Plans for a claims performance index for insurers have moved a step further with a workshop being planned for October between members of AIRMIC and some of its partner organisations who have expressed interest in taking part in a pilot study.
AIRMIC members approved the proposal to create the index at the annual meeting in June, after a survey revealed substantial concern among them over the way claims are paid. Fewer than half the 135 surveyed rated their insurers good or excellent on speed and accuracy of claims handling. A quarter of the sample had had a claim refused by an insurer within the past two years, while half said they had had one referred to senior management.
Paul Hopkin, AIRMIC's technical director, says that the pilot study would concentrate on material damage and business interruption claims, as these are challenging but relatively narrowly focussed and short tail. The meeting in October is intended to get the views of the members and partner organisations about the concept and what issues they believe should be covered.
Initially described as a ‘willingness to pay’ rating, the idea of the index now is expanding into a more of a gauge of insurers' total claims management. Hopkin has created the acronym PRAISE to indicate the likely component indicators. PRAISE stands for
• Procedures the insurer has for notifying/handling escalation of claims
• Resources devoted to claims
• Accuracy of interpretation of policy wordings
• Impartiality of implementation
• Speed of investigation and settlement
• Evaluation by insurers of their own performance
Hopkin explains,that resources, for example, can include the number of claims staff and their experience, and whether there is a single IT platform or a legacy of various systems as a result of mergers and acquisitions.
He says that, although some brokers have developed their own ratings for insurers' claims handling and treat them as a selling point, the results are proprietorial and the method by which they are calculated is not transparent. AIRMIC will make the findings of the pilot study available to members.
