By James Sterling, Head of Claims
In this blog, we share Kayzen’s perspective on the significance of the Claims function and how we aim to positively differentiate when providing this key client service. This is against the backdrop of the FCA’s Consumer Duty implemented in July 2023, as well as comments made by the CEO of the MGAA , underscoring the importance of insurers delivering good claims outcomes for its customers.
Claims as the shop-window
Let’s first revisit the fundamentals of insurance and remind ourselves what every client is purchasing. Insurance is essentially a financial arrangement in which an individual or entity pays premiums to an insurance company in exchange for a promise to pay valid future losses or claims.
Taking this “promise to pay” as being core to the insurance contract, how does an insurer facilitate this promise? Via its Claims function, often referred to as the ‘shop-window’, where insurers can theoretically show-case how the insurance product works in practice.
Managing stakeholder expectations
The challenge for the insurance industry lies in balancing the pursuit of insurer profit against protecting clients' interests. Claims operational decisions - such as reducing claims staff, implementing automation, outsourcing claims, selling claims portfolios, or isolating claims teams from underwriters and clients - can have adverse impacts on this delicate balance, often to the detriment of good claims service.
Fundamentally, the client and its executives may experience financial or other commercial difficulties if its insurers are unable or unwilling to promptly settle valid claims. This is especially true in the Financial Lines sphere, where claims can be complex, protracted and costly, exerting ongoing financial and reputational strain on the company and its management team.
For example, an internal investigation that subsequently morphs into formal regulatory proceedings, followed by potential investor, liquidator, and other third-party claims, could conceivably drag on for several years and erode millions of pounds in defence costs.
Therefore, when claims do materialise, clients want to see empathy and have their drivers understood, instilling confidence that they are partnering with reliable specialists who can be trusted to fairly assess coverage and pay valid claims promptly. Clients also benefit from an insurer who understands their business needs, not just when a claim presents itself but can also provide a personal continuum from the placement stage, including being consulted on any risk management.
The Kayzen claims promise
At Kayzen, we take our claims commitments seriously, understanding that every claim or circumstance can potentially have a significant business and personal impact. Therefore, Kayzen’s claims proposition is designed entirely with our brokers and clients in mind, recognising that the journey to resolution is just as important as the ultimate outcome:
- we handle each notification in-house from start to finish;
- we provide a personal and responsive service via a main point of contact;
- we oversee the entire resolution process, proactively liaising with relevant stakeholders and driving forward any litigation using our expertise and legal relationships;
- we endeavour to adhere to the timeframes set out in the Kayzen Claims Charter : by implementing swift turnaround times at all key claim stages, we believe this best facilitates positive client journeys AND outcomes.
Concluding thoughts
One of Kayzen’s primary focuses is on the client experience and, from a current Financial Lines claims perspective, we firmly believe claims are in the safest hands when overseen by human beings in-house. Whilst we actively embrace technology when it genuinely adds client benefit, our understanding is that most of our target customers still prefer the peace of mind of having any claims process driven via humans rather than technology (or a volume claims service provider).
Indeed, it has been a consistent source of complaint amongst our fellow insurers, including those who have downsized their internal claims teams, that there is a shortage of human claims talent and that this is slowing down much-needed claims transformation initiatives (such as the facilitation of Artificial Intelligence). Is it any wonder, especially when some insurers appear to be deliberately minimising spending on the very claim asset that is at the heart of the insurance product they aspire to credibly sell.
For decades, insurers have outsourced or sold on claims in bulk or relied on technology to assist with key parts of the claims adjusting process. Kayzen’s Claim’s USP is “we will not do this where there is no client value add”: instead, we take pride in our in-house claims offering, selling a claims service that we genuinely believe upholds contract certainty and the efficacy of the “promise to pay”.
