Reducing Claims Costs -The Benefits of Third Party Claims Intervention
3 minute read | July 14, 2020
For a number of years now, the cost of settling Third Party motor claims has been increasing across the insurance industry.
We spoke with MSL Managing Director, Glen Eastwood, to find out how MGA’s and Insurers might address this increase. This is what he had to say:
‘Unfortunately, Third Party claims have been on an upward trajectory for a long time now, caused by myriad reasons.
Amongst other things, technological advancements in vehicles have made them more expensive to repair. Various safety features are now standard and the availability and costs of imported parts and the loss of some of the repair workforce due to concerns around Brexit will also have impacted upon repair costs.
The emergence of Covid19 is unlikely to make Third Party claims any cheaper for MGA’s and Insurers. It is highly likely that the availability of parts will be affected and this too could push up repair times, knocking on to hire periods. We are also likely to see increased fraud as more people become desperate to replace lost income.
Despite best efforts, Third Party claims never seem to become cheaper. Insurers/compensators will be hoping that the introduction of the Civil Liability Act, now scheduled for April 2021, will dampen the cost of Personal Injury. That remains to be seen, but the chances are that Third Party Damage and Credit Hire costs will continue to rise.
No Silver Bullet
This is not a new problem and insurers need to identify the key issues they are facing, explore those areas in detail and then look for efficiencies and strategies to improve overall handling and consequently costs.
Pro-activity is incredibly important. Claims don’t get cheaper with time and making an early assessment of liability and quantum and thereafter presenting offers and concluding claims speedily can have a huge impact.
Insurers will want to work with their trusted advisors, suppliers and industry peers to consider strategies and look for ways to improve performance.
Unfortunately, there is no silver bullet that will fix this issue overnight.
Paying close attention to your claims, monitoring repair periods and amounts and generally being pro-active in Third Party claims handling can help.
Signing protocols with hire companies is another route to guarantee certainty, reduce attrition and to speed up the handling process generally. This tends to work well both for compensators and credit hire organisations. It’s a win win.
For me though the single biggest thing that an insurer can do to reduce their claims spend is to invest in intervention services, either via your own team or by outsourcing to a high performing claims business.
Put simply, it allows you to control the claim (hire, repairs and PI) and to a large degree the cost of that claim. I am not for one minute suggesting you under settle it, quite the opposite. It’s essential that you make a fair offer in settlement given you have a claimant who does not know their entitlement or indeed the process as well as you do. You will though have the opportunity to make savings in legal costs and in credit hire and repair costs.
When intervention is done well, savings of between £2,000 – £3,000 can be realised per Third Party. This is a significant sum in the overall context of an average claim.
Achieving a good level of intervention, whilst providing great service to Third Parties leads to a positive impact on the loss ratio.
Key Features of Good Intervention
- Intervention is most effective when done quickly following notification of the claim by the customer. The longer the gap between notification and the call to the Third Party, the less chance there is of success. Encouraging or incentivising customers to report claims quickly, can help intervention opportunities.
- Claims Handlers must build up a good rapport with the Third Party. Time should be taken to listen to any issues or concerns and then to address these with clear explanations of entitlement and next steps. It is important to build trust and show empathy for their situation.
- Your team must be skilled in offering the right services, overcoming objections and reaching a fair settlement of the claim (property/vehicle damage, replacement vehicle, personal injury as appropriate).
- Claims Handlers must deliver upon promises made! If you have agreed to deliver a replacement car or to book a vehicle in for repairs at a certain time, make sure you do so.
- Caseloads need to be kept at levels which allow pro-activity across the claims journey to ensure you can give the Third Party the service they need and are expecting. If the service is poor, the Third Party will seek an alternative route to pursue their case.
- There must be good levels of communication throughout the claim. Keeping the Third Party informed as to what is going to happen next, when and how are key features of good quality handling.
At a time when Covid19 and its consequences are likely to lead to even greater claims costs, getting your house in order on intervention can make such a difference to the bottom line.
If you‘re not doing this at all or not doing it well, my strong advice is to make this a top priority’.
Please contact Ben Clarke – firstname.lastname@example.org if you would like more information on how MSL could assist you in this crucial area.
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