The Single Claims Agreement Party (SCAP) Model was a key step towards modernising and streamlining existing claims agreement models for non-complex claims, says Lee Elliston, claims director at the Lloyd’s Market Association
What is SCAP and why does the Lloyd’s of London market need it?
Lee Elliston: The Single Claims Agreement Party (SCAP) Model is a collaborative cross-market initiative between Lloyd’s and company carriers that will enhance the London claims service for our customers. It is a key step towards modernising and streamlining existing Lloyd’s of London and International Underwriting Association of London claims agreement models for non-complex claims. It will speed up the agreement of claims, reduce the agreement parties, reduce each claim’s lifecycle, and provide the opportunity to accelerate payment.
At present, the lead underwriter of Lloyd’s-only policies has the authority to agree claims, when the indemnity is below $250,000. This extends that authority, when agreed in advance at point of placement, to the leaders of policies with company market participation, which will significantly speed up the claims process. Our customers should not experience distinct agreement models between London carriers, because we are a market of insurers and reinsurers that share the capacity backing risks.
How complex has the SCAP been to conclude? What were the barriers?
Elliston: The work has been undertaken by three working groups each dealing with a strand of the process. The Inter Carrier Agreement Working Group drafted terms, conditions, and obligations, including:
- Financial threshold
- Carrier scope: the definition of a SCAP (re)insurer
- Scope of the SCAP (ie, business exclusions)
- Leads’ responsibilities (principally claims determination, provision of information to followers, and soft and financial triggers)
- Brokers’ responsibilities
- Claims re-assignment
- Termination of application of the SCAP clause
- Professional advisers
- Claims concerns and disputes
- Conflicts of interest
- Law and jurisdiction
The working group concluded, for example, to exclude binders, lineslips, and proportional treaties, based on cross-market claims volumes and the basis of presentation and claims handling, complexity, and risk.
The operations working group tackled building the operating model and processes to support a tactical delivery of SCAP. These require no material change to technology and/or services, including Xchanging Claims Service’s role in claims processing. However, these will have some impact on the current claims agreement process, and the way claims professionals operate within it. The working group also set key principles and requirements to deliver a strategic operating model, including material change to current technology and market services required to create an efficient, automated and central claims agreement model.
The process has been complex, but it has not been strewn with roadblocks, for two reasons. Firstly, the need is real and well recognised. Secondly, a precedent and model exists within Lloyd’s. It was essentially understanding the market feeling and level of support that existed to widen this Lloyd’s model to a cross-market claims agreement model and practice.
The project was formally initiated in April 2017, although some analysis and market consultation was carried out by the London & International Insurance Brokers Association, Lloyd’s and the Lloyd’s Market Association prior to this. The fact that the SCAP clause and model are already operational shows that from conception to launch it has been a very short period, particularly when considering the parties affected by the launch: approximately 120 brokers, 57 managing agencies, and 50 company carriers.
What efficiencies will the agreement bring?
Elliston: Carriers and brokers will have to spend much less time discussing and agreeing lower value, straightforward claims with multiple agreement parties. Collapsing the carrier agreement chain will mean less touchpoints, and reduced duplication and re-keying of data.
Streamlining the claims agreement model across London carriers opens up opportunities to deliver a modern operating model, making use of automated technology, and structured messaging and reporting. All of which, when implemented, will create and support a straight-through processing model, from notification to agreement to claims processing. The model will move the dial for the speed of claims agreement. The strategic delivery to support SCAP operationally is now a key priority of the target operating model claims programme, which was initiated in Q1 2018.