Lloyd’s to Restructure Claims Management Procedures

Tom Bolt, Lloyd’s Underwriting Performance Director, outlined plans in a speech last week to reorganize Lloyd’s claims handling procedures. He received immediate, and no doubt expected, support from Lloyd’s CEO Richard Ward.

In an open letter to “all Managing Agents,” Ward described the “Claims Vision” project, which will take 3 to 5 years to achieve, as designed to significantly enhance “Lloyd’s market claims performance, which will enable the claims function to deliver a competitive advantage for each managing agent and Lloyd’s generally.”

He added that “realizing the Vision will require some fundamental changes in approach by the Corporation, managing agents, each individual handling Lloyd’s claims and the service providers we use,” and asked the MGA’s “assistance in achieving this.”

Ward then outlined a series of initiatives, starting with the Claims Transformation Program (CTP), which “has been developed to deliver the Vision through superior customer service, attraction of talent and increased choice, efficiency and transparency.”

It is currently in a “pilot” phase, which Ward described as “a success and will continue in 2011.” He added that “Lloyd’s will publish by the end of 2010 plans for the expansion of its scope to additional classes of business. This plan will be subject to continued success, an assessment of the market’s resources and will include a process to identify and address any issues that arise during expansion.”

The plan calls for “enhanced governance,” which will “include regular auditing and the provision of enhanced management information to all underwriters.” Details, including provisions for consultations, are scheduled to start at the end of the year. The new procedures are expected to commence by the beginning of 2012.

Ward stressed that “all entities handling Lloyd’s claims will be required to meet Lloyd’s standards, and where a managing agent fails to demonstrate an ability to do so, we will require them to outsource claims handling to an approved third party. We will be working with Xchanging Claims Services (XCS) and others to ensure that such a safety net is available and I am encouraged that XCS have offered to invest in this.”

He also outlined procedures to measure performance, which he said requires accurate measures “using claims data that is consistent, reconcilable across different systems, accessible and complete.”

“There will be no change to the existing technical processing service provided by XCS, which captures claims data onto the CLASS system,” Ward wrote. However, he also indicated that the “CTP Pilot has identified a requirement for better accuracy and completeness of claims information at first touch, and Lloyd’s will be publishing service standards in this area. We will be working with XCS to develop a ‘Pre-Adjusting Checks’ service to meet this requirement for those managing agents who wish to use it, or cannot demonstrate an ability to meet the service standards themselves.”

Ward also singled out the “support of modern technology” as vital to the project – without which, “Lloyd’s will not be able to provide a competitive claims service. In 2009 the Lloyd’s Claims Team defined the market’s business requirements and conducted a tender process based on those requirements. The Future Processes Project is now validating the work on behalf of the London Market and it is critical that the pace of this work does not diminish as this could prove fatal to the achievement of our goals.”

He also outlined plans to try and recruit talented people into the claims management process through the establishment of a “dedicated learning and development program aimed at current and future claims professionals to promote skills and develop future talent. The Lloyd’s Claims Talent Program, which I announced earlier this month, aims to attract new, high caliber, recruits to the market and to up-skill existing claims practitioners. Our plan is to deliver 50 skilled claims professionals to the market, representing 10 percent of the claims community, over the next 5 years.

Source: Lloyd’s of London