Loss adjusters must adapt to the cross border nature of global insuranceprogrammes, as Neil Marsh explains.
The issue of globalisation within the insurance sector is perhaps an over used and often misunderstood term. Can any business be truly global? There are certainly not many organisations that offer a standard product range at a standard price on a worldwide basis. There are, however, European multi-national companies who, in more recent years, have sought to develop their business away from a polycentric organisation (autonomously operating units without any issues of standardisation) to a geocentric organisation, whereby a degree of control is administered from the centre. The business is then standardised as far as possible, but adaptation allows for local influences to affect the product or service and price. In real terms, a business which standardises as far as possible but looks to adapt for local markets is likely to be a global business in its broadest sense. When purchasing insurance services, major companies will look to their carriers and insurance service providers to provide an effective, seamless solution to their insurance needs. Furthermore, when a claim occurs, adjusters handling the claim on behalf of the client will be expected to demonstrate an understanding of the sensitivities involved.
These could include global brand issues and wider liability concerns, as well as the issue of service delivery in all territories where the multi-national clients are located.
In my own organisation we have had to address this issue by setting up a specific focus for the Uinted Kingdom (UK) and European market (the London market operation) that looks to standardise the supply of service worldwide. This ensures that we deliver an appropriate technical standard but allows that standards are adapted to suit local markets. Having ensured the supply of service locally, we have then found it necessary to set up central co-ordination to ensure communication and delivery of that service to the appropriate market place.
The theory of local adaptation is a fairly simple one, but in practice the reality can be somewhat different. For example, any UK adjuster, who attends a meeting of French experts on a major loss somewhere in France, would be mistaken if he or she expected, as one would in the UK, to control the meeting, providing some direction to the discussion and the input from the various parties. In such a meeting in France, all parties must be allowed the opportunity for comment, however long that may take. While this is, perhaps, slightly exaggerated, it is clear that the cultural and professional differences one would encounter in such a situation must be understood and the protocols of dealing with them addressed.
On a technical note, the French experts would very rarely comment on policy liability, this normally being dealt with by the local carrier, and most local French covers do not include the reinstatement memorandum. A multi-national company with cover written out of the UK market, whose carrier appoints a French adjuster to deal with a loss, must understand that it will be unlikely to receive comment on liability unless requested separately, nor will its appointed representatives understand how to deal with the reinstatement of say, plant and machinery, in the traditional UK manner.
These type of issues exist worldwide in different markets and different guises, and require adaptation of the service that we provide to our clients. It has proven necessary within GAB Robins for us to address this issue by setting cross border protocols and handling agreements, so that all the different geographical sectors within our organisation understand and are aware of the requirements of each others' clients in respect of cross border work. It is in this way, by better communication and clearer understanding, that we will be able to supply the sort of service that our clients expect.
For example, a colleague was recently involved in co-ordinating an international programme fronted in Latin America, ceded into London and reinsured both inwards and outwards throughout the world. Both producing and reinsurance brokers, cedant, original insured and reinsurers alike required a centrally focussed adjusting ability in London to serve the entire programme, both technically and linguistically, taking into account the multi cultural and often politically conflicting interests.
As operating on a global basis develops, understanding between thedifferent areas will improve and, indeed, is already improving. The governing body for loss adjusters in the UK, the Chartered Institute of Loss Adjusters (CILA), is now linked more closely with the federation of European loss adjusting experts (FUEDI, ), and Paul May, the president of the CILA, is now also president of FUEDI. A closer understanding of the working practices within Europe is being developed and will continue to be so, providing these sort of links are retained and are allowed to grow organically.
Loss adjusters will need to embrace changes to their business to mirror the changing requirements of their global clients, as well as the changes in the market place. No business can afford to stand still ,and it will be necessary not only to supply the service that is needed today, but also to look at what type of service will be needed in the future. Product development and more emphasis on adaptation are both areas that all claims service providers will need to invest in more heavily for the future.
As well as providing effective major loss handling anywhere in the world, adjusters need to provide high volume, low value claims handling not just within one territory. Many multi-national organisations now require cross-border claims management for all employer's liability, motor and public liability claims for the whole of Europe perhaps and the rest of the world. This raises not only the issue of processes but also of local legal implications and procedures and, not least of all language.
As the industry develops into more diverse areas and creates new products adjusters will need to look to diversify their services away from core loss adjusting to claims services and new product development.
It is now possible to buy personal lines insurance cover over the internet. New media are seen as a major growth area within the insurance industry. How long will it be before all low value claims handling services are undertaken over the internet, complete with financial transactions and direct connection with suppliers and distributors, as well as an on-line claims handling?
While this in part exists today, in the future it is possible that a seamless service will be provided and, perhaps, the claims service provider who is able to diversify its business to deliver the needs of new media will find itself in a major position of strength, as the need for traditional loss adjusting diminishes.What effect will alternative risk transfer (ART) have in the traditionalinsurance market place? If, as some suggest, rates harden in the nearfuture, will ART become a more acceptable form of placing traditional risk and how then will claims service providers need to adapt their operations to meet these changes?
The answers to the questions and the way in which all our businesses will adapt, will become clear with time. We are, however, working in interesting times, and while the adage “the strong will survive” is unlikely to change, perhaps it will also be the most innovative and most forward thinking claim service providers who will be the most successful.
Neil Marsh is London market operations director for GAB Robins. Tel: +44 (0) 2017- 200-3000; fax: +44 (0) 2017 3155; e-mail: firstname.lastname@example.org .