After the success of Lloyd’s Claims Transformation Programme (CTP) pilot, its rollout has been accelerated overr the next 18 months. The pilot exceeded expectations and is already significantly reducing the time it takes to process new claims in the market.
Centre of claims excellence
Lloyd’s has the best pool of claims expertise anywhere in the world, says David Lang, who joined Lloyd’s as Head of Claims in April 2011. The market pays out £10bn in claims each year, handling 210,000 claims at any given time. However it would be a mistake for the market to sit on its laurels, says Lang. Claims handling is a high priority for Lloyd’s and is now far more visible than has been the case in the past.
“The market is investing and building on the pool of claims talent in the market, as well as improving underlying processes and systems,” Lang says. “The settlement of claims should be sufficient, appropriate, and reflect the nature of the claim - and this is what the CTP sets out to achieve.”
The CTP is a major project requiring significant investment from the market, says Lang. It introduces a new multistage ‘triage’ approach to claims that applies different appropriate levels of resource – and timeframes – to different claims depending on defined criteria.
The CTP will streamline the process for simple claims, freeing up skilled loss adjusting resource for the more complex claims. This should mean insurers have more control of the cost of claims combined with better and quicker information on claims trends.
“Simpler claims should be paid much quicker under CTP while the larger or complex claims will benefit from the focus of a better quality resource, allowing them to be dealt with faster and more professionally,” says Lang.
After a successful launch the CTP pilot scheme was extended in July 2011 to include more lines of business. The pilot, which began at the start of 2010, focussed on selected property and marine business, but has now been extended to include all new property and marine, together with energy claims.
A substantial number of new claims in the market are now processed under the CTP, and Lloyd’s is on track for almost all new claims to be processed under the new process by the end of 2012.
“The pilot has shown that the CTP is delivering against both its speed and quality criteria,” says Lang. “We have now moved into a roll-out phase and we will be bringing more classes of business into the CTP pilot over the next 18 months.”
The CTP performed even better than expected, says Lang. “Standard claims under the CTP are being processed 50% quicker without any lowering of quality of handling. The market is now taking just 13 days on average to process a standard claim, compared with the previous average of 26 days.”
There is room for even more improvement as the market gets more comfortable with the process, says Lang. There is also scope for brokers to improve their processes and speed up the overall time taken to process claims.
The CTP has required the market’s claims handlers to change their ways of working. But Lloyd’s has been supporting managing agents and educating the market – with more than 500 of the 650 claims handlers in the market already receiving online or face to face training.
“As we roll-out more classes of business in the future we need to ensure resource and training is available,” says Lang.
As Lloyd’s new Head of Claims, Lang has had a busy first few months in the role. In addition to giving renewed impetus to the CTP he is also overseeing other projects.
“We are also looking to raise claims standards and focus more on claims governance,” Lang says. “From January 2012, Lloyd’s will enforce enhanced claims standards, so managing agents need to spend the next six months preparing.”
Lang has also had to steer the market through a number of catastrophe events that have included earthquakes in New Zealand and Japan, as well as storms in the US and flooding in Australia.
“Catastrophes in the first half of 2011 do give rise to an increase in the amount of insurance claims for Lloyd’s. However this is what Lloyd’s does so it is essentially business as usual,” says Lang.
The recent string of natural disasters are making insurers rethink catastrophe insurance, says Lang. “The earthquakes in Japan and New Zealand were outside expectations and have shifted the boundaries of what we now think is possible.”
“These events continue to push our understanding of nature and present new challenges to claims adjusters and underwriters,” he says. “They reinforce that nature is unpredictable, with each event giving rise to issues which have previously not been tested in the relevant legal systems.”