By Patrick Vice
(reprinted with permission, published in
ci – Canadian Insurance Magazine, April 2002)
Ron and Julie White faced a financial crisis last November
when the auto insurance for their 20-year old, second-generation family business came up
for renewal. But with new-generation technology that can streamline the claims handling
process, their dilemma need not ever have happened.
Collaborative or “hub” technology, as it is
variously known, uses software applications and Internet portals to link up the various
parties involved in handling an insurance claim, facilitating the exchange of information
and thereby improving communication, reporting and workflow.
That kind of online interaction, which is gaining ground in
the insurance industry, could very well have prevented the kind of predicament the Whites
found themselves in or, at the very least, have left the couple with a better sense of service.
Ron’s Burner Service is a heating/cooling company in
Guelph, Ont., specializing in the service and installation of oil furnaces. It has five
service vans, insured as a small fleet. The company had been with a Guelph broker for a
decade until 1998, when that broker sold out to another broker in the area. Over the past
three years, there had been two claims but there had never been a major impact on the
premium, which was $4,800 in 1999.
In April 2001, one of the vans was involved in a
first-party, property damage claim. The claim was reported to the broker and the insurer
paid approximately $8,000 for repair to the vehicle. There was no further contact from the
insurer or the broker until Oct. 31, when the insurer sent a non-renewal to Ron and
Julie’s company, effective Nov. 30.
There had been no notice from the broker regarding the
non-renewal and when Julie called, she was given little help. She contacted another
broker, who could only offer Facility coverage in the range of $35,000 to $50,000, with
payment required up front. The White’s were frantic. As Julie says, “this gave
us two weeks of hell and no sleep.”
Finally, Julie got in touch with the Insurance Bureau of
Canada and found a person who suggested two alternative carriers. She relayed that
information to her new broker, who placed the business with one of the suggested companies
at a premium of $16,000.
In the current market, such stories are unfortunately
common. However, in the customer’s mind, several questions arise. Could the
non-renewal have been avoided if the claim had not been reported? Why was there no contact
from the broker when the non-renewal went out? Why did the insured have to research the
availability of alternative markets?
Naturally, there are many details from this case that are
missing. However, according to Lorie Guthrie-Phair, chief operating officer of
Toronto-based Guthrie Insurance Brokers Ltd., “it does illustrate the importance of
professional consultative service and effective communication from brokers in all situations.
“It is imperative that clients be given the
information they need in order to make appropriate decisions,” she says. “At
times, it isn’t what they always want to hear nor can we solve every problem; our current
insurance climate is evidence of that but, nevertheless, a broker still owes a duty of
care to their clients.”
While technology won’t solve the problems of a
tightening market, new approaches are addressing the problems of communicating information
to a variety of interested parties in a secure, timely and accurate fashion. This
technology is currently being deployed largely in the higher-end commercial insurance
market place but is becoming more available to a broader segment of the insurer and broker community.
For example, Riskclick Inc., which has offices in London
and New York, has designed modular web services software that can create virtual
communities that work together with complete security and with real-time access to
relevant information and documents.
Initially, Riskclick was set up to house data for insurers,
brokers, and customers, which is working well for a set of clients. However, at the
request of larger clients, Riskclick has developed web services that provide a single view
and inter-operability across different computers and platforms. According to Riskclick
chairman and CEO Tim Wright, this allows the insurers, brokers and other information
sources to maintain their own data yet allow access to others by invitation.
Vice president Daniel Stander says that
this has specific meaning for claims processes. Riskclick allows the insured to submit
first reports and add additional data. The claims notification will create a structured
message thread, file it automatically in the right client folder for the right policy year
and alert all stakeholders. The broker can determine participation of the insurer and can
also invite others such as outside adjusters or examiners to become part of the process.
Indeed, Riskclick’s growing popularity is being
“driven by risk managers wanting to adopt and promote best practices,” says
Stander, citing two examples of how his company’s products can be used in different scenarios.
In one case, a large international firm
wants to use Riskclick to outsource the claims function while maintaining the ability to
monitor activities at whatever level it chooses. The company sometimes encounters large,
complex claims that can span more than two years and overlap insurance programs. Riskclick
allows the management of the outsourcing while meeting the need for internal control over processing.
Another company, a large retailer, has
high-frequency but low-value claims and does its own claims handling. Riskclick is used to
manage the claims from field reporting through the handling process.
Riskclick refers to its approach as
“collaborative technology.” On the other hand, Correlation Technologies Inc. of
Burnaby, B.C., another supplier offering Web-enabled products to facilitate insurance
communications, prefers the term “hub technology.”
Correlation is developing what it calls the
ClaimCore Collaborative Commerce technology set, which is designed specifically for
“service-chain” connectivity and work management within the claims industry.
“We are addressing claims management
using technology as the platform for facilitating collaborative claims handling amongst
all service providers such as medical managers, legal firms, restoration companies,
auto rental and auto body shops,” says Correlation account executive Scott Knight.
“Everyone in the claims facility cycle is a participant and the more collaboration,
the higher the cost reductions.”
Correlation targets adjusters and other
service providers as the primary drivers for its ClaimCore product. “An adjuster can
use the service free of charge and make all assignments from a single web screen and track
all claim activity by any of his/her service providers including workflow and vendor
performance metrics,” Knight points out.
Service providers see value in the ClaimCore product. For
instance, Craig Hogarth, president of Squamish, B.C.-based Onside Restorations, says his
company has implemented the technology across the board, creating “huge
efficiencies” in workflow.
“This has had a positive impact to our bottom
line,” says Hogarth. “Further being able to extend our work to the customer via
the Internet has resulted in greater customer satisfaction and significantly increased
revenues for our company.”
One of the obvious benefits of collaborative or hub
technology is better communications among all parties in the claims handling process
without pigeonholing those exchanges into standardized formats. This allows brokers and
others to offer personalized service, leveraging larger relationships without error-prone duplication.
Indeed, the online information sharing facilitated by hub
technology need know no boundaries. For instance, London-based Worldwide Broker
Network’s (WBN), a partnership of independently-owned brokerages in 40 countries,
demonstrates international-local collaboration.
“Our members handle placements and claims the world
over using (Riskclick),” says WBN executive director George Worsley. ” WBN
understands that superlative service is based on a relationship of efficiency and trust
and that trust is a function of security, certainty and transparency.
“Riskclick promotes all of these and, in turn, helps
our members promote themselves as the trusted risk advisor of choice both internationally
and in their respective local markets”.
Michael Boire, account executive at Toronto-based Hunter
Keilty Muntz & Beatty, a WBN member, says his firm uses Riskclick to manage the
international loss control program of a growing, Montreal-based technology client.
“Riskclick allows me to leverage my WBN partners on
every single client engagement,” Boire explains. “It is an excellent tool for
structuring any kind of program, whether managing a renewal or handling an overseas claim.
“I find that Riskclick improves the efficiency,
certainty and transparency of all interactions associated with the account. This kind of
technology helps HKMB continue operating in our role as trusted advisor to our clients.”
Back to Julie and Ron White. How could this new technology
have affected the outcome of their claim and their search for insurance?
First, if the broker that acquired the business from the
White’s original broker could have plugged in to the couple’s existing files
electronically, it could have seen any claims that had been on the books when the file was
taken over, alerting it to the possibility of a rate adjustment if there were another
claim reported. This would have been especially important when the new claim was reported
and the broker was advising the Whites on a course of action.
Second, the new broker would have had access to a much
richer source of information. A major side benefit of collaborative or hub technology is
that both structured and unstructured documents can be accommodated, providing the facts
and the nuances of the situation (for example the White’s long-standing relationship
with the insurer and original broker).
Third, regardless of whether the claim had been reported,
the application of collaborative or hub technology would have made the broker aware of the non-renewal
that was issued and the broker could then have been much more proactive in addressing the situation.
Fourth, the broker would have been able to do a more
thorough search of the market place to find alternatives to Facility coverage for the Whites.
And last but certainly not least, the broker could have
invited the Whites to be a party to some or all of the negotiations in the claims handling
and subsequent placement, underscoring the broker’s important role as a trusted, professional advisor.
Irrespective of market conditions, it is incumbent upon
brokers to provide, in Guthrie-Phair’s words, “professional consultative service
and effective communication from brokers in all situations.” Collaborative or hub
technology can be a powerful tool in achieving that objective.