Issuu

ILC In association with MGAA

Better Tomorrow MGA

MGA CLAIMS CONFERENCE

ILC

www.iloveclaims.com

MGA

MGA CLAIMS CONFERENCE

ILC In association with MGAA

Headline Sponsor

Gold Sponsors

ILC

Insurer Partners

Industry Body Partners

Insights Partners

www.iloveclaims.com

Contents MGA claims in the spotlight

ILC 04

Sue Whyte

Insurers on ‘slow journey’ to recovery

Alex Evans

People not systems deliver good claims handling

Catherine Healy

Claims critical to company success

Tom Helm

Positive outlook for MGAs

Dan King

Dan Berr y, Underwriting v claims:

Kath Mainon,

Dan Berr y, Kath Mainon

Nikka Nagra,

Nikka Nagra, Trevor Bowers

Trevor Bowers

Overcoming the barriers to digital transformation

Kevin Drake , Emma Bazard

MGAs urged to dive into data pool

Wayne Calderbank

Experts MGAs breaks-out to focus on specialist areas

Experts

Pardus takes the Wiser approach to apprenticeships

Mark Allen, Aron Kaushick

Higher expectations demand higher service levels

Catherine Carey

Collaboration critical in claims Mike Keating

Wayne Calderbank

MGA Claims Conference 2023

Sue Whyte

Catherine Healy

Alex Evans

10 Tom Helm

Dan King

Catherine Carey

Kevin Drake Emma Bazard

26 Mark Allen Aron Kaushick

30 Mike Keating

DISCLAIMER Contributors The views and opinions expressed within Better Tomorrow are reported from live events and are those of the individual contributor/s. They do not necessarily reflect the official policy or position of the contributor’s employer, organisation, committee or other group or individual. ILC While every effort has been made to ensure the accuracy of information, ILC will not accept responsibility for errors or omissions or for consequences arising from reliance on information published. The opinions expressed in Better Tomorrow are not necessarily the opinions of, or endorsed by ILC unless otherwise stated. COPYRIGHT All rights reserved. No part of the material contained within this publication may be reproduced or copied in any form or by any means without written permission from ILC.

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MGA claims in the spotlight S U E W H Y TE ILC

Welcome to ILC’s Better Tomorrow magazine which this issue brings together all the insights from ILC’s Managing General Agents (MGA) Claims Conference 2023. Held in association with the MGAA, ILC’s MGA Claims Conference took place at the tail end of September at 155 Bishopsgate, London and was supported by Headline Sponsor Claims Consortium Group (CCG); Gold Sponsors: Activate Group, Carpenters Group, EDAM Group, Enterprise, LexisNexis Risk Solutions, Pulse, Value Checkers, and Wiser Academy – all of which were present within the ‘marketplace’ exhibition area. The marketplace also featured Enhanced Exhibitors: Alphatec Ltd, Caysure Digital, Clearway, CRIF Decision Solutions Ltd, FMG, ICAB, Richfords Fire and Flood, Synetics Solutions and TIW Group along with a host of fellow exhibitors. A huge thank you to all those who supported and attended the event.

There was also the key overarching insights which set out the key themes across all areas of claims in 2023 including: a keynote opening presentation courtesy of Alex Evans, CFA Vice President, European Insurance Equities, Citi Research EMEA who explored where the sector is now compared to 2022 and what the future might look like; Mike Keating, CEO of the MGAA who provided his thoughts and insights on how the MGA community can get stronger through better collaboration; and a headline session focusing on Underwriting Vs Claims – asking who is at fault when the loss ratio is too high? Along with a host of other priceless insights from a range of speakers, so too did the opportunity to network provide a great platform for future advancement throughout the sector. We hope this issue of Better Tomorrow helps bring to life a flavour of the day and we look forward to continuing to develop our successful offering to the MGA sector in the future. Enjoy this issue.

Sue

This year’s agenda provided a diverse exploration of claims within the MGA sphere – from discussions centred on personal lines through to gadget claims, public and employer liability, and careers within the sector.

MGA Claims Conference 2023

Insurers & MGAs

TMM RISK SOLUTIONS LIMITED

Insurers on ‘slow journey’ to recovery

A LE X E VA N S CFA Vice President, European Insurance Equities Citi Research EMEA

Claims inflation in the past year has been unsustainable, but price adjustments made by insurers are not expected to kick in until next year at the earliest. In his keynote address Alex Evans, CFA Vice President, European Insurance Equities, Citi Research EMEA, said that 2023 would be another difficult year for insurers but predicted that the next 18 months will be ‘a slow journey to improvement.’ However, the industry is rallying from a low base. Alex pointed out that profitability for personal lines is the lowest it’s been for a number of years.

MGA Claims Conference 2023

Trading conditions

Difficult year

Other factors

The main reason for this is because of tough trading conditions in motor insurance, with the market as a whole recording a combined operating ratio (COR) of 109% in 2022. This is due to claims inflation estimated at between 10% and 17%, driven by higher repair costs, longer repair times, and rising labour rates which accelerated even faster from last summer.

But despite this, Alex is still predicting a difficult year for insurers. Although they responded to what he called ‘unsustainable losses’ by raising premiums – Confused.com saw new business quotes in the second quarter increase 40% year-on-year, while the Association of British Insurers reported combined increases of new business and renewals at 21% in quarter two – Alex has warned that their impact will not be felt for 12-18 months.

Other factors that could also impact insurer profitability in the coming year include the Ogden Rate, which is due to be changed at the end of 2024, and Consumer Duty.

Alex said, “Against these rising claims costs, the level of earned premium remained flat.” The start of 2023 continued in a similar trend, with motor claims inflation stuck at 13%. Meanwhile, repair costs were up 15% in the first quarter of the year and 16% in the second quarter. However, there are some positive signs. Repair cost inflation is anticipated to slow to eight per cent in the third quarter, with claims inflation down to five per cent for the second half of the year.

He said, “I’d characterise the next 18 months as a slow journey to improvement. A lot of pricing increases made this year will not have any impact on profitability in 2023, but we expect material improvements – in the high single digits – in combined ratios in 2024, in motor particularly. While we still expect claims inflation to remain elevated, in mid-single digit territory, we think that normal earned margins should be reached in the second half of 2024.”

Alex warned that Consumer Duty could have a significant impact on pricing as the Financial Conduct Authority has said that ‘pricing in line with the market is not a justification of fair value.’ However, against this, adjustments to the Ogden Rate, which was last set in a low interest rate environment, could lead to a seven to 12% earning uplift for insurers.

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People not systems deliver good claims handling

C ATH E R I N E H E A LY Claims Manager Delegated Authority HDI Global Specialty

When it comes to effective claims handling, insurers and MGAs have been encouraged to remember their most critical asset – their people. Catherine Healy, Claims Manager Delegated Authority at HDI Global Specialty SE, said that the Covid-19 pandemic had put claims handlers under intense pressure. She said the impacts of that are still apparent, either in workforces depleted by ‘the great resignation’, or in low morale among claims handlers who feel they were unsupported.

MGA Claims Conference 2023

“People were over-worked, stressed and exhausted,” she said. “Many claims handlers left the industry or took early retirement, and many who remain are resentful because they don’t feel like they were properly supported during the crisis. In many cases, we’ve just gone back to business as normal, but we need to remember that this is a people business and it was the claims handlers on the frontline. They had a lot to deal with and as insurers we have to rebuild those relationships.”

Relationship-building However, Catherine said that relationship-building following Covid-19 was not just critical between insurers and MGAs, but between the industry as a whole and the wider public. “The pandemic impacted the public perception of insurers,” she explained. “Some claims departments even called in Samaritans because of the nature of some of the calls they were getting. People were going through unprecedented challenges, insurers were dealing with unprecedented claims volumes, and MGAs were caught in the middle trying to manage it. So I think we need to remember what the pandemic was like, because that’s what a lot of policyholders remember.”

For that reason, she said the service delivered by MGAs had never been more important. However, not all MGAs are suited to all product lines and she encouraged insurers and MGAs to talk more openly about what a good claims journey looked like for each product line.

One size doesn’t fit all “One size doesn’t fit all,” she said. “Taking that approach is often setting up an MGA for failure. MGAs and insurers need to talk about what the claims solution needs to look like, because it won’t always be the same and you have to find the best handler for the product.” This is even more important under new Consumer Duty regulations, when insurers are required to comply with much stricter standards around service and value. Again, this places a huge emphasis on communication through the claims supply chain. Catherine explained, “Insurers are delegating the control, but not the responsibility. A decision made by a claims handler directly effects the insurer and how the FCA views that insurer, so we need to be clear to the MGA about what we require right at the beginning.”

Sharing She also called for greater cooperation – and greater clarity – when it comes to data sharing. She said that with so much data generated, insurers needed to be clear about what they wanted from MGAs and instead of taking a primarily regulatory approach, consider how the right data can help mitigate the risks of fraud. “We need to work together to find meaningful ways of reporting data and information, and be mindful of the MGAs who are having to keep all of us insurers happy. To that end, we need to get better about what we’re asking for and understand what is effective reporting.” Ultimately though, the end goal is providing an effective service to policyholders, and that will always come down to one thing. Catherine concluded, “There are a million system solutions for great claims handling, but ultimately it has to be the human relationships with your business partners that get you through. You need to work with people who understand what your claims profile is and what your claims expectations are, and if standards are not being met you need to be able to have difficult conversations with them.”

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Claims critical to company success

TO M H E LM Director - Claims Practice Leader wtw

The value of claims in overall business performance was underscored during an insightful session titled, ‘Tackling turbulent times – pricing, underwriting and claims,’ delivered by Tom Helm, Director, Claims Practice Leader, Insurance Consulting and Technology at WTW. He explained that by working with clients to help them assess their performance over recent years and gauge the effectiveness of their responses to challenging and changeable circumstances, he has been able to identify the critical role claims management plays in business outcomes and pinpoint the areas where businesses can improve and embed more resilience going forward.

Tom said, “There has been a lot of change in a short space of time. We’ve seen changes in inflation and pricing, new outcomes after Covid meaning insurers haven’t been able to base decisions on pre-Covid results, severe weather events, and new regulations. “By working closely with our clients and with the benefit of hindsight, we have been able to ask, what did you do at certain points, how did you respond, what could you have done differently and what can you do going forward so you’re prepared for any future change on this level?”

MGA Claims Conference 2023

He said that the forensic work undertaken by WTW in recent months has identified eight failures that were commonplace in the industry and restricted its ability to react more positively. •

Business planning was over-optimistic, inflexible and over-simplified.

•

There was a lack of experience in key positions; many decision-makers had never seen such high inflation and didn’t know how respond.

•

Businesses did not have suitable metrics in place to monitor the impact of inflation in real-time.

•

Companies relied too much on what their technology was telling them, such as AI, rather than considering evidence from multiple sources, including human experience.

•

There was a lack of case estimates, which meant a slowdown in claims processing was not identified early enough and, as a result, pricing became increasingly inaccurate.

•

A lack of communication between departments hindered decision-making.

•

A lack of cross-functional data sharing clouded the overall picture, with people coming up with different versions of the truth based on different data sets.

•

Companies weren’t prepared for the pace of change and weren’t able to respond quickly enough. Tom explained, “The motor market changes very fast. You might have a desire to write 10% of a certain segment but you could suddenly find you’re writing 30% because everybody has moved out of that market and you’re now sitting there with a much higher risk. If you can’t move as fast as everyone else, you’ll find you’re not writing what you intended to write. The lessons in motor are transferable elsewhere, so you need to know what is happening in your market.”

The challenges, he continued, are still very real. Claims inflation is now at 18.8% while the 18.2% surge in motor claims inflation recorded in the second quarter of 2023 is the highest quarterly rise on record. Going further back, motor inflation since 2019 is now at a staggering 40%. Premiums have risen accordingly, but it will take time for this to offset the losses already and still being incurred. With more turbulence coming, Tom urged businesses to leverage their claims departments more to gain valuable insights into market shifts, and to develop greater cohesion between claims, underwriting and pricing to inform better decision-making throughout the company. “Everyone needs to understand what is happening within the business to make effective decisions,” he explained. “Am I seeing higher costs because we’re insuring Aston Martins or because used car prices have gone up? That’s a big difference.” Tom concluded, “Lessons have been learned, but change is relentless. To navigate turbulent times you need get the basics right, you need to build robust portfolio management, and you need to embed effective claims management. That is absolutely essential.”

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Positive outlook for MGAs

DA N K I N G Co-founder Insurance DataLab

Research on the performance of MGAs conducted by Insurance DataLab has identified a clear link between good customer service and profitability. Insurance DataLab analyses data from more than 1,000 insurers and brands to glean a deep understanding of the health of the market, and where it may be heading. When assessing the performance of MGAs, Insurance DataLab measures three key pillars – growth, profitability, and productivity. Growth is measured by year-on-year revenues and operating profits, profitability is determined by margins over the past three years, while productivity considers staff costs as a percentage of turnover and turnover per employee.

MGA Claims Conference 2023

Important

Positive

Dan King, co-founder of Insurance DataLab, said, “It’s never been more important for MGAs to know how they perform against their competitors. Capacity in the market is harder to come by these days, so insurers are being more selective about who they choose as MGA partners and they are looking for those whom they believe will be more profitable partners in the long term.”

Looking ahead, Dan is positive for the future of MGAs. He believes their role in the insurance claims industry will become ever-more pivotal, and says they are wellpositioned to take advantage of the opportunities that will arise from an evolving market.

Insurance DataLab’s latest research, which assessed the MGA market between 2020 and 2023, found that overall the sector performed well during the threeyear period. Revenues grew each year, although growth fell from 23% in the first year to just four per cent in the third year, profitability remained stable despite challenging conditions, while productivity increased due mainly to lower staff costs.

Size matters Dan said, “Size matters, with the bigger players generally outperforming the smaller players. However, there are exceptions with the highest rating going to an MGA in the smallest revenue bracket, MPR Underwriting.

He said, “MGAs now play a significant role in UK general insurance, with many providing specialist expertise and underwriting capabilities in niche markets to customers and brokers alike. “Although MGAs face a number of challenges, whether that be through regulation, changing consumer behaviour, or the economic landscape, MGAs have a bright future. They are more agile than insurers, they can develop new products more quickly, and often they are quick to address emerging risks such as cyber and climate change. “Many are now adopting new technologies to provide highly innovative solutions. So we expect there to be plenty of opportunities for MGAs, which will translate to strong revenue growth and improved profitability.”

“But MPR Underwriting has just received five stars for the fourth year running from Insurance Times, which supports our own findings that there is a clear link between good customer service and profitability.”

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Underwriting v claims: who is at fault when the loss ratio is too high?

DA N B E R RY

K ATH M A I N O N

N I K K I N AG R A

TR E VO R B OW E RS

Chief Underwriting Officer Brown & Brown (Europe)

CEO Claims Solutions Davies Group

Director of Claims Operations and Recoveries Edam Group

Underwriting Consultant TMM Risk Solutions Limited

A fair and frank panel debate considered the implications of high loss ratios and asked: is underwriting or claims at fault? Taking part in the debate were Dan Berry, Chief Underwriting Officer, Brown and Brown; Trevor Bowers, Underwriting Consultant, TMM Risk Solutions; Kath Mainon, CEO Claims Solutions, Davies Group; and Nikki Nagra, Director of Claims – Operations and Recoveries, Edam Group. Before the debate, delegates were asked to answer a series of questions surrounding the issue of high loss ratios. The results were then presented to the panellists before they debated each question in turn. Below we have produced the questions, the results from delegates, and an abridged version of the panel discussion that followed:

On a scale of 1-10, how would you rate collaboration within your company between claims and underwriting, with one being low and 10 high? 6.3 Dan: I think that’s about fair. Claims can be a bit of an afterthought. For MGAs, where claims are often outsourced or handled by the insurer, you have additional challenges as the handlers aren’t always your people. Collaboration has improved, but a lot more can be done and it’s key that from a business planning stage, claims and underwriting are being considered together. Kath: There has been an improvement over the last few years; MGAs are smaller and more flexible so maybe they find it easier to get into collaboration mode than large insurers. But it has been a tough environment in the last few years and that has forced us an industry to collaborate more. We haven’t got time to point fingers now, we have to look for answers together. Nikki: From a customer perspective, claims aren’t involved when policies are taken out. I think it is a good idea to take a claims colleague with you to talk about what happens at the point of claim so they know what to expect and a relationship between claims and the customer is established from the start.

MGA Claims Conference 2023

Who is responsible for customer satisfaction following a claim? Claims 90% Nikki: Claims own the journey. We’re the product at the end of the day. We have to hold the customer’s hand so we’re ultimately responsible for delivering on our service value proposition. Trevor: The customer journey starts at the quote so underwriting also has a role to play. When the underwriter starts building the proposition for the customer, that will impact whether the customer has a good experience or not. As underwriters we can do a lot at the front end to help our claims colleagues at the back end. We can set the customer’s claims expectations and share that with the claims team so their service aligns with what has been promised. That can help to bring the front and back end together. Tom: Unfortunately, there are often technology problems hindering collaboration as you may have claims on one legacy system and underwriting on another. It should be simple to have all the information in one place so we can all see the same data, but as an industry we’re behind the curve on this.

Who is responsible for policy wording? Claims 27%, underwriting 73% Dan: There is confusion over what policy wordings mean even within the same company. There is no need for wordings to be as complex as they are. Consumer Duty brings an obligation to simplify the language, but businesses have to make it a priority or it won’t happen. And revising the wording once isn’t enough. Things are changing all the time to it needs to be regularly updated. Trevor: We focus on building a rate book and algorithms and pricing structures, but policy wording is sometimes a poor relation. Kath: There is great chance for further collaboration here. Claims will hear first if customers think they’re covered when they’re not. We should share that information with underwriters so if there is confusion around certain clauses and wordings they can address it.

Kath: The whole customer journey is determined at the FNOL stage of the claim, and if the claims department doesn’t have access to underwriting records it can be very detrimental.

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Who is responsible for fraud underwriting and detection?

Who is at fault when the loss ratio is too high?

Claims 94%, underwriting 6%

Underwriting 80%

Kath: Detecting and avoiding fraud is a claims responsibility. We put an awful lot of effort into detecting and avoiding fraud and deploy increasingly sophisticated technology and data analysis techniques. But we cannot detect every fraud and we cannot avoid every fraud we detect. As the dialogue between claims and underwriting has become more pragmatic in recent years, there has been a recognition that we need to underwrite away from fraud. None of us can do it alone. We have to work together.

Dan: On the pricing point there is a huge obligation on underwriting to get that right. You have to keep looking at pricing and revisiting it because external factors will have an impact. There will always be bumps in the road in the short-term, so you need to get pricing right for the long-term. Catastrophe events are going to be very difficult to price in, and in the short term you can’t price them in, so it’s about taking a long-term, sustainable approach to pricing.

Dan: Underwriting has to take some responsibility for fraud. We’re onboarding customers and there are tools that can give us an idea of who we’re onboarding. We have to be aware through risk solutions so we understand who we’re insuring. Trevor: The underwriting role is making sure you charge the right price for the risk they present. Data science can be used more to make pricing more accurate. If we get more information from claims around fraudulent claims, then we can link that up to the front end and get a better understanding of what type of person is more likely to commit fraud.

It is definitely an underwriting responsibility, but what happens if there is leakage or claims life cycles being extended? That has huge impact on loss ratios too. Kath: We moved straight from pandemic to an era of unprecedented global inflation, which has gone into claims costs. In claims we’re thinking about how we can help our underwriters to price in these circumstances. Claims must capture and provide granular claims data so we can see precisely what is driving claims cost inflation, that will help underwriters price more accurately. We are also plugged into our vehicle and building repairer networks and over the last 12-18 months we’ve been using that to get an advanced view of what’s coming down the line and feed that to our underwriters. So as well as looking back at inflation, claims people can help underwriters foresee what’s coming next. Trevor: Pricing is critical to success and certainly drives loss ratio. But I think risk selection is underestimated. You’ll write a certain risk at a certain price, but the market won’t allow you to charge the right price. So you write the risk and know you’re underfunded. But you can turn those risks down. You can use data models to identify that risk and say no, you don’t want that risk – at least not at that price.

MGA Claims Conference 2023

Key message? Dan: Challenge the status quo and collaborate in new ways. It’s improving, but there is more we can do together. Trevor: Data, detail, dialogue, and decisions: Get the data, examine the details, then have the dialogue around it to make good decisions. Kath: Collaboration has improved in recent years, but we’re also more diverse. Those two things may be coincidental or they may not be. Nikki: Generate the dialogue yourself. If they don’t speak to you, go and speak to them.

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Overcoming the barriers to digital transformation

KEVIN DR AKE

EMMA BAZARD

Innovation Director Pulse

Strategic Client Lead Pulse

A comprehensive industry survey carried out by claims and repair management platform Pulse found that 86% of respondents have committed to a digital transformation strategy. This figure was backed up by a live poll of delegates during the conference. The Pulse survey also revealed that industry investment in digital technology is expected to increase by 25% by 2026. Driving this investment is a desire for improved efficiencies followed by a better customer experience. More advanced fraud detection and compliance was also cited as key motivators.

Greater efficiency Addressing MGA Claims Conference delegates during Pulse’s session, ‘Claims through a digital lens: industry perspectives on the tech transformation in claims,’ Kevin Drake, Innovation Director, said, “The main factor driving digital transformation is that companies want greater efficiency in their claims journeys. They also recognise that customer expectations have changed and they now want an immediate response and a transparent next step. “Technology can achieve both these things. It can identify and automate the simpler claims and then root the more complex claims to handlers based on their skills, priority and complexity. This will accelerate the customer journey and free up claims handlers to focus on the areas where their expertise and experience can be most beneficial.” Increased levels of automation could be even more beneficial during surge events, which are becoming ever-more common.

MGA Claims Conference 2023

Barriers But while 86% of respondents said they have digital projects planned, underway or completed, the Pulse research also identified a number of barriers that are either delaying digital investment or putting companies off altogether. Cost pressures and proving a return on investment is one challenge, but even more significant is a lack of technical knowledge. This is preventing companies from first envisaging how technologies can improve processes and then implementing the change.

She said there is a growing trend for this hybrid development, which combines in-house expertise with technology partners to deliver efficiency and service improvements. “New isn’t always better so you need clarity around the specific problems you want technology to solve, whether that’s AI, robotics or machine learning. Often the best solutions involve a combination of technologies,” said Emma.

Emma Bazard, Strategic Client Lead, Pulse, said, “Respondents to our survey said the pace of change was a challenge and they were finding it hard to keep up with new technology. But no one can be an expert in everything and there is a lot of expertise in the supply chain; sometimes you need an external set of eyes to come in and assess the systems you have in place, identify the problems and then work out the solution.”

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MGAs urged to dive into data pool

WAY N E C A LD E R B A N K Data and Performance Director CCG

MGAs are perfectly placed to tap into the tech revolution, but creating a clear digital strategy is the critical first step. Wayne Calderbank, Data and Performance Director, CCG, urged MGAs to recognise the opportunities that digital and data present, and then act on them. He said, “There is a real opportunity for start-up MGAs to move into a tech-driven world. Tech has never been as affordable, agile and accessible as it is now; you don’t need to spend millions on hightech systems because there are a lot of off-the-shelf solutions that can suit your needs. “But don’t just dive into tech because you think it’s funky. Think about the problems you want to solve. Do you want to connect better with your customers or your suppliers, do you want to get more insights into claims payments and inflation, or join up certain functions? “It’s all about strategy, but once you have an idea of what you want to achieve don’t take so long thinking about it that it is already out of date by the time you act.”

MGA Claims Conference 2023

Decision

Wealth of data

Underpinning every business decision these days is data. More data than ever before is being created that can steer organisations towards better outcomes. But understanding what data is relevant and how to interpret it is as much an art as it is science.

When it comes to claims, he believes there is a great wealth of free, untapped data that is easy to find if you know where to look. He pointed to the Bank of England to measure interest rates and inflation, and the Office of National Statistics for unemployment figures per sector, which can indicate high labour rates and repair costs. Meanwhile AI solutions such as Chat GPT can help identify fraud characteristics in a claim, while machine learning can help predict outcomes.

Wayne said, “You can’t live without data, but you can’t make the most of it unless you have good tech to collect that data. And you need to merge that data with human insight, so you can’t afford to have people measuring your data who don’t understand your business. I’ve always been a big advocate of getting claims people to work with data people, or, even better, turning claims people into data people.”

Wayne said, “There is a lot of data already out there, it’s just a matter of using it. And don’t just measure what you can measure. Everyone understands expenses and profitability, but how much do we truly know about our indemnity spend? Do we still just work on average settlement costs? That doesn’t give us the whole picture; you need all the integers, and you can get that by collecting good data.” He concluded, “You have to invest in your data strategy, and the objective is always to simplify: make everything simple to build, develop and understand.”

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MGA breaks-out to focus on specialist areas

P E TE TH O M P S O N

OW E N P U G H

TI M G O O D M A N

C H A R LE S M A RTI N

Director of Product Activate Group

Chief Operating Officer CCG

Managing Director ICAB

Partner Kennedys

R E B E CC A S A N D E RS

TO M B U R RO U G H S

SIMON HOPKINS

G O R D O N VATE R

Claims Manager, Specialty Third Party Administration CCG

CTO Synergy Cloud

Director Value Checkers

MD - Gallagher Bassett Technical Gallagher Bassett

K A JA L VA K A S

S O P H I E WA R D

Senior Vertical Market Manager; Claims LexisNexis Risk Solutions

Technical Claims Manager Pen Underwriting

MGA Claims Conference 2023

The main event split for some of the day to focus on specialist areas including personal lines; specialty lines; and next generation. Focusing on motor and home, the personal lines channel saw Activate Group launch its repair-as-aservice proposition to meet the changing capacity demands of the market whilst also reducing backlogs and delivering better outcomes. Repair-as-a-service is a bespoke repair model that enables insurers and MGAs to tap into extra repair capacity as and when they need it. Pete Thompson, Director of Product, Activate Group, explained, “The claims journey is evolving but insurers and MGAs are at different stages of what they can offer, either technically or operationally. Repair-as-aservice takes that into account and provides a solution that they can use in the same way they use claims-asa-service.”

Managing the rising costs of AA During his session ‘The changing landscape of alternative accommodation,’ Tim Goodman, Managing Director, ICAB, revealed that in the last three years the total cost of accommodation has increased significantly while the average cost of a settled claim is up 23% from 2021-2022 and already 33% higher this year. Tim has urged insurers to focus more attention on AA as a means to reduce costs. He said, “With AA costs increasing across the board, it’s vital we all think about time-scales upon instruction to save indemnity spend.”

Leverage data

During the session: ‘Home truths: making claims easier in property insurance,’ Owen Pugh, Chief Operating Officer, CCG, suggested a blame culture within the industry is making people reluctant to take radical decisions to initiate change. Owen said that often it is the amount of data available that is creating hesitancy as people are not sure how best to leverage it for the best results. He said, “The real benefit of data can only be achieved if we understand it and are brave enough to do something about it. We might use data to price a slightly higher premium because the property has a thatch roof or is situated in a flood plain, but there is so much more we can do that should help us manage claims spend and forecast what is going on.”

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Careers

Specialty

Focusing on careers and skills within the sector, Gordon Vater, Managing Director, Gallagher Bassett Technical, Gallagher Bassett; Sophie Ward, Technical Claims Manager, Pen Underwriting and MGAA NEXT Gen Committee Member; and Kajal Vaka, Senior Vertical Market Manager, Claims, LexisNexis Risk Solutions, took part in ‘Navigating future risks and claims: preparing the skills for what lies ahead’.

Charles Martin, Partner, Kennedys Law, presented, ‘Caution! EL/PL hazards ahead’ where he explored secondary victim claims and questioned how psychiatric injury might be defined in the future and asked if technology is changing the definition of ‘proximate’.

Exploring the evolving landscape of risks and claims the session delved into the technological innovations that enhance the efficiency and accuracy of claims handling. The panellists shared insights into tools and technologies being used in our industry. It was also questioned whether technology has a role in supporting or replacing human skills when dealing with vulnerable customers. The speakers also shared best practices their organisations have implemented to optimise the claims handling process and discussed the essential competencies needed for this evolving role. Lastly, the session examined how customer expectations have changed and what the next generation of customers will demand in the future. Three further sessions were also dedicated to specialty lines.

He then looked at vicarious liability highlighting how after a period when case law meant that it was more difficult to sue the negligent person’s employer a recent judgment has simplified the law to make it easier to do so. This could have a profound impact in future. Charles also explored the impact of social inflation and the resulting rise in shoplifting and looting – coming at significant and rising cost to the insurance industry. Rebecca Sanders, Claims Manager, Specialty Third Party Administration, CCG; and Tom Burroughs, CTO, Synergy Cloud, took part in ‘Beyond the mainstream: navigating specialty lines with customised solutions’ debate during which they addressed the limitations of generic tech in specialty lines; looked at operational excellence and how tailored technology enhances claims management and loss adjustment; and explored how it can be achieved affordably via cost effective solutions. Focusing on often regarded smaller value, higher volume claims, Simon Hopkins, Director, Value Checkers, presented a session titled, ‘Value Checkers: are you really making the most?’ where he provided an insight into how the business manages insurance claims for damaged IT goods including smartphones, laptops, tablets, photography equipment and smart watches. With its vast experience, Value Checkers provides insurers a holistic claims management solution including validation, repair or, where necessary, replacement, and salvage helping to ensure claims are settled speedily ensuring customer ‘downtime’ is minimised.

MGA Claims Conference 2023

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Pardus takes the Wiser approach to apprenticeships

M A R K A LLE N

A RO N K AU S H I C K

Company Director Pardus Underwriting

Business Management Graduate Pardus Underwriting

The benefits of apprentices was underlined during a peer-to-peer session entitled ‘MGA’s got talent’ which provided a first-hand account of a successful apprenticeship at Pardus Underwriting. Taking part were Mark Allen, Company Director, and Aron Kaushick, Business Management Graduate. Aaron graduated two years ago and was drawn to the risk management side of insurance. His apprenticeship, which is being delivered by Wiser Academy, combines on-the-job experience with classroom learning and is providing him with a wellrounded view of the industry.

Understanding He said, “I didn’t know much about insurance but I’m getting a good understanding of it now from all sides. For example, I’m learning the broking side of the business even though I’m in underwriting. I’m just trying to be a sponge and take it all in. “But it’s been a really good experience. I started from nothing and now I’m playing an active hands-on role in underwriting risk – under supervision, of course. Actually doing the job really helps to accelerate your development because you’re learning with each new risk and there is no replacement for that.”

MGA Claims Conference 2023

Solution Aaron is one of two apprentices at Pardus and Mark says it has provided an effective solution to the recruitment and retention challenge afflicting the wider industry. He explained, “Trying to recruit top talent is a challenge, so we wanted to grab it by the horns and bring talent into the business ourselves. The first step for us was speaking to Wiser Academy and partnering with someone like that was priceless. It took the burden away and helped us through the journey. “Apart from that, the programme Aaron is on is teaching him soft skills that he might not learn with us. We can teach him our way of doing things, but there is a lot more around the edge that he is learning and now he brings new ideas to the table and that creates value to our business.”

Perception In many cases, apprenticeships are still looked down on and considered an inferior route into the job market. However, that perception is changing and Mark believes it can’t happen soon enough. He said, “In insurance there is a void between old and new. Apprenticeships can bridge that gap but we need to change our view of what apprenticeships can offer and we need to market it better to the next generation because it’s the best of both worlds: you can train someone from the ground up while also giving someone a career opportunity.” Going forward, he said he expected Pardus to tap into the apprenticeship pool again and again. He concluded, “The heartbeat of everything we do is the people. To grow we need more people to build that scale. We have decided training is the way forward and we have dedicated and committed to it in order to future-proof our business. We can bring in one apprentice or 101 and it will be the same process. We’ve got that model in place now and we’re going to be taking advantage of it from here on.”

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Higher expectations demand higher service levels

C ATH E R I N E C A R E Y Head of Marketing Consumer Intelligence

Customer expectations are rising exponentially and meeting them will be the key determining factor in whether businesses comply with Consumer Duty or not. Research from Consumer Intelligence found that good customer service boils down to two things: speed and efficiency. Technologies such as AI can help to deliver both, but good outcomes will only be achieved with customer buy-in. That was the message from Catherine Carey, Head of Marketing, Consumer Intelligence, during the event.

MGA Claims Conference 2023

Expectations rising

Polarising

She said that customer expectations are rising as premiums and cost-of-living rise; as they pay more, they expect more back. However, with 61% inflation recorded in motor premiums and 29% in home, the bar is being set high.

Many insurers are putting their faith in AI to resolve this issue, but the same Consumer Intelligence survey suggests technology can be polarising and on its own may not be enough to satisfy customers.

Catherine said, “Making matters worse, customers feel like they’re stuck with their current insurer. The days of savvy customers being able to shop around for better deals feels like a memory. They are getting their higher renewal premiums and don’t have the relief of being able to get a better deal in the market.” It’s perhaps not surprising then that complaints have risen to a five-year high, with delays in payouts the number one thing displeasing policyholders; according to a Consumer Intelligence survey of more than 1,000 customers, speed and efficiency and quick settlements were the most important things to customers.

Almost half (46%) of respondents said they didn’t actually know what AI is, and of those who did only 30% said they’d be happy for AI to be involved in the claims process. The same percentage were against the use of AI in claims but 40% said they were unsure and could be influenced either way. What this means, said Catherine, is that insurers can’t rely on AI to meet all their needs. Communication about technology is critical, but even then it will need to be embedded alongside the human element to satisfy customer expectations. She said, “Customer expectations will continue to rise, and speed and efficiency needs to be the focus for improvement. AI could be the answer, but insurers need to bring customers with them. But if we get this right, it’s not just good for customers, it’s good for business too because there is a strong link between good customer service and profitability.”

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Collaboration critical in claims

M I K E K E ATI N G CEO Managing General Agents’ Association (MGAA)

CEO of the Managing General Agents’ Association Mike Keating has said there is work still to be done before collaboration between MGAs and insurers is where it needs to be. He said that while there have been signs of improvement in recent years, progress has not been fast enough and many of the issues that were challenging the sector in 2021 are the same ones being discussed today. Mike warned that MGAs and insurers would have to develop a more cohesive service as a matter of urgency now that Consumer Duty is shining a spotlight on the customer experience. He said, “It’s not all rosy in the garden and there is an awful lot of work to be done in terms of collaboration between underwriting, claims, and actuarial before we are where we should be.”

MGA Claims Conference 2023

Culture Creating a culture of collaboration at the outset is the first and most important step. Mike said that insurers, MGAs and third parties must all be involved at the onboarding stage to ensure that service levels and claims management expectations are defined from day one. However, he believes that organisations are in such a rush to start writing new business that claims is often overlooked, which sets the MGA up for problems further down the line. He explained, “When an MGA onboards with new capacity or additional capacity, claims is not always at the forefront. Conversations tend to focus on underwriting and a rush to start writing business, and then the claims piece comes in afterwards. That’s not a blanket comment, but it does tend to happen. Then you are bound to get claims problems because you’re already writing business but haven’t aligned all stakeholders in what a claims service should look like. “Claims needs to be at the table at the start of any onboarding process. And this is especially true if MGAs are using a third party; over 80% of our 200-plus MGA members use a third party for claims delivery, so it’s absolutely critical that all stakeholders are involved in onboarding. You have to start with collaboration from day one. You have to have the right behaviours and the right people. The claims community can’t be an afterthought.” For MGAs, the risks of ignoring claims when establishing a relationship with an insurer cannot be overstated. If they fail to meet their underwriting earning targets they could face financial penalties in the short term, and capacity being pulled in the longer term.

frequency and severity can add value throughout the claims process. Here too, though, collaboration needs to be improved. Mike said, “Where is the dialogue between stakeholders to get the underwriting loss ratio on the right trajectory? Claims has such a strong voice in that and I’d encourage the claims teams to be braver in sharing those trends and push them back to the underwriting teams. “But having said that, I’m particularly disappointed by how much data insurers share with MGAs. They’re on the same team, they’re both trying to deliver on underwriting profit, but insurers are slightly reluctant to share information.”

Improvement There has been progress, however. The pandemic has played a part, but so too has the diversification of workforces, with new ideas and new approaches bringing about a positive shift. Mike has urged the sector to continue driving this agenda and believes that MGAs offer an attractive but misunderstood career path for the next generation. He said, “We know there is a skills crisis, and everyone has a moral obligation to promote the MGA community. We’re good at talking ourselves down and we don’t talk ourselves up enough. But MGAs have a lot to offer. They’re agile, innovative, they make decisions quickly and bring products to market quickly. There has been a talent drift from insurers to MGAs for these reasons, but we need to appeal to more people by going into schools and colleges and promoting the industry as a fast-moving, exciting sector.”

He said, “MGAs have skin in the game. They can’t operate without capital.”

Future

Outcomes

Certainly the challenges remain, with customer expectations rising and inflation having a serious impact on claims costs. However, the MGAA is optimistic for the future.

Greater communication is not just important during the onboarding stage though. Mike believes all stakeholders need to communicate on a regular basis, sharing data to improve outcomes both in terms of efficiency and profitability. He said that claims has a valuable role to play here, as the insights that can be gleaned in terms of

Mike concluded, “The MGA community is buoyant and will continue to be buoyant, but what I’d hope is that in 12 months’ time we’re not still talking about the things we’re talking about today. There needs to be a real desire from stakeholders to shift the dial.”

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MGA Claims Conference 2023

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