The insurance industry has often been disparaged for lacklustre service and unhelpfulness, which run counter to its stated mission to protect clients from risks.
According to Antony Broome, joint managing director of the casualty division at Manchester Underwriting Management, these issues also plague the casualty market, which is struggling from poor service and a shortage of specialty underwriters.
“UK rates are about as low as they could be and while risk selection is key, it’s never been so important,” he told Insurance Business. “The market seems to be focusing on cross-class and a mentality of ‘computer says no’, which comes from a lack of empowerment.”
Broome believes that, for some MGAs, wordings and claims processes are mere afterthoughts, which result in a lack of support for brokers.
“This is one area where we need more specialists who build a proposition with focused product offerings and services so that they are providing something different for the market – and don’t just look like the capacity provider with a different coat on,” he said.
On the brokers’ end, Broome said that they must spend time and effort in preparing a quality presentation in order to get the best from the underwriter. This, according to him, is what differentiates brokers.
“They also need to ensure that the policy they have in place actually provides the right cover for their client and, while this seems obvious, coverage and exposure issues do get missed, which leaves both the client and the broker exposed,” he said.
Broome also touched on several areas where the industry may be under-insuring clients, as well as the effects of major regulatory changes.
“In a lot of cases, insurers are reducing indemnity limits at a time when insureds need to be considering increasing limits,” he said. “Some activities are higher risk than others. For example: the manufacture of safety critical components, working close to valuable property, and exporting to or working in the USA/Canada, as these territories are more litigious with higher awards for damages.”
He also added that some clients may have contractual obligations where their customers specify minimum insurance limit requirements, as often happens with public sector or industry bodies.
“The Ogden Civil Liability Bill changed awards overnight, reducing the investment return on large awards,” Broome said. “In one example, an employee falling from height with severe brain injury requiring long-term care, the claim increased from £5.3 million to £10.6 million.”
In order to fill the gaps in the industry’s casualty offering, Broome said that underwriters must be more flexible, interactive, and willing to listen to the insured’s needs. Furthermore, they must demonstrate the ability to craft a bespoke proposition where it’s needed.
“So many risks do not fit the standard box and brokers need confidence that they are getting the correct product from someone who will listen and then offer and deliver what the insured actually needs for them to operate their business,” he said. “This goes far beyond wordings and documents and more attention is needed in claims management and understanding how the insured wants to be involved in the process along with linking this to helping on risk management. The quality of claims handling not only affects the experience that insureds and brokers have but also impacts the loss ratio.
“We believe that claims should be handled fairly and proactively, analysed and reserved quickly, settled as soon as possible with feedback to provide a health check, all allowing a proper assessment of the account performance,” he said.
“At Manchester Underwriting, we built our proposition in great detail and then found capacity that bought into our vision.”
