The Lloyd’s market spent more than £1 billion on third-party experts in the past 24 months, according to the Lloyd’s Market Association (LMA), prompting the need for greater control over claims costs.
In June, the claims committee of the LMA, whose Lloyd’s members manage a gross premium income of around £32 billion per annum, approved the project to create the Claims Expert Management Hub for the Lloyd’s market. The hub will enable managing agents to monitor the effectiveness of claims experts, as well as track and control associated costs—all digitally.
Advent Claims was selected as a partner and vendor for the hub late last year, and the LMA and Advent Claims are working to move the project toward delivery, scheduled for later in 2018.
According to Lee Elliston, claims director at the LMA, the hub is one step in the Lloyd’s market’s journey toward becoming a much more digital marketplace.
Claims Media (CM): To what extent—and in what ways—is the Claims Expert Management Hub borne from a desire to modernise the claims process?
Lee Elliston: Lloyd’s is moving towards becoming a much more digital marketplace. Data capture, manipulation, and sharing is one of the routes towards modernising the market, and holds out benefits for all market functions, including claims.
The Claims Expert Management Hub is just one of many important step towards a more modern claims process, and is based on current technology allowing it to integrate with current/future platforms and services, including Electronic Claim Files (ECF).
Without comprehensive data on what the market spends on claims experts, the professional advisers they hire to provide claims-related services on a claim-by-claim basis such as loss adjusters and lawyers, LMA members—Lloyd’s managing agents—could be making uninformed decisions on the appointment and continued provision of claims experts.
That could result in unnecessary spending, or insufficient management oversight of those experts. The hub modernises the process by introducing new, technology-driven efficiencies.
Meanwhile, Lloyd’s has introduced a new Minimum Standard for Claims Management that requires managing agents to demonstrate control of all the third parties they work with, including the appointment process and ongoing management of external experts. They will be looking at selection based on performance, agreeing budgets, and validating fees based on agreed scales.
The Claims Expert Management Hub will provide the data and performance oversight necessary to demonstrate adequate control of claims experts.
CM: What key features did the association and its members want from the hub?
Elliston: The LMA Claims Committee (LMACC) identified two gaps that currently exist in relation to the data capture of managing agencies’ spending on claims experts: the management of claims leakage and the oversight of experts.
In the data capture and spending area, managing agents find it difficult to track their spending on claims experts accurately, and even more difficult to map experts’ performance against the indemnity, the outcome of each case, and the customer experience.
On oversight and management of expert performance, members wanted a system that gives them the ability to demonstrate adequate on-boarding, oversight, and management of claims experts.
They also sought support for the appointment and selection process, and a tool to measure performance against outcome, agreed service levels, and their own claims philosophy.
CM: How did you strike a balance between the needs of users, ie, insurers, and ultimate beneficiaries, ie, claimants, when designing the hub?
Elliston: One doesn’t come at the cost of the other, so no such balance is really necessary. The system helps carriers to ensure that claims experts they appoint are performing their job adequately as well as cost-effectively.
Those that overcharge, underperform, or both should be easy to identify and remediate. The system is designed to help ensure everyone is doing their job well.
Data is captured throughout the life of a claim. That allows the effectiveness of handling individual claims to be assessed, as well as supporting the users’ claims strategy, and the outcome and experience delivered to the insured or policyholder.
Elective components of the tool will offer functionality to set service level agreements, and to deliver central and standardised terms of engagement and rate cards.
CM: What made Advent stand out as a partner in this project?
Elliston: The LMACC looked at 11 possible suppliers. Seven made formal proposals, which were considered by a market working group of 24 claims professionals from 15 managing agencies. Four were selected to make a more detailed proposal, and Advent was chosen based on several factors.
The product design, technical capabilities, and the flexible and agile nature of the platform Advent proposed suited the LMACC’s vision for the project. Advent’s proposal exceeded market and project requirements in relation to scope and key deliverables, and the company takes a partnership approach, with a vision to serve the market on a long-term basis. This includes a low-cost and flexible approach to change.
Advent displayed professionalism, engagement, and partnership delivery, all supported by technical expertise with significant market knowledge and experience, and backed up by a service-support approach, ongoing management, and resource within agreed and recommended implementation and running costs.
CM: When can we expect the Claims Expert Management Hub to be delivered?
Elliston: Last year’s huge volume of catastrophe-related claims caused us to delay the initiation of the delivery phase until February, but we remain on target for intended launch in the third quarter of this year.
Lee Elliston is claims director at the Lloyd’s Market Association (LMA). To find out more about the association, visit its website.