How to Achieve Claims Excellence And Not Breach New Complaints Legislation

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INTRODUCTION Insurance claims management has
come under the spotlight and poor claims handling
is cited as one of the major culprits when it
comes to insurance grievances. Moreover, the
Insurance Act coming into effect throughout 2016
is set to cause the biggest shake up of insurance
law in over a decade. It focuses on the need for
transparency and certainty which means insurers
must take steps to ensure that they arent still
operating in the dinosaur era when it comes to
the systems and processes that their company use
when dealing with suppliers and
customers. Figures published show that there are
a growing number of complaints in motor and more
complex cases such as medical and property
claims. The Financial Ombudsman has quoted that
the most complaints arise where there are 3rd
parties involved in the fulfilment of a claim.
This is often as a result of not having a clear
set of instructions, as well as the customer and
supplier expectations not being effectively
identified, communicated and agreed upon. Even
though the issuance of an instruction at the
First Notification of Loss (FNOL) is regularly
well executed, any subsequent instructions are
frequently lost into a black hole and additional
visibility is needed with regards to the ongoing
status of claims. In this white paper we will
explore recent complaint statistics and
year-on-year (YOY) trends, along with how poor
communications with your suppliers and customers
can lead to a higher number of complaints and
increasing costs. Well summarise some of the
latest legislation along with highlighting
helpful ways to prevent complaints through
applying improved processes and new technology.
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HOW TO ACHIEVE CLAIMS EXCELLENCE AND NOT BREACH
NEW COMPLAINTS LEGISLATION  
Complaints by numbers what are some of the
trends? Firstly, to remove any confusion as to
What defines a complaint? according to the
Financial Conduct Authoritys Handbook its any
oral or written expression of dissatisfaction,
whether justified or not, from, or on behalf of,
a person about the provision of, or failure to
provide, a financial service or a redress
determination. On 26 May 2016, the Financial
Ombudsman's Service (FOS) published its annual
report. It contains statistics for the period
between 1 April 2015 - 31 March 2016 as well as
detailed commentary on trends and themes which
weve summarised below.   Key themes PPI still
accounts for half of all complaints received by
FOS but the volume of new complaints are
dropping. Insurance (excluding PPI) made up 9 of
complaints received New insurance complaints
(excluding PPI) were up from 30,080 to
31,284. Complaints about misselling made up 24
of insurance complaints. 5 of Small businesses
complaints were about commercial property
insurance
The loudest message from the FOS for the
insurance industry is that it needs to continue
improving its communications with customers to
avoid complaints and improve service levels.
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HOW TO ACHIEVE CLAIMS EXCELLENCE AND NOT BREACH
NEW COMPLAINTS LEGISLATION  
Key trends The biggest contributor to complaints
(excluding PPI) was for motor with a share of
27.5 Buildings insurance came next with
13. Most other sectors were below 5 Poor
communication at both point of sale and during
the claims process is the most significant
driver Out of all the complaints received who
gets the most? Banks are responsible for
72 General insurers are responsible for
10 Insurance brokers are responsible for
3.5 Mortgage intermediaries are responsible for
2 Independent Financial Advisors are responsible
for 1
Poor communication at both point of sale and
during the claims process is the most significant
driver for complaints arising!
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Taking a closer look at Year On Year complaints
statistics for the insurance sector
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Taking a closer look at Year On Year complaints
statistics for the insurance sector Motor Motor
has already been cited as being responsible for
the most insurance complaints and the FOS usually
leans in favour of the consumer in most cases.
People also complained to the FOS about the
repairs that their insurer had arranged after car
accidents. Some said the damage hadnt been
adequately repaired or that further damage had
been caused by the repairs carried
out.    Buildings and Contents Insurance Last
year, the FOS were seeing complaints mostly where
insurers instructed a 3rd party to act on their
behalf and insurers were failing to take
responsibility for their actions (or inactions).
For example, Loss Adjusters may be accused of not
being thorough and one of the reasons is poor
communications and instructions from the insurer.
The floods for instance, generated a number of
complaints. Typically, people were upset that
their claim hadnt yet been dealt with and were
concerned about significant delays in the
process, or were unhappy with the quality of
repairs.   Travel and Medical Insurance The FOS
has also seen a number of problems with annual
travel policies particularly those that come
with a packaged bank account. These problems
often came about because someones health had
changed during the year and when they came to
make a claim, they found they were no longer
covered.  
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Taking a closer look at Year On Year complaints
statistics for the insurance sector
The other sorts of complaints arose due to
customers not being made aware that their level
of cover had changed since the original policy
was written. This is often the case in private
medical complaints where cover for different
conditions can change from year-to-year.
Furthermore, complaints were made as a result of
policies not keeping pace with the increased cost
of medical fees so limits applied were
unrealistic, leaving customers out of pocket to
cover the shortfall. This customer satisfaction
chart from Capgeminis 2015 World Insurance
Report also shows that customer experience
scores deteriorate during the insurance lifecycle
from quote gathering, through policy acquisition
to claims servicing. This suggests that more
needs to be done at each stage in the insurance
process but greater focus should be given to the
claims fulfilment or servicing process.  
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What are the changes being introduced by the 2015
Insurance Act? The Insurance Act 2015 mainly
applies to non-consumer insurance and reinsurance
but also in part to consumer insurance and comes
into effect on 12 August 2016. It brings into
force the Third Parties (Rights against Insurers)
Act, with minor corrections and represents a
significant change to the legal framework of
insurance contracts. Here is a summary of the
changes being introduced 1. The Duty of Fair
Presentation Insureds will hold the general
obligation to disclose all material facts. The
insured will have to disclose every material
circumstance that he or she knows or ought to
know, with sufficient information to put a
prudent insurer on notice that it needs to make
further enquiries to reveal the material
circumstances. This applies to disclosure before
the contract is concluded, for both new contracts
and renewals, as well as mid-term variations.
2. New Remedies for Non-Disclosure New
proportionate remedies are available to insurers
following a breach of the new duty of fair
presentation. For example, where a deliberate or
reckless breach of fair presentation occurs,
insurers can still avoid the insurance and retain
any premiums paid. This would normally be from
inception except where breach relates to a
variation such as a mid-term adjustment. The onus
will be on the insurer to show that a qualifying
breach was deliberate or reckless and will need
to be judged by the courts. 3.Warranties and
Other Terms Warranties are to be treated as
suspensive conditions, meaning that an insurers
liability will only be suspended during a period
of breach and a breach of warranty will no longer
automatically terminate the policy. The breach of
the warranty must have some bearing on the actual
loss by increasing the risk of the loss
occurring.  
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Fraudulent claims If the insured makes a
fraudulent claim the insurer is not liable to pay
it. If such a claim is presented the insurer may
recover sums paid in respect of the loss and the
insurer may give notice terminating the insurance
as from the date of the fraudulent act and need
not return the premium. Claims arising from an
event before the fraud would however continue to
be payable. This reflects the law as it currently
stands as established by the Courts. In this area
the Act does not change the law but merely
codifies it. Contracting Out and the
Transparency Requirements For consumer contracts,
an insurer cannot agree terms which put the
insured in a worse position than that set out in
the Act. For non-consumer contracts, parties will
be entitled to agree terms which are less
favourable to the insured than those set out in
the Act subject. However, there are certain
transparency rules that require (i) the insurer
to take sufficient steps to draw
disadvantageous terms to the insureds
attention (ii) the disadvantageous term must
further be made clear and unambiguous. It will
therefore not be possible for insurers to avoid
the Act by introducing a simple additional clause
into their policy documentation excluding the
application of the Act without bringing the Act
to the insureds attention. The Third Parties
(Rights against Insurers) Act 2010  The Third
Parties (Rights Against Insurers) Act 2010 is
intended to enable victims of wrongdoers to
proceed directly against the insurer, but it has
not come into force due to a number of technical
deficiencies. The latest Act rectifies these
deficiencies and should allow the 2010 Act to
come into force.  
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• How can insurers be prepared?
• Although some of the changes may seem subtle they
  will require new processes and audits to ensure
  compliance, especially as there is a shift
  towards the insurer having more responsibility to
  question insureds thoroughly in order to disclose
  any possible required information. Especially as
  there is a shift towards the insurer having more
  responsibility for ensuring the insured has had
  an opportunity throughout the length of the
  policy to disclose and update any required
  information.
• For underwriting
• Claims, fraud and underwriting IT systems will
  need to be connected so that underwriters can
  underwrite at the policy inception stage in
  real-time.
• More detailed, thorough questioning to the
  insured needs to be carried out and documented
  with further information sought if necessary.
• Underwriters need to be clear that they are
  responsible in providing the insurer with all of
  the information required under the Act.
• Insurers must work with underwriters and sales
  teams to make them aware of their duties so that
  they dont fall foul of the Act.
• Insurers need to review their policy wordings,
  certificates, notices to policyholders,
  underwriting criteria and question sets to ensure
  they are compliant with the Insurance Act.

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• For claims
• Claims teams should have access to the
  information provided by the insured at inception.
• Detailed records must be stored and easily
  accessed by claims teams to ascertain the facts
  provided in the event of discrepancies.
• There needs to be close interaction between
  claims and underwriting teams to establish
  whether or not a material circumstance is
  substantially correct.
• Closer co-operation between claims and
  underwriting teams will also help to identify and
  fight fraud.
• Handling guidelines and standard
  documents/letters will need to be updated to
  remove references to insurance being a contract
  of utmost good faith and setting out the basis of
  the new duty of disclosure.
• Once the Act comes into force care will need to
  be taken when handling claims to apply the new
  provisions and not confuse them with the old
  ones.

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• How can insurers be prepared?
• For Complaints
• Processes will need to be amended to take into
  account the provisions of the Act.
• Due regard should be given to the Financial
  Ombudsman Service, their jurisdiction, their
  likely interpretation of the Act, and their
  powers to apply what is fair and reasonable in
  their adjudications.
• Insurers should bear in mind the view from the
  regulator that insurers should put their customer
  at the centre of their business and provide
  policies that provide real value.
•  
• For Marketing
•  Insurers should review all marketing materials
  including their websites to ensure that they are
  fit for purpose in light of the recent changes.
• For Brokers
• Training will be needed for all brokers,
  partners, and key suppliers to ensure that they
  will be ready for the Act.
• During the underwriting stage, these changes
  should encourage both the insurer and the insured
  to ask more questions of each other, which may in
  turn increase the role and responsibility of
  brokers. When the Act comes into force, insurers
  should have a very careful look at their standard
  terms to ensure they comply with transparency
  requirements.

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Whats The FCA changing around complaints
legislation? The FCA publishes complaints data
every 6 months. They collect data at a market and
firm level but only publish data on those firms
reporting 500 or more complaints. These firms
must also publish the complaints data on their
own websites. In terms of when and what had to be
reported, the rule was that firms must formally
acknowledge all complaints by the next business
day. However, they didnt have to report on any
of the complaints that were resolved by close of
business, on the day following the day that it
was received. New legislation by the FCA means
that financial firms must now report on all of
their complaints, and they need to submit details
on the size of their company, along with more
contextual data around their complaints handling.
The purpose being to provide an improved service
to consumers and provide greater access to the
Ombudsman service. It also provides greater
transparency and competitive analysis for
end-customers which could be used to assist them
during the process of selecting their financial
service providers.
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• Therefore, the FCA are on a mission to improve
  the complaints process for the consumer and new
  guidelines have been set out for firms to begin
  implementing from March 2016. The FCA expect
  these changes to be in place within a year.
  Consequently, from March 2017 firms complaints
  handling and monitoring procedures need to be
  well prepared to cope with the new guidelines as
  summarised below
• The FCA are extending the next business day
  rule. Therefore, firms are permitted to handle
  less serious complaints more informally, without
  sending a final response letter, to the close
  of three business days after the date of receipt.
• Firms will now need to report and publish on all
  claims received, even those resolved by the next
  business day.
• Firms will also need to raise consumer awareness
  of the ombudsman service, by sending a summary
  resolution communication to all consumers for
  complaints resolved by the close of the third
  business day after receipt.
• There are new rules coming into play that must
  limit the cost of calls for a consumer and firms
  have to adhere to a maximum basic rate,
  including all post-contractual calls and all
  complaints related calls.
• There will be an enhanced complaints return
  process which will require more contextual
  information and transparency around the detail of
  the complaint and how it was handled against a
  set of new metrics.
• More detailed information regarding the changes
  and whats required from the new complaints
  return process can be found in the FCAs
  Consultation Paper on Improving Complaints
  Handling.

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How can insurers reduce complaints during the
claims process? Its important to build trust
with customers and your suppliers through having
transparency during the writing of a policy and
during the claim should it arise. As the
Financial Services industry is cited as one of
the least trusted markets in the 2016 European
Trust Barometer, its important the insurance
industry shifts public opinion by putting
customer service and communication as its number
1 priority. The fallout from a bad customer
experience is now bigger than ever before due to
consumers sharing experiences, seeking reviews
online and via social media.   A recent success
story to evolve from having an open, transparent
service is Uber. The customer gets to see the
journey of their taxi in real-time and can leave
a review for each driver. Additionally, the
driver can leave a review for the passenger so
the trust needs to be mutual.   Likewise, for an
effective insurance policy its crucial to know
what is important to the customer from the very
beginning of the relationship and ensure that the
pertinent points are clearly communicated without
room for misinterpretation.
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• Below are some of the key things a consumer
  should have clear instructions about
• Whats included in my policy what can and cant
  be claimed?
• Whens my renewal due?
• How is my renewal calculated?
• How can I save?
• Are there customer loyalty discounts/benefits?
  what further products / services are available to
  me?
• How do I claim what information is required,
  and routes to do so?
• How much is my excess?
• How long will my claim take / what stages will it
  go through?
• Whats the status of my claim?
• How was the decision reached?
• Who will be appointed to carry out the work for
  my claim?
• Whats their customer service rating?
• Can I choose which supplier I use?
• I want convenience in how I access my
  policy/claim information.

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How can insurers reduce complaints during the
claims process? The FOS have cited that one of
the main causes for complaints is down to the
insurer not explaining clearly why a claim was
rejected. The reasons and language used to
communicate to the customer should tally up with
the original policy wording so theres no room
for doubt or uncertainty. Insurers need to go to
more lengths to communicate with policyholders in
the event of a claim rejection to ensure the
facts are understood as it could prevent the
complaint from arising in the first
instance.   Another main cause for complaints is
down to a lack of effective communication during
a claim when a 3rd party is appointed. Past the
initial claims instruction, both customers and
suppliers are unsure what is happening, when and
by whom. Suppliers have told the FOS that they
have received poor instructions from the insurer.
There seems to be something of an abyss where
communication and status updates are lost in
simple and more complex claims that are handled
by a 3rd party. In these cases, the complaint is
almost always upheld due to insurers having
failed to take responsibility for the actions (or
inactions) of their agents. So more needs to be
done in order to keep all parties informed during
the claims process which is the moment of truth
for the insured. This is where customer loyalty
can be made or broken.  
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In the modern digital age, there is no excuse for
poor communication. The tools exist to help
insurance networks made up of multiple suppliers,
agents and 3rd parties to collaborate and in
real-time. Furthermore, customer interaction
preferences are changing. Gen Ys preference to
interact exclusively via digital self-service
(web or mobile) increased to 27 percent in 2015,
up from 21 percent in 2011. And, this trend is
only set to continue as new start-up entrants to
the market such as Trov are causing a stir and
attracting high investment from main insurance
companies already.   Therefore, adopting
technology that connects your insurance supply
chain and helps you to keep your customers
informed is crucial to prevent unnecessary
grievances. Complaints will always be part of an
Insurers Claim File and its practically
impossible to have a 100 complaint free claims
service. But as regulators become noisier and
customers more vocal, it has never been more
important to treat complaints with the upmost
priority from the board level and down.
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How to prevent 3rd party claims data falling
into a black hole Although distribution of the
initial Instruction is generally well executed,
the actual content can be poorly written and
misunderstood. Added to this, claim status
updates are not always subject to the same clear
process and data exchange as the instruction.
Claim handlers are opting to call or email each
other for the latest position or claim status
information. This seems to indicate a lack of
trust in the quality of the data or the system
behind it.   It may also indicate that logging
onto many different supplier portals and
navigating through different workflows and
dashboards is just too complex and time consuming
compared to email and telephone. Instead look to
the following steps to improve communication and
collaborative ways of working.  
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Implement a centralised claims portal to access
all claims information   Adopting a system that
has a defined process and enables claims to be
centralised, transparent and visible should mean
that claims are dealt with more proactively.
Customers can speak to just one contact for a
complete picture about their claim. Additionally,
any complaint that arises against a claim can be
seen and dealt with swiftly. A single portal can
also help to shorten the length of time taken to
resolve an issue by highlighting where an
exception is occurring outside of the standard
process and alerts the insurer and supplier to
bring additional resource into play.   Set
achievable targets for resolution and create
alerts for issues   Recognising that performance
perfection is unobtainable in every single claim
instruction means that a more obtainable goal of
resolving mistakes and problems quickly and to
high levels of satisfaction is achievable.
Implement automated alerts to relevant parties
when follow up actions fall outside normal and
acceptable response times. Being able to
concentrate both insurer and supplier resources
on these problems, by way of quick, clear
communications can help to bring about a
satisfactory and satisfying outcome before a
complaint arises. If something has gone wrong
during the claims process, this needs to be
turned into an opportunity to go beyond the call
of duty and fix the issue for the policyholder
which can in turn lead to improved customer
loyalty.
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Speed up communications through using multiple
channels Using the phone is not the most
efficient way to communicate. Insurers and
suppliers recognise that automating the claims
instruction process and sharing status updates
instantly and electronically over the internet
would reduce operational costs and improve the
service for the policyholder. It also provides a
digital historical communication chain that is
often lost if conversations are carried out via
telephone. Instead messages could be sent to the
policyholder directly through the internet to
their phone via SMS, email or a claims app.
Future options will include other notification
methods, such as Facebook Messenger, Kik and
perhaps even robo-advisors. Standardise process
through the entire supply chain Most claims
admin systems will help to improve the internal
claims process but most do not include the
required functionality to get the best out of the
external claims supply chain. Whether this is the
provision of a supplier view of the claim,
communication with the supplier or management of
the supplier. As an example, if your system does
not help you with supplier management then
relying on the suppliers to provide the
management information to monitor Service Level
Agreements means, at the very least, that you are
not in full control of when and how you view it.
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• What are the risks of doing nothing to improve
  claims and reduce complaints?
• Lastly, what could happen if insurers dont take
  heed of new legislation and work towards more
  transparent and collaborative processes when it
  comes to writing insurance policies and managing
  claims? In this digital age, it could create a
  perfect storm as consumers have access to more
  information than ever before. They can quickly
  compare policy premiums and gather reviews and
  recommendations for certain products online, as
  well as be more informed as to how to complain to
  bodies such as the FOS.
• The risks of providing a poorly written policy
  and slack claims service include
•  
• Increasing number of fines from the Financial
  Ombudsman
• Increased costs of managing complaints
• Increased claims leakage
• Loss of market share through poor customer
  feedback
• Decreased profit margin

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The continuation of high complaint volumes
through not addressing straight forward
opportunities to improve transparency to
customers, and efficiency in managing information
with their suppliers could be fatal for
insurers.   Real-time interchange of accurate
information between the insurer and their
suppliers is essential to providing a positive
claims experience. A quicker, well designed and
transparent claims settlement process is
beneficial for everyone. A visible collaborative
process is an enabler that puts the right
information in the right peoples hands at the
right time.   Improved management of suppliers
and partners can reduce the settlement time,
reduce the potential opportunities to commit
fraud, reduce frictional costs of processing the
claim and improve the policyholders
satisfaction.   Insurers need to embrace the
digital age and take the opportunity to provide
more value added services to their customers as
insurance cannot continue to be treated as a
commodity as it will diminish premiums and profit
margins. If insurers dont look for more ways to
work smarter and reinforce their supply chain
processes and engage the customer and win back
their trust then its likely more foreword
looking businesses will take their place.
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About Adjuno
Adjuno is a global software business that is made
up of two former supply chain solutions companies
that united to launch as a single world-wide
brand in February 2016. We are also part of the
1 Billion Allport Cargo Services Logistics
Group.   We provide a web-based claims fulfilment
platform to a number of global insurance
companies, as well as Lloyds of London insurance
syndicates. Our platform connects insurers with
their suppliers to reduce the cost per claim.
Insurers who work with us gain complete
visibility of their supply chain, enabling
improved supplier management and reduced claims
leakage. The end result is a faster, more
efficient process, and a better customer
experience.   We have more than 20 years of
experience in providing cloud-based business
solutions, and a global client base spanning
across America, Europe, South Africa, and
Australasia. We have worked with companies of all
sizes across the retail, insurance and consumer
product industries, including AXA insurance,
Marks and Spencer, ASOS, and John Lewis.   Today,
our claims management software has over 13K users
logging on each day to effectively manage and
drive their business, and every month we track
over 11M processes, at more than 150 customer
sites across the world.   Contact us for more
information Adjuno Regional Europe/ UK Head
Office Worcester House, No 6 Langley Quay,
Waterside Drive, Langley, Berkshire, SL3
6EY 44(0)1753 260 400 enquiries_at_adjuno.com www.ad
juno.com
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About Adjuno
Adjuno UK LIMITED is a company registered in
England and Wales, VAT No. 226834456, Company No.
1239655 Registered office address Allport House,
Cowley Business Park, Cowley, Uxbridge, UB8 2AD  
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