Insurance: Best Practice in Claims Handling

Last week, AIRMIC (The Association of Insurance and Risk Managers) published its best practice guide, “Delivering Excellence in Claims Handling”. It is intended that the guide be used as a tool for insurance buyers and as a reference point for insurers. The objective of the guide is “to achieve a claims handling culture and service that ensures claims are managed in a consistent, yet flexible and fair manner that is transparent, accurate and timely, as well as secure and compliant.”

The guide identifies eight key components which must be in place in order to comply with best practice and the features of each component which need to be demonstrated. These components are: Culture and Philosophy, Communications, People, Infrastructure, Claims Procedures, Data Management, Operations and Monitoring and Review.

The guide is aimed at helping insurance buyers identify the strengths and weaknesses of the claims handling service of a given insurer. The guide sets out parameters by which an insurance buyer can objectively evaluate how a given insurer is performing and compare the services offered by competing insurers.

On the other side of the coin, the structure set out in the guide will enable the insurance company to identify areas of weakness so that the necessary changes and improvements can be made to bring about an enhanced claims handling service. The guide encourages insurance companies to evaluate their own performance against the criteria set out in the guide.

The message sent out by the guide is loud and clear: insurance buyers and risk managers are becoming increasingly sophisticated and demanding clients and they expect a high quality claims service from their chosen insurance company; if they do not receive this, they will take their business elsewhere. The guide sets a high standard. This is not necessarily bad news for insurers; an increasingly sophisticated and empowered client base brings with it the opportunity for insurers to differentiate themselves from their competitors in areas other than price.

The provision of an excellent claims handling service will require support from external service providers such as lawyers, loss adjusters, forensic accountants and expert witnesses. It is imperative that the same excellence is demanded of these service providers; failure to do so could reflect badly on the reputation of the insurer. Strict criteria must therefore be applied by insurers when selecting their third party service providers, with the emphasis being on selecting firms who can facilitate and enhance the relationship between insurer and insured. Long term relationships and panel appointments will also assist in ensuring there is a consistency of approach in the way claims are handled.

There is a number of ways in which CMS Cameron McKenna already provides its key clients with the kind of support that might be needed by an insurer wishing to demonstrate and maintain a high level of performance within the parameters set by the AIRMIC Guide. Further information with regard to the claims support services that we provide is available on request.