliance processes, which they have to adhere to, and are regularly audited to ensure the compliance is at the right standard. Typically, the insurer will be required to demonstrate compliance to:

• Due diligence for on boarding supplier incorporating• Sourcing/tendering process• Pricing• Georgraphical footprint• Capability• Strategic Fit.

• Data & IT Security• Financial Health• Corporate Social Responsibility• Business Continuity Plans• Business Risk Assessment.

The insurer will typically need to evidence that they performance manage the supplier in an appropriate manner. They need to show:

• A contract is in force• Regular review meetings are occurring• Management Information is being used to assess and improve

performance• Customer satisfaction is at an acceptable level• A annual strategic review of the relationship is occurring• Costs are being controlled in an acceptable and expected

manner• Strategic development and continuous improvement is

occurring• The value of the relationship is at its planned level.

With the motor supply chain typically sitting outside the insurer and not via a vertically integrated model, transparency is crucial. This can be challenging to achieve as some suppliers may ultimately be competitors. The insurer needs to develop a canvas of trust, so that each party in the supply chain is charged to do the best for the insurer customer, enabling the insurer to deliver its strategy, vision and values. Without this trust and transparency, the ultimate customer experience is unlikely.

sArAH kenWortHy MCIPS FCMI is Head of Supply Chain Management at AXA Insurance Claims.

May 2016

FEATURES


fter 2 years of delivering an outsourced repair management solution to Jewson both parties are in agreement that performance has delivered average

savings of 42% against their previous solution.

S&G’s remit is to provide a national repair management solution to meet Jewson’s extensive requirements and, where appropriate, to deliver a third party assistance solution. They were selected as Jewson recognised that they required a partner with a deep understanding of the HGV and commercial vehicle market coupled with a national network and reach. With a fleet of over 5,000 vehicles of which 70% were commercial, S&G were their natural supplier of choice.

Sean Harper, S&G Response Supply Chain Manager said:“As a true partnership we have taken significant time to understand the Jewson fleet to build a tailored and robust supply chain that can respond and work in total synergy with the client to reduce vehicle off road time and improve fleet utilisation”.

After an initial pilot period where we together adopted a partnership approach to the relationship, our team pro-actively looked to understand the requirements and drivers of the outsource programme for Jewson. An exercise to map vehicle depots with accident hotspots and assign network repairers to facilitate those areas was performed with introductions to the respective depot managers facilitated through a series of regional implementation roadshows.

The results speak for themselves in terms of both cost control and reduced VOR times.

As well as providing a robust supply chain delivery model, we have utilised the latest in workflow technology to improve our client’s visibility of the process and interpretation of management information. We are able to provide both the individual depot and central head-office with real-time updates as repairs progress for both local operational benefit, and central financial and management information.

Chris Gibson, S&G Response Fleet Account Manager said:“We work extremely hard to understand and penetrate the core requirements of every fleet ensuring we deliver a bespoke and tailored solution. Industry leading workflow and management information provides transparency and understanding within every single claim”.

Where there is a requirement to pro-actively manage third party property claims, we are able to call upon our national property damage and network of building repairers to ensure maximum efficiency and cost control. This capability allows us to swiftly authorise repairs where our clients cause structural damage to other property.

After an initial pilot period where we together adopted a partnership approach to the relationship, our team pro-actively looked to understand the requirements and drivers of the outsource programme for Jewson

Jewson select S&G Response for repair management programme and see savings of 40%

ASpeaking of the relationship that has been built between S&G Response and Jewson, Ian Berrill, Director of Transport said:“We have a successful tailored an innovative fleet management partnership with S&G Response that is built on a true and unique understanding of fleet and the commercial vehicle sector. S&G Response have built a robust model that proactively reduces our vehicle off road time and our overall claim cost. S&G Response offer Jewson and its subsidiary companies, such as Jewson a true ethical fleet incident management program that we recommend to all fleet managers. Working with existing Jewson suppliers to form working partnerships and sharing best practice, which ultimately benefits Jewson commercially.”

the results in numbersThese results have been verified and are agreed as true and accurate by both S&G Response and Jewson.

For further information, visit www.sandgresponse.co.uk or call 01625 415960.

May 2016

CASE STUDY


“2016 will shape the future of the personal injury market place like never before. The immense pressure upon law fi rms, both claimant and defendant, to re-evaluate their entire practices is going

to cause mayhem. Rather than trade insults over a ravine it is time for the industry to come together to argue their points and create a united voice! Tickets are entirely free to solicitors, insurers,

brokers and barristers so that we can get all the major stakeholders in one room.” Joint Conference Chairman, Andrew Twambley, Director, InjuryLawyers4U

“Following the Autumn statement 2016 has already produced some excitement, accusations of secret meeting and FOIL breaking ranks with Insurers on the small claims track. This will

be an incredibly important year for all involved in the claims process. Nothing is yet decided, it is still possible to infl uence the fi nal outcome and I would recommend all interested

parties to attend the Modern Claims conference where you will hear from all sides of the debate and can contribute yourself to what could be the biggest change in almost 20 years.”

Joint Conference Chairman, David Williams, Managing Director, Underwriting, AXA Insurance - Commercial Lines and Personal Intermediary

Wednesday 15th June 2016Manchester United Football Club, Old Trafford

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TICKETS ARE FREE FOR SOLICTIORS, INSURERS, BARRISTERS & BROKERS

To book your place please visit www.modernclaimsevents.co.uk

Sponsorship enquiries please contact Martin Smith | 01765 600909 | [email protected]

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Modern Claims Magazine Issue 19 - Accident Management Supplement