Covid-19: Jeremy Trott on insurance response to crisis

The weeks following the UK lockdown on 23 March as a result of the spread of Covid-19 have seen traditional claims activity decrease substantially, suggesting that ‘business as usual’ will not be the case for the foreseeable future, according to Jeremy Trott, non-executive director of the Society of Claims Professionals

The outbreak of Covid-19 and subsequent lockdown in the UK caught most businesses and industries by surprise, including insurance.

In response, the Society of Claims Professionals of the Chartered Insurance Institute (CII) pointed insurers and their claims functions to its good practice guide, which advises on preparations required for surge events, such as the current pandemic.

Along with establishing a ‘surge group’ to oversee surge events and service, the good practice guide recommends using predictive data wisely, managing staff levels appropriately, getting into the mindset of the customer and identifying those who are vulnerable or at-risk , providing accessible and consistent information, and following up with a post-surge service.

The message that they need to be prepared to improvise and react, while being flexible, was clear.

The weeks following the UK lockdown on 23 March have seen traditional claims activity decrease substantially, suggesting that ‘business as usual’ will not be the case for the foreseeable future, according Trott.

He says: “Most claims, such as motor accidents, have seen a significant decrease. This is unsurprising given that there is very little traffic on the roads of the UK at the moment. Of course, one area where we are seeing more activity is commercial property, because of business interruption cover.”

The CII is keen for insurers to uphold their commitment to ensuring public trust in the industry, a point that it measures. Trott has several recommendations for insurers and their claims functions, which, if followed, can help customers, employees and suppliers through the worst of this unprecedented crisis—and beyond.

Firstly, the management of Covid-19 claims, largely coming under travel and business interruption cover, requires honesty, transparency and quick responses, he says. 

“Insurers need to be clear, open and transparent about the cover they are providing, and tell customers as quickly as possible, and in plain and simple terms, whether they are covered for their claim.”

“The reality is that, as the ABI has confirmed, the vast majority of customers will not be covered for business interruption, unless they have specific extensions. Whatever happens, whether customers are covered or not, I want insurers to be honest, and to do that as quickly as possible, so they are not leaving customers waiting for decisions. On the flipside, if a customer is covered, insurers should go through the usual processes while being clear about the timeframes involved for providing payouts and so on.”

Of equal importance is the need for insurers to be flexible in their service delivery and how they support customers.

An easy change to implement for customers is automatically updating cover to reflect and protect a change in business use, either for businesses that are adapting to stay afloat, such as a now-closed restaurant that’s putting its insured vehicles to use as a delivery service, or manufacturers switching their operations to produce key products, such as ventilators, face masks or hand sanitisers.

Trott adds: “The difficult part with that second example, the manufacturer switching from its usual line to medical devices, is the product coverage. There may be some restrictions there. But the general change from the manufacturer’s point of view should automatically be covered.”

“This is where the insurance industry should be offering a flexible approach around how people might diversify their business, either to keep afloat or to help the humanitarian effort.”

Other examples of a flexible approach that insurers could take include offering adjusted cover and premium returns for businesses that have taken their vehicle fleets off the road, effectively insuring for fire and theft only, with the third- and first-party risks removed. 

Courtesy car provisions for key workers and others could be relaxed in cases where damaged vehicles are unlikely to be repaired because parts are in short supply and garages are closed. Total loss cases also require consideration, with Trott urging insurers to assess the likelihood of a new vehicle being sourced at the moment, rendering payouts useless.

Trott also wants insurers to be flexible and supportive when it comes to paying their supplier networks, which may be made up of small, specialist businesses suffering from cash-flow restrictions due to the Covid-19 crisis.

He explains: “There will be many suppliers, such as vehicle repairers and smaller, bespoke loss adjusters that will be struggling for cash right now. Insurers need to be in constant contact with them and paying them appropriately for their work, and perhaps even changing some of their payment terms to help.”

Internally, Trott asks that insurers pay particular attention to managing during a difficult operational environment. Significant stress and strain will be felt within particular areas of the claims function, with payments to customers likely to be one. He says: “Insurers need to make sure that payments are going out to customers and suppliers within the usual timeframes, or even quicker than previously, to guarantee that cash is flowing to the people who need it most at this difficult time.”

As a profession, Trott says that colleagues and peers need to look after one another during the Covid-19 crisis. “We have 10,500 members and there are probably 30,000 people who work in claims in some shape or form in the UK. There is huge anxiety in the country overall, so insurers and we as the Society of Claims Professionals have a huge role to play in supporting individuals through this.”

Support can include helping employees to work from home, looking after their mental health, ensuring that lunch breaks are taken—the list goes on, Trott says.

He continues: “There is a huge amount that we need to do as a profession to ensure we are supporting our employees, who are then supporting our customers. This sort of support will be costly, but investment now will be repaid in engagement down the line. An engaged workforce will look after its customers better.”