INTRODUCTION

Insurance claims management has come under the spotlight and poor claims handling is cited as one of the
major culprits when it comes to insurance grievances. Moreover, the Insurance Act coming into effect
throughout 2016 is set to cause the biggest shake up of insurance law in over a decade. It focuses on the
need for transparency and certainty which means insurers must take steps to ensure that they arent still
operating in the dinosaur era when it comes to the systems and processes that their company use when
dealing with suppliers and customers.
Figures published show that there are a growing number of complaints in motor and more complex cases
such as medical and property claims. The Financial Ombudsman has quoted that the most complaints arise
where there are 3rd parties involved in the fulfilment of a claim. This is often as a result of not having a clear
set of instructions, as well as the customer and supplier expectations not being effectively identified,
communicated and agreed upon.
Even though the issuance of an instruction at the First Notification of Loss (FNOL) is regularly well executed,
any subsequent instructions are frequently lost into a black hole and additional visibility is needed with
regards to the ongoing status of claims.
In this white paper we will explore recent complaint statistics and year-on-year (YOY) trends, along with how
poor communications with your suppliers and customers can lead to a higher number of complaints and
increasing costs. Well summarise some of the latest legislation along with highlighting helpful ways to
prevent complaints through applying improved processes and new technology.
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HOW TO ACHIEVE CLAIMS EXCELLENCE AND

NOT BREACH NEW COMPLAINTS LEGISLATION

Complaints by numbers what are some

of the trends?
The loudest
message from
the FOS for the
insurance industry
is that it needs to
continue improving
its communications
with customers to
avoid complaints
and improve service
levels.

Firstly, to remove any confusion as to What defines a complaint?

according to the Financial Conduct Authoritys Handbook its any
oral or written expression of dissatisfaction, whether justified or not,
from, or on behalf of, apersonabout the provision of, or failure to
provide, a financial service or aredress determination.
On 26 May 2016, the Financial Ombudsman's Service (FOS)
published its annual report. It contains statistics for the period
between 1 April 2015 - 31 March 2016 as well as detailed
commentary on trends and themes which weve summarised below.

Key themes
PPI still accounts for half of all complaints received by FOS but the
volume of new complaints are dropping.
Insurance (excluding PPI) made up 9% of complaints received
New insurance complaints (excluding PPI) were up from 30,080 to
31,284.
Complaints about misselling made up 24% of insurance complaints.
5% of Small businesses complaints were about commercial property

HOW TO ACHIEVE CLAIMS EXCELLENCE AND

NOT BREACH NEW COMPLAINTS LEGISLATION

Key trends

Poor communication
at both point of sale
and during the claims
process is the most
significant driver for
complaints arising!

The biggest contributor to complaints (excluding PPI) was for

motor with a share of 27.5%
Buildings insurance came next with 13%.
Most other sectors were below 5%
Poor communication at both point of sale and during
the claims process is the most significant driver
Out of all the complaints received who gets the most?
Banks are responsible for 72%
General insurers are responsible for 10%
Insurance brokers are responsible for 3.5%
Mortgage intermediaries are responsible for 2%
Independent Financial Advisors are responsible for 1%

Taking a closer look at Year On Year complaints statistics for the insurance sector

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Taking a closer look at Year On Year complaints statistics for the

insurance sector
Motor
Motor has already been cited as being responsible for the most insurance complaints and the FOS
usually leans in favour of the consumer in most cases. People also complained to the FOS about the
repairs that their insurer had arranged after car accidents. Some said the damage hadnt been
adequately repaired or that further damage had been caused by the repairs carried out.

Buildings and Contents Insurance

Last year, the FOS were seeing complaints mostly where insurers instructed a 3rd party to act on
their behalf and insurers were failing to take responsibility for their actions (or inactions). For
example, Loss Adjusters may be accused of not being thorough and one of the reasons is poor
communications and instructions from the insurer. The floods for instance, generated a number of
complaints. Typically, people were upset that their claim hadnt yet been dealt with and were
concerned about significant delays in the process, or were unhappy with the quality of repairs.

Travel and Medical Insurance

The FOS has also seen a number of problems with annual travel policies particularly those that
come with a packaged bank account. These problems often came about because someones health
had changed during the year and when they came to make a claim, they found they were no longer
covered.
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Taking a closer look at Year On Year complaints statistics for

thesorts
insurance
sector
other
of complaints
arose due to

The
customers not being made aware that their level of
cover had changed since the original policy was
written. This is often the case in private medical
complaints where cover for different conditions can
change from year-to-year. Furthermore, complaints
were made as a result of policies not keeping pace
with the increased cost of medical fees so limits
applied were unrealistic, leaving customers out of
pocket to cover the shortfall.

This customer satisfaction chart from Capgeminis

2015 World Insurance Report also shows that
customer experience scores deteriorate during the
insurance lifecycle from quote gathering, through
policy acquisition to claims servicing. This suggests
that more needs to be done at each stage in the
insurance process but greater focus should be
given to the claims fulfilment or servicing process.

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What are the changes being introduced by the 2015 Insurance Act?
The Insurance Act 2015 mainly applies to non-consumer insurance and reinsurance but also in part to
consumer insurance and comes into effect on 12 August 2016. It brings into force the Third Parties (Rights
against Insurers) Act, with minor corrections and represents a significant change to the legal framework of
insurance contracts.
Here is a summary of the changes being introduced:
1. The Duty of Fair Presentation:
Insureds will hold the general obligation to disclose all material facts. The insured will have to disclose every
material circumstance that he or she knows or ought to know, with sufficient information to put a prudent
insurer on notice that it needs to make further enquiries to reveal the material circumstances. This applies to
disclosure before the contract is concluded, for both new contracts and renewals, as well as mid-term
variations.
2. New Remedies for Non-Disclosure:
New proportionate remedies are available to insurers following a breach of the new duty of fair presentation.
For example, where a deliberate or reckless breach of fair presentation occurs, insurers can still avoid the
insurance and retain any premiums paid. This would normally be from inception except where breach relates
to a variation such as a mid-term adjustment. The onus will be on the insurer to show that a qualifying
breach was deliberate or reckless and will need to be judged by the courts.
3.Warranties and Other Terms
Warranties are to be treated as suspensive conditions, meaning that an insurers liability will only be
suspended during a period of breach and a breach of warranty will no longer automatically terminate the
policy. The breach of the warranty must have some bearing on the actual loss by increasing the risk of the
loss occurring.
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Fraudulent claims
If the insured makes a fraudulent claim the insurer is not liable to pay it. If such a claim is presented the
insurer may recover sums paid in respect of the loss and the insurer may give notice terminating the
insurance as from the date of the fraudulent act and need not return the premium. Claims arising from an
event before the fraud would however continue to be payable. This reflects the law as it currently stands as
established by the Courts. In this area the Act does not change the law but merely codifies it.

Contracting Out and the Transparency Requirements

For consumer contracts, an insurer cannot agree terms which put the insured in a worse position than that
set out in the Act. For non-consumer contracts, parties will be entitled to agree terms which are less
favourable to the insured than those set out in the Actsubject. However, there are certain transparency
rules that require; (i) the insurer to take sufficient steps to draw disadvantageous terms to the insureds
attention; (ii) the disadvantageous term must further be made clear and unambiguous. It will therefore
not be possible for insurers to avoid the Act by introducing a simple additional clause into their policy
documentation excluding the application of the Act without bringing the Act to the insureds attention.

The Third Parties (Rights against Insurers) Act 2010

The Third Parties (Rights Against Insurers) Act 2010 is intended to enable victims of wrongdoers to proceed
directly against the insurer, but it has not come into force due to a number of technical deficiencies. The
latest Act rectifies these deficiencies and should allow the 2010 Act to come into force.

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How can insurers be prepared?

Although some of the changes may seem subtle they will require new processes and audits to ensure
compliance, especially as there is a shift towards the insurer having more responsibility to question insureds
thoroughly in order to disclose any possible required information. Especially as there is a shift towards the
insurer having more responsibility for ensuring the insured has had an opportunity throughout the length of the
policy to disclose and update any required information.

For underwriting:

Claims, fraud and underwriting IT systems will need to be connected so that underwriters can underwrite at the
policy inception stage in real-time.
More detailed, thorough questioning to the insured needs to be carried out and documented with further
information sought if necessary.
Underwriters need to be clear that they are responsible in providing the insurer with all of the information
required under the Act.
Insurers must work with underwriters and sales teams to make them aware of their duties so that they dont fall
foul of the Act.
Insurers need to review their policy wordings, certificates, notices to policyholders, underwriting criteria and
question sets to ensure they are compliant with the Insurance Act.

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For claims:
Claims teams should have access to the information provided by the insured at inception.
Detailed records must be stored and easily accessed by claims teams to ascertain the facts provided in the
event of discrepancies.
There needs to be close interaction between claims and underwriting teams to establish whether or not a
material circumstance is substantially correct.
Closer co-operation between claims and underwriting teams will also help to identify and fight fraud.
Handling guidelines and standard documents/letters will need to be updated to remove references to insurance
being a contract of utmost good faith and setting out the basis of the new duty of disclosure.
Once the Act comes into force care will need to be taken when handling claims to apply the new provisions and
not confuse them with the old ones.

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How can insurers be prepared?

For Complaints:
Processes will need to be amended to take into account the provisions of the Act.
Due regard should be given to the Financial Ombudsman Service, their jurisdiction, their likely interpretation of
the Act, and their powers to apply what is fair and reasonable in their adjudications.
Insurers should bear in mind the view from the regulator that insurers should put their customer at the centre of
their business and provide policies that provide real value.

For Marketing:
Insurers should review all marketing materials including their websites to ensure that they are fit for purpose in
light of the recent changes.
For Brokers:
Training will be needed for all brokers, partners, and key suppliers to ensure that they will be ready for the Act.
During the underwriting stage, these changes should encourage both the insurer and the insured to ask more
questions of each other, which may in turn increase the role and responsibility of brokers. When the Act comes
into force, insurers should have a very careful look at their standard terms to ensure they comply with
transparency requirements.

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Whats The FCA changing around complaints legislation?

The FCA publishes complaints data every 6 months. They collect data at a market and firm level but only publish
data on those firms reporting 500 or more complaints. These firms must also publish the complaints data on
their own websites. In terms of when and what had to be reported, the rule was that firms must formally
acknowledge all complaints by the next business day. However, they didnt have to report on any of the
complaints that were resolved by close of business, on the day following the day that it was received.
New legislation by the FCA means that financial firms must now report on all of their complaints, and they need
to submit details on the size of their company, along with more contextual data around their complaints
handling. The purpose being to provide an improved service to consumers and provide greater access to the
Ombudsman service. It also provides greater transparency and competitive analysis for end-customers which
could be used to assist them during the process of selecting their financial service providers.

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Therefore, the FCA are on a mission to improve the complaints process for the consumer and new guidelines
have been set out for firms to begin implementing from March 2016. The FCA expect these changes to be in
place within a year. Consequently, from March 2017 firms complaints handling and monitoring procedures need
to be well prepared to cope with the new guidelines as summarised below:
The FCA are extending the next business day rule. Therefore, firms are permitted to handle less serious
complaints more informally, without sending a final response letter, to the close of three business days after
the date of receipt.
Firms will now need to report and publish on all claims received, even those resolved by the next business day.
Firms will also need to raise consumer awareness of the ombudsman service, by sending a summary resolution
communication to all consumers for complaints resolved by the close of the third business day after receipt.
There are new rules coming into play that must limit the cost of calls for a consumer and firms have to adhere
to a maximum basic rate, including all post-contractual calls and all complaints related calls.
There will be an enhanced complaints return process which will require more contextual information and
transparency around the detail of the complaint and how it was handled against a set of new metrics.
More detailed information regarding the changes and whats required from the new complaints return process
can be found in the FCAs Consultation Paper on Improving Complaints Handling.

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How can insurers reduce complaints during the claims process?

Its important to build trust with customers and your suppliers through having transparency during the
writing of a policy and during the claim should it arise. As the Financial Services industry is cited as one of
the least trusted markets in the 2016 European Trust Barometer, its important the insurance industry shifts
public opinion by putting customer service and communication as its number 1 priority. The fallout from a
bad customer experience is now bigger than ever before due to consumers sharing experiences, seeking
reviews online and via social media.

A recent success story to evolve from having an open, transparent service is Uber. The customer gets to
see the journey of their taxi in real-time and can leave a review for each driver. Additionally, the driver can
leave a review for the passenger so the trust needs to be mutual.

Likewise, for an effective insurance policy its crucial to know what is important to the customer from the
very beginning of the relationship and ensure that the pertinent points are clearly communicated without
room for misinterpretation.

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Below are some of the key things a consumer should have

clear instructions about:
Whats included in my policy what can and cant be claimed?
Whens my renewal due?
How is my renewal calculated?
How can I save?
Are there customer loyalty discounts/benefits? what further products / services are available
to me?
How do I claim what information is required, and routes to do so?
How much is my excess?
How long will my claim take / what stages will it go through?
Whats the status of my claim?
How was the decision reached?
Who will be appointed to carry out the work for my claim?
Whats their customer service rating?
Can I choose which supplier I use?
I want convenience in how I access my policy/claim information.

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How can insurers reduce complaints during the claims process?

The FOS have cited that one of the main causes for complaints is down to the insurer not explaining
clearly why a claim was rejected. The reasons and language used to communicate to the customer should
tally up with the original policy wording so theres no room for doubt or uncertainty. Insurers need to go to
more lengths to communicate with policyholders in the event of a claim rejection to ensure the facts are
understood as it could prevent the complaint from arising in the first instance.

Another main cause for complaints is down to a lack of effective communication during a claim when a
3rd party is appointed. Past the initial claims instruction, both customers and suppliers are unsure what is
happening, when and by whom. Suppliers have told the FOS that they have received poor instructions
from the insurer. There seems to be something of an abyss where communication and status updates are
lost in simple and more complex claims that are handled by a 3rd party. In these cases, the complaint is
almost always upheld due to insurers having failed to take responsibility for the actions (or inactions) of
their agents. So more needs to be done in order to keep all parties informed during the claims process
which is the moment of truth for the insured. This is where customer loyalty can be made or broken.

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In the modern digital age, there is no excuse for poor communication. The tools exist to help insurance
networks made up of multiple suppliers, agents and 3rd parties to collaborate and in real-time.
Furthermore, customer interaction preferences are changing. Gen Ys preference to interact exclusively
via digital self-service (web or mobile) increased to 27 percent in 2015, up from 21 percent in 2011. And,
this trend is only set to continue as new start-up entrants to the market such as Trv are causing a stir
and attracting high investment from main insurance companies already.

Therefore, adopting technology that connects your insurance supply chain and helps you to keep your
customers informed is crucial to prevent unnecessary grievances. Complaints will always be part of an
Insurers Claim File and its practically impossible to have a 100% complaint free claims service. But as
regulators become noisier and customers more vocal, it has never been more important to treat
complaints with the upmost priority from the board level and down.

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How to prevent 3rd party claims data falling into a black hole
Although distribution of the initial Instruction is generally well executed, the actual content can be poorly
written and misunderstood. Added to this, claim status updates are not always subject to the same clear
process and data exchange as the instruction. Claim handlers are opting to call or email each other for
the latest position or claim status information. This seems to indicate a lack of trust in the quality of the
data or the system behind it.

It may also indicate that logging onto many different supplier portals and navigating through different
workflows and dashboards is just too complex and time consuming compared to email and telephone.
Instead look to the following steps to improve communication and collaborative ways of working.

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Implement a centralised claims portal to access all claims information

Adopting a system that has a defined process and enables claims to be centralised, transparent and
visible should mean that claims are dealt with more proactively. Customers can speak to just one contact
for a complete picture about their claim. Additionally, any complaint that arises against a claim can be
seen and dealt with swiftly. A single portal can also help to shorten the length of time taken to resolve an
issue by highlighting where an exception is occurring outside of the standard process and alerts the
insurer and supplier to bring additional resource into play.

Set achievable targets for resolution and create alerts for issues

Recognising that performance perfection is unobtainable in every single claim instruction means that a
more obtainable goal of resolving mistakes and problems quickly and to high levels of satisfaction is
achievable. Implement automated alerts to relevant parties when follow up actions fall outside normal
and acceptable response times. Being able to concentrate both insurer and supplier resources on these
problems, by way of quick, clear communications can help to bring about a satisfactory and satisfying
outcome before a complaint arises. If something has gone wrong during the claims process, this needs to
be turned into an opportunity to go beyond the call of duty and fix the issue for the policyholder which
can in turn lead to improved customer loyalty.

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Speed up communications through using multiple channels

Using the phone is not the most efficient way to communicate. Insurers and suppliers recognise that
automating the claims instruction process and sharing status updates instantly and electronically over the
internet would reduce operational costs and improve the service for the policyholder. It also provides a
digital historical communication chain that is often lost if conversations are carried out via telephone.
Instead messages could be sent to the policyholder directly through the internet to their phone via SMS,
email or a claims app. Future options will include other notification methods, such as Facebook
Messenger, Kik and perhaps even robo-advisors.

Standardise process through the entire supply chain

Most claims admin systems will help to improve the internal claims process but most do not include the
required functionality to get the best out of the external claims supply chain. Whether this is the provision
of a supplier view of the claim, communication with the supplier or management of the supplier. As an
example, if your system does not help you with supplier management then relying on the suppliers to
provide the management information to monitor Service Level Agreements means, at the very least, that
you are not in full control of when and how you view it.

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What are the risks of doing nothing to improve claims and reduce
complaints?
Lastly, what could happen if insurers dont take heed of new legislation and work towards more
transparent and collaborative processes when it comes to writing insurance policies and managing
claims? In this digital age, it could create a perfect storm as consumers have access to more information
than ever before. They can quickly compare policy premiums and gather reviews and recommendations
for certain products online, as well as be more informed as to how to complain to bodies such as the FOS.

The risks of providing a poorly written policy and slack claims service
include:

Increasing number of fines from the Financial Ombudsman

Increased costs of managing complaints
Increased claims leakage
Loss of market share through poor customer feedback
Decreased profit margin
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The continuation of high complaint volumes through not addressing straight forward opportunities to
improve transparency to customers, and efficiency in managing information with their suppliers could be
fatal for insurers.

Real-time interchange of accurate information between the insurer and their suppliers is essential to
providing a positive claims experience. A quicker, well designed and transparent claims settlement
process is beneficial for everyone. A visible collaborative process is an enabler that puts the right
information in the right peoples hands at the right time.

Improved management of suppliers and partners can reduce the settlement time, reduce the potential
opportunities to commit fraud, reduce frictional costs of processing the claim and improve the
policyholders satisfaction.

Insurers need to embrace the digital age and take the opportunity to provide more value added services
to their customers as insurance cannot continue to be treated as a commodity as it will diminish
premiums and profit margins. If insurers dont look for more ways to work smarter and reinforce their
supply chain processes and engage the customer and win back their trust then its likely more foreword
looking businesses will take their place.

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About Adjuno
Adjuno is a global software business that is made up of two former supply chain solutions companies that
united to launch as a single world-wide brand in February 2016. We are also part of the $1 Billion + Allport
Cargo Services Logistics Group.

We provide a web-based claims fulfilment platform to a number of global insurance companies, as well as
Lloyds of London insurance syndicates. Our platform connects insurers with their suppliers to reduce the
cost per claim. Insurers who work with us gain complete visibility of their supply chain, enabling improved
supplier management and reduced claims leakage. The end result is a faster, more efficient process, and a
better customer experience.

We have more than 20 years of experience in providing cloud-based business solutions, and a global client
base spanning across America, Europe, South Africa, and Australasia. We have worked with companies of all
sizes across the retail, insurance and consumer product industries, including AXA insurance, Marks and
Spencer, ASOS, and John Lewis.

Today, our claims management software has over 13K users logging on each day to effectively manage and
drive their business, and every month we track over 11M processes, at more than 150 customer sites
across the world.

Contact us for more information

Adjuno Regional Europe/ UK Head Office
Worcester House, No 6 Langley Quay, Waterside Drive, Langley, Berkshire, SL3 6EY

About Adjuno

Adjuno UK LIMITED
is a company registered in England
and Wales, VAT No. 226834456,
Company No. 1239655
Registered office address: Allport
House, Cowley Business Park, Cowley,
Uxbridge, UB8 2AD

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