Our claims conference earlier this year in Bogota, for insurance buyers, insurers, reinsurers and claims experts, threw up some interesting findings. We wanted to focus attention on experiences of handling major losses between the LatAm and London markets. Underlying it all was the need to increase understanding and improve the settlement of claims.
The LatAm region’s rapid economic development has drawn in many of the global industrial giants and expenditure on infrastructure and natural resources projects has been massive. The resulting trading environment has resulted in huge risks being placed both domestically and in the global reinsurance marketplace.
I’m pleased to say London has remained the market of choice for many large corporate insurance buyers. To maintain this position however a major challenge for us lies in settling larger and more difficult losses that can arise. The size of the placements – which can often involve more than 20 international reinsurers – poses particular challenges. A proactive approach needs to be adopted where the process is constantly under review and kept moving.
Insurers and reinsurers traditionally rely on a range of appointed experts to help them. Within the adjustment process claims information comes from many sources and the sheer amount of information required and the number of experts appointed can make it a challenge to ensure the right people are making the important decisions and taking ownership for driving claims through to settlement. Effective information flow, prompt investigation and mutually agreed expectation of how the process is to work are all key to getting a successful result.
At the conference we saw presentations from various key stakeholders, from local buyers through to international reinsurers. They all gave their perceptions of how they expect the claims process to work, why claims handling can sometimes become protracted giving rise to disputes and what they believe would give rise to improvements. Lack of awareness in London of the governing laws, custom and practice in LatAm countries were put forward as typical causes of e friction as well as a tendency to treat all LatAm countries in the same way, when regulations vary considerably. Failure to understand this can get the process off on the wrong footing and sometimes it can be difficult to correct differences thereafter.
Naturally insurance buyers look for a process that is clear and a commitment to handling losses in which their needs are understood at all times. After all they typically have businesses to run whilst insurers work with and around them to conclude their claims. They recognise their responsibility to substantiate their claims and the need to work with appointed experts to understand the level of recovery under their insurance programmes, this needs however to be quickly and effectively completed with minimal impact to them.
In my view once the investigation is underway an early and ongoing dialogue is essential. The London insurance market has already done a lot of work on segment specific handling protocols in areas such as mining and D&O to improve claims service, outline responsibilities and bring transparency to what otherwise can be a confusing process. But in the end the best way to smooth the process and avoid the disputes that can arise is to ensure that points of difference are raised early with the emphasis being on finding solutions. As long as the insurance markets maintain this focus there will continue to be tremendous opportunities in the region.
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For further information, please contact Richard Gurney, Managing Director, Construction on +44 (0)20 7558 3880