Risk Specialist June 2012 - JLT

14 RISK
RISK SPECIALIST
www.jltgroup.com
Keeping a
close eye on
Making early contact with customers or
employees following a personal injury
incident might seem unwise, but evidence
proves that this strategy – claims
intervention – can result in significant cost
savings as well as lessening the risks to
an organisation’s reputation. Nevertheless,
careful consideration of a business’s
suitability and the risks is needed.
By Martin Friel
A
simple concept lies behind
claims intervention strategy:
identifying the incident, catching
the claim and ensuring the
injured party is dealt with fairly
and promptly. The idea is to avoid a drawn out
claims process that drives up legal costs, and
also to prevent a badly handled claim that could
have an adverse impact on a business’s brand
and reputation.
Getting in early
Whether the claim comes from an injured
employee or member of the public, the key is to
get in first, explains Pas Mariconda, Claims
Executive and Partner at JLT Specialty. “It’s
about third-party capture and taking control of a
claim at a very early stage. Five to ten years ago,
CORBIs

CLAImS INTERvENTION
JUNE 2012
15
Insurance can
help bridge the
gap between
seller and buyer
in negotiations
claims
the strategy would have been to view the third
party as an adversary and wait for the letter of
claim to arrive.”
For the claim intervention strategy to work,
a company must be able to identify incidents
and contact the affected party before they turn
to a solicitor. Only accurate incident reporting
can provide the information needed to do this.
Once contact has been made, it must be
established whether or not an injury has
occurred and, if so, whether there is liability.
If the business is liable, an appropriate redress
should be offered to the injured party.
Identifying suitable businesses
While this sounds simple, any claims
intervention strategy must be appropriate for
the risks a business is exposed to. Getting the
processes right is absolutely vital – if it is not
handled properly, the claims intervention
strategy could end up doing the company
more harm than good.
I can’t think of one sector, other than the
legal profession, that wouldn’t like less
involvement from solicitors in lower value claims.
”
Richard Gurney, Claims Managing Director, JLT Specialty
Many businesses could potentially benefit,
says Richard Gurney, Claims Managing
Director at JLT Specialty. “With so many
clients retaining a significant proportion of
their claims spend, in one form or another,
there is a relevance well beyond just the
largest insurance buyers.”
Businesses that have greater than normal
liability exposures arising from an employer
liability claims culture or high footfall levels,
such as those in leisure, property and retail,
are most likely to benefit from savings.
Simon Pemberton, Sales Director at
Gallagher Bassett International, a claims
handling company, explains that any
business that is experiencing a large
number of public and employers’
liability claims each year should
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RISK SPECIALIST
www.jltgroup.com
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consider corrective action. If the cost of
these claims is increasing and is affecting
profitability, there is a strong argument for a
claims intervention strategy. But even so, it
may not be suitable.
Ian Thompson, Partner in JLT Specialty’s
Risk Practice and former Head of Group
Insurance at a large rail company, has seen the
difficulties first-hand. “It’s more complex – in
a rail accident you could have the main rail
company, contractors, the infrastructure owner
and potentially the train maintainer all
involved in the claim,” he explains.
Such complexities do not mean that the
company has to abandon the idea of a claims
intervention strategy altogether. Thompson
points out that, although it was not suitable to
be rolled out company-wide, a claims
intervention strategy was applied to the
company’s motor risks. Liability is typically
less complicated with these types of claims –
they are generally low severity and low cost
so it should be possible to settle without
bringing solicitors into the equation. Indeed,
identifying the less complex claims and where
unnecessary litigation and aggravation can be
avoided – especially through the involvement
of solicitors – is an essential part of an
effective strategy.
Solicitors’ costs
In fact, solicitors’ costs are one of the major
reasons for implementing an intervention
strategy. It’s no secret that as soon as a
solicitor gets involved in the claims process,
the costs increase markedly. As Gurney puts
it: “I can’t think of one sector, other than the
Top tips for incident recording
It is a legal requirement to report any accidents in the workplace that involve either members of
staff or the public. When recording an incident make sure that the following is noted:
• Full name, address and occupation of the injured person
• Date and time of the accident
• Location of the accident
• Cause and nature of the injury
Taking the plunge:
companies may not
see instant benefits
legal profession, that wouldn’t like to see less
involvement from solicitors in the lower value
claims. And this is certainly the view that the
government are now taking, with a raft of
measures planned to combat excessive costs.”
Of course, nobody will be denied access to
justice if correct processes are followed. An
injured individual that has been identified as a
potential claimant must be informed at the
earliest stage of their entitlement to bring a
solicitor into the process. Also, there must be
no suggestion that there is an attempt to
unfairly reduce the damages element of the
claim – it’s about cutting out the unnecessary
• Record the cause or causes of the incident and the nature and severity of the injury. Ensure
that you get witness statements, particularly from the injured person, if possible
• Photograph any damage and injury if possible
• Ensure that, when recording the incident, no blame is placed on any individual or group. The
aim should be to report the facts impartially
costs incurred through litigation. The ABI has
published guidelines on dealing fairly with
unrepresented claimants, which are readily
accessible from its website under the heading
‘Third Party Assistance’.
As Nick Bonser, Deputy Managing Director
of Gallagher Bassett, says: “Fundamentally,
claims intervention is about providing access to
justice and delivering swift, prompt and fair
settlements. We should be able to achieve that
without solicitors on a proportionate level of
cases.”
This is a persuasive argument for relatively
simple claims that do not involve long term
injury. Some companies that have taken on a
strategy have witnessed an overall cost
reduction of 25-30 per cent.
Mariconda says successful implementation can
have a beneficial effect on a company’s risk
profile. While stressing that there would not
necessarily be an immediate reduction in
premiums paid, he points to longer term benefits.
“They will not receive a reduction in premium
just for having a strategy but reducing claims
costs along the way should hopefully improve
the claims experience, which over time makes
the risk itself more attractive.”
But there is more to claims intervention than
simple cost cutting. Brand is of immeasurable
value to any business. A successful claims
intervention strategy can become a fundamental
part of brand protection and reputation.
Getty Images

claims intervention
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JUNE 2012
Dixons: buy-in, clear objectives and a proper process
Hoping to improve customer service and reduce costs, high
street retailer Dixons Retail plc, owner of Currys and PC World,
introduced a claims intervention strategy in 2010. The group’s
Head of Insurable Risk, Andrew Hanton, says that by settling
claims quickly, stripping out unnecessary activity and taking
out the need for customers to deal with solicitors, Dixons is
witnessing a 50 per cent reduction in legal costs and a fall in
overall injury claims costs in excess of 25 per cent.
Hanton advises anyone looking to implement such a
strategy to focus on three main aspects: first, identifying key
senior stakeholders, building buy-in and getting a board
member to ‘sponsor’ the project; second, providing clear
project objectives and ensuring stakeholders understand them;
and finally taking the time properly to map out and stick to a
clear process with clear roles and responsibilities, timelines
and terms of reference.
But what does that look like in practice? First and foremost,
all accidents involving members of the public and staff must
be properly recorded and logged. Incidents can then be
analysed and a decision can be made on whether or not there
is liability. If there is, swift contact must be made and the
claimant given appropriate compensation or access to
rehabilitation. Without proper and accurate reporting, the
whole strategy will collapse.
How did Dixons manage to ensure that its 700 sites were
complying? Hanton says that engagement from those at a
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local level mbnbmnnb needs to be part of the culture. Sanctions may need
to be imposed on those that do not toe the line; to
encourage adoption, individual stores should see the results
of non-compliance impact on their own profit and loss.
For instance, if a store is not playing ball, Dixons will send
an investigator from its claims handler to ascertain what is
happening. The store will pay for that cost. If a store’s inaction
results in Dixons paying a claim it wouldn’t otherwise have
faced, the store will foot 25 per cent of the bill.
Performance indicators
These measures are working for Dixons, but how can other
businesses see if they are heading in the right direction?
Hanton says that the key performance indicators (KPIs) are
pretty clear cut. The number of claimants who agree to a fair
settlement with no subsequent approach from legal
representatives can be tracked relatively easily. If accurate
records are kept, a company should be able to compare the
year-on-year cost of accidents where a liability attaches.
Other important indicators, which show how customers are
treated following an accident, are the average accident
reporting time and the average settlement time. Dixons
doesn’t want the small number of customers injured in its
stores suffering more than they already have. Hanton advises
reviewing these KPIs on a monthly basis until the strategy is
bedded in, and quarterly thereafter.
Reputational benefits
There can be serious reputational fallout from
a customer injured on a business’s premises if
the claim is handled badly, especially in the
age of social media. Multiply one disgruntled
client by 500 and it is easy to see how the
absence of a cohesive claims strategy can
have a detrimental impact on reputation.
Trumpeting a new claims-friendly stance
may not always be advisable, however. Being
perceived as a ‘soft touch’ for fraudulent
claims may attract fabricated or exaggerated
claims in the hope of a payout so there is a
balance to be struck. Detailed investigation of
incidents is still therefore an invaluable factor,
and full and accurate data capture will help
companies to identify any fraud.
Claims intervention is
about providing access
to justice and delivering swift,
prompt and fair settlements.
”
Nick Bonser, Deputy Managing Director, Gallagher Bassett
Companies that have adopted this approach
attest to its effectiveness in reducing costs and
improving customer sentiment. John Searing,
Partner at JLT Specialty’s Real Estate
division, has seen the benefits himself.
Before joining JLT Specialty, he was a risk
manager for a pension fund that had a large
shopping centre in its portfolio. They took the
decision to identify and tackle claims as early
as possible.
“When we trialled this process at the
shopping centre, we found that genuine
claimants don’t want as much money as
possible: they want to recover from their injury
as fully and as quickly as possible,” he says.
Searing found that intervention increased
the proportion of claims that were settled
without a solicitor. “Overall
payments actually reduced,
although we had more cases
where we paid out.”
Still, seeing the
possibility of the number of
claims rise tends to frighten
off many potential adopters
– the concept of contacting
an injured individual before they formally
pursue a claim, in order to reduce claims
costs, can be difficult to accept. New
adopters clearly need to hold their nerve as
claims volumes possibly rise.
Think long term
Focusing on the outcome can help to stiffen
resolve. Significant savings and a better
protected brand are hard to argue with. A
good broker will be able to guide their client
through the set-up process. At a basic level,
detailed investigation and comprehensive
incident reporting, combined with prompt
action, are all that is required.
The benefits of a well-thought out, wellimplemented
and well-managed claims
intervention strategy should begin to show
within two years. Provided the necessary
focus and attention are maintained, the cost
savings and brand benefits will be
longstanding. RS
Pas_Mariconda@jltgroup.com
Martin Friel is a former Editor of Insurance Age.