An Insurance Company Is Only As Good As It’s Claims Department

Few people actually think about their insurance cover until they hear a loud crash, smell smoke or discover that someone has made off with their possessions. TV news footage of people being rescued from floods, their homes devastated by water and rendered uninhabitable, are surely the best reminder that having insurance cover is a good thing. Or is it? Many flood victims will say, after they got over the initial shock of the damage, that is when their problems truly started. If the TV cameras revisit the scene months later, how many of the people who are interviewed say they are waiting for the insurance company to sort things out?

What should be the greatest advertisement for being fully insured, can turn into a PR nightmare for the insurance companies. They never seem to get their act together when they are needed most, but once again, this is not actually the case either. In fact everything hinges on the quality of the insurance companies claims handling.

The cameras will not revisit houses where they have been completely restored and look immaculate with new decoration and furnishings throughout. Neither will commentators mention the number of cars insurance companies swiftly paid out for after a flood.

An example of good claims handling is the speed an insurer will make a payment on account for emergency work or to enable their customers to move into temporary accommodation. Those affected will get to know where builders gut and rebuild a home at the insurance company’s expense, as they will those who seem to spend months haggling.

Quality claims handling is all about treating the customer as an individual and taking responsibility for the claim from beginning to the end. In contrast, those companies that just focus on the process and chiefly see their role as cost reduction, are almost incapable of delivering good customer outcomes. They are set up to fail, inevitably their complex system will ‘drop the ball’ at some point.

If their customer  has to ring around and then sent from pillar to post to chase up their claim, they will immediately tell everyone that this is not what they signed up for. Being kept on hold for several minutes can be OK, provided the person who picks up the call can deal with the problem. But if they just send the caller to another queue to speak to someone else, this is just bad service in action.

Good claims departments make or break an insurance company. However, that is not just from the viewpoint of their first duty to deal efficiently with own customer’s claims. Not paying out is also very important. Particularly if they are good at detecting fraud, for example third party ‘claims rings’ where criminal gangs make money from staged accidents. In these cases a good insurance company will have the expertise and ability to gather evidence that could ultimately help with a criminal conviction. Ultimately, an insurer that is good at dealing with fraudulent claims, will see an improvement in their claims costs that in turn will enable them to price more competitively. In this case everybody wins, including their customers.

Are claims departments a good place for an insurance company to invest in efficient and customer focused service? The customer would say of course. An excellent example of where this can been seen in action is the niche on-line provider iprotectinsurance.co.uk. They have achieved outstanding feedback from customers, yet in their field of Mortgage Insurance, offer some of the lowest premiums in the UK.  Since 2007 they have proven that offering a good claims service does indeed deliver low prices and has been critical to establishing their reputation and success.

Author Dennis Haggerty is a Chartered Insurer and Fellow of the Chartered Insurance Institute and is currently Marketing Manager at Wessex Group.

Insurers Prepare For Global Doomsday Scenario

According to scientists the World as we know it is in imminent danger from a Doomsday scenario the likes of which would scare the science fiction writers and not even Dr Who could avert.

No we are not talking about global warming, plate tectonics, mega tsunamis, giant asteroids, disclosure and alien invasion or the Satanic manoeuvrings of the New World Order, but something much more likely to occur first.

The Insurance companies are starting to prepare for the event for the simple reason – it has happened before!

In late August 1859 a very strange phenomena was experienced all across the World which had never been reported before. It was only a short period prior to this date that man had started using electricity for technology.
The first electronic telegraph dates from 1832 when it was invented by Schilling.
As the event occurred, all across the globe telegraph systems failed, in some cases burning out and shocking the users and in others, continuing to transmit code even when disconnected from the electricity supply.

The phenomenon became known as the Carrington Event, was named after a British scientist who first identified the cause – simultaneous coronal mass ejections or CME’s. The CME’s of August to September of 1859 were the largest ‘solar flares’ ever recorded to date.

Threats to the Earth from the Sun include coronal mass ejections and solar radio bursts which create solar winds, solar radiation storms of cosmic rays and magnetic storms.

Coronal Mass Ejection

Coronal Mass Ejection

All of these have in the past since the Carrington Event occured on smaller scales and disrupted power stations, power grids, telephone and television systems.
Since the advent of the digital age, all inter-connected systems, computers and the Internet and homes and businesses are now at major risk.

Solar activity occurs in known 11 year cycles and we are now entering a phase where a large CME or worse is expected anytime between 2012 and 2015.

This fact has not gone unnoticed by Insurers and Governments and Lloyds of London have issued numerous warnings and produced white papers on the global risk potential to business and society.

The largest risks are to power supplies and communications which if destroyed or shut down globally for large periods of time, will be the the proximate cause of the rapid mass breakdown of society as we know it. The scenario is truly frightening and it doesn’t take too much of an imagination to visualise the consequence.

Doomsday!

The Doomsday Vision of the Prophet Ezekiel

The Doomsday Vision of the Prophet Ezekiel

When a large CME occurs the size of the Carrington Event the World will have in the region of 12 to 17 hours of warning to prepare itself before we are hit by the ‘storm’. The normal rate at which solar flares take to reach the earth is two to three days.
Governments will not be able to supress that the event is about to occur due to the numerous individuals and agencies around the globe who are constantly watching and recording solar activity.
However short of sitting on your own personal Faraday cage with electronic equipment, batteries and generators, there is little that a business of individual can do to protect themselves from the electro-magnetic pulse and nothing much can protect from the cosmic radiation.

In a worse case scenario all power stations will be knocked out, transmission cables and electronic equipment – fried.

Satellites, television, radio, landlines, Internet and mobile phones will cease to function and there will be a Global communications blackout that could last for years!
Transportation will be massively affected. Trains, trucks and cars will stop working and planes will literally drop from the sky.

Electronic money will become worthless as ATMs and the systems that control them will be fried globally. Businesses will not be able to carry out any transactions and food supplies will rapidly diminish leading to massive civil unrest and riot.
Water systems which rely on pumps will fail to function and sewage and waste build-up will lead to large scale disease and death.
More frightening will be the secondary damage caused by the failure of the initial systems, such as was witnessed recently after the Fukushima Tsunami incident. When backup diesel generators for water cooling pumps failed due to a lack of supply,  it led to a nuclear core meltdown and radiation emissions not witnessed since Chernobyl. There are approximately 450 nuclear reactors worldwide!

No part of society will escape the consequences of such an event. Business interruption insurance and failure of service supply cover will either reach maximum levels of indemnity which are insufficient or be declared a fundamental risk.  The only action that individuals and businesses can take to mitigate the damage is in the words of Baden-Powell, to be prepared!

Further Reading

Coronal Mass Ejection – http://en.wikipedia.org/wiki/Coronal_mass_ejection
Carrington Event – http://en.wikipedia.org/wiki/Carrington_Event
Lloyds Global Risks White Paper – http://www.lloyds.com/~/media/Lloyds/Reports/360/360 Space Weather/7311_Lloyds_360_Space Weather_03.pdf
Lloyds of London Space Weather Report – http://www.lloyds.com/news-and-insight/news-and-features/market-news/industry-news-2010/be-prepared-stormy-space-weather-ahead
CME Nuclear Risks – http://beforeitsnews.com/space/2011/09/1089880-1089880.html

Is Car Insurance Telematics Black Box Technology Penalising Good Drivers?

Car Insurance telematics, often known as in-car black box technology, has been hailed this year as the panacea for all the ills of insuring young drivers and claims to offer this class of driver cheaper car insurance.

The technology works by having a ‘black box’ fitted under the bonnet of the insured vehicle which measures the drivers performance and sends data using a variety of techniques, to the insurer for analysis and pricing.

Premiums are initially charged using known risk data and rating factors and then adjusted up or down over the course of the policy life. Many large car insurers have adopted the technology in a bid to win a larger share of this lucrative yet risky end of the market and in many cases premiums for young drivers have been reduced.

However questions are now starting to be asked about the accuracy of the data and the consequent pricing models.

The typical system works by measuring location defined by GPS, the time of day and certain performance related measurements for acceleration, speed, cornering and braking. A scoring method is applied to each of these criteria to determine the drivers performance and additional premium or future discounts are applied dependent upon these scores.

Clients can then access their account either online or via a mobile phone app where they can see how well the insurance company thinks they drive and discover whether they will get a refund or be charged more. The customer application often known as a dashboard shows the drivers perceived peformance in a colour coded Green – Amber – Red layout with performance rated from 1 bad to 5 Angelic.

However many drivers are now complaining about the fairness of the system and the measurement and charging methods and this week the BBC Radio 4 consumer complaints program ‘You and Yours’ reported on the growing number of dissatisfied drivers.

One particular interviewee a Mrs Bev Stainsby took out Co-operative car insurance at a cost of £1100 to cover herself and her young son using the telematics system. The car was driven for a short period of time by the youngster before he went away to university. Since then the car has been driven exclusively by Mrs Stainsby who when she took over usage noticed that the dashboard scores were declining and further charges might have to be paid. She only uses the car to commute 20 miles per day on a straight road and was horrified to notice that the system was penalising her driving particularly for cornering and braking. She doesn’t trust the calibration of the telematics and upon enquiry was fobbed off by the insurer with the excuse that the scores are averaged over the year. A spokesperson for the company admitted that insurers adjust the basic system scoring against known data collected from its other drivers using the boxes, but defended the performance calibration. Mrs Stainsby is not happy! The program is available to listen to on BBC iplayer for a short period of time.

Steve Davis of online specialist car insurer Car-Insurance.tv said “Although the telematics driven policies can have benefits to both the driver and the insurer, the systems are still in their very early stages of development and there are some large concerns that customers should be made aware of. In particular the question of privacy.”

“The system allows insurance companies to completely profile your lifestyle, way beyond your driving skills. It allows them to see exactly where you go, who you visit, when you go out and also classifies you as a certain type of driver which may adversely affect you in the future.  Clearly there are problems with insurers adjusting the calibration scores and until a defined set of  performance skill scoring is adopted across the industry, many drivers will be financially disadvantaged by belonging to the ‘wrong’ pool of drivers defined by a particular company’s dataset.”

“Furthermore, where multiple drivers have access to the same vehicle, the data cannot be trusted as a definition of risk and pricing anomalies are bound to occur”

RBS Sells Off Direct Line Insurance Cheaply!

City Analysts are stating that the flotation of  government owned Direct Line is priced well, as the share price is up 7% today on the grey markets from the initial offering of £175 per share. The official floatation is not until the 16th of October.

However this begs the question that the company is being sold cheap and the taxpayer losing again.

The UK government has pumped more than 21 billion pounds into RBS, and the insurance side is one of the most profitable areas.
The Stock market listing of the company, which also owns the Churchill and Green Flag brands,  is the largest in London this year.
Private investors have been less sceptical about the float than other institutions.

At 175p a share, Direct Line would have had a market value of £2.63bn, which is much is lower than a £2.8bn-£3.5bn value placed on the insurer by the IPO advisor. Clearly the private investors see a quick profit to be made.

The future of the Croydon based company, which invented call centres, might appear rosy to those looking to make a quick buck, however the UK car insurance market is already saturated and the competition enquiry into car insurance might crimp future profits, however the brand under new management has been seen to perform well over the last two years.

Does your BMW Car Insurance actually cover you for theft?

If you own a recent BMW car you may be surpised to find that it’s not actually covered should you fall victim to theft and try to make a claim.

The problem stems from the on-board computer and the associated key-fob technology which allows car thieves easy access to your vehicle.

Technology has been widely available and can be obtained on the Internet, that allows would be thieves to tap into diagnostic system of the on-board computer and clone the key technology, allowing easy access to the car.

The problem has been exacerbated by recent EU competition directives that allow non BMW garages the ability to access diagnostic systems.

West Midlands police have reported 154 thefts of BMWs with this technology in the last three months.

The Government sponsored company responsible for setting the insurance security rates Thatcham Research thatcham.org for members of the ABI reported the problem to insurance companies  over nine months ago. They have refused to downgrade the 5 star security rating of the affected models as they state this would be unfair to the manufacturer.

The BBC has been leading an awareness campaign for owners of these BMWs with its consumer affairs program Watchdog and Radio 4.

Speaking on Radio 4 a Mr Gordon who is a director of Southampton Football Club said he was treated like a criminal by his car insurance company LV after he made a claim for theft. Despite having both keys in his possession and a CCTV tape he managed to secure from close by to where the car was stolen from he claimed that LV  inferred that he was party to the theft. They sent out a private investigator to interview him and  treated him as a suspect. It took them 9 months to finally settle claim, only paid out the minimum amount which was a lot less than the cars value and he lost his no claims discount.

When contacted BMW suggested that any concerned owner should contact their  dealership and fit secondary security devices such as steering wheel crook locks.