How will Covid-19 lockdown affect future claims handling?

Mark Pierce, operations director at Criterion, the high-net-worth claim specialist, explains why the insurance industry will return to physical visit claims assessments once the Covid-19 lockdown is lifted

Until ‘lockdown’, virtually all of our claims assessments involved a physical visit. But these are no longer usual times. Under the Covid-19-instigated lockdown, less than 10% of our assessments now include a physical visit, with us adopting all appropriate government guidance on personal safety. It is a testament to the commitment of Criterion’s team that we can do physical visits at all. These few such visits are currently consigned to urgent cases; where properties have been rendered uninhabitable, for instance, through a water tank burst or fire, or when the properties are empty. 

More than 90% of the time, however, we have been compelled to run assessments virtually. Most insurers don’t have access to the technology that we have to do virtual visits. So these assessments tend to be outsourced to us and we use all of the technology at our disposal. Although we have been able to do virtual visits for some years now, it is not something in the high-net-worth sector that either insurers or their customers really wanted. 

Typically on a virtual visit, we’ll conduct an interview with the insured. From that conversation, we will gain an understanding of their background, the risk and what has happened. We will then ask the policyholder to take us on a virtual tour with their smartphone or tablet. Through the video screen, we will assess the damage, moving from room to room to determine how much has been impacted.

Benefits of virtual visits

Compare a virtual visit with a physical visit—the time taken for the assessment is very similar. However, once you remove travel, you’re buying back a lot of time with a virtual visit. Outside of London, our adjusting team each drive on average about a thousand business miles per month. With a team of nearly 20 adjusters, that represents a significant time saving, which is now better used to service claims even better. This helps our efficiency, customer satisfaction and turnaround.

However, the downsides associated with virtual visits significantly outweigh the benefits. Policyholders accept virtual visits under lockdown. They understand there is no alternative. But human beings are social animals. We enjoy physical interaction. It is difficult to replicate that interaction through even the best technology. Technology presents other challenges, too. Some customers—not necessarily just older ones—struggle with operating the smartphones and tablet computers needed to carry out a virtual visit.

We are required by insurers to comment on the adequacy of their customer’s cover. During a physical visit, we can help satisfy the insured that the risk is correctly valued. This is almost impossible with a virtual visit.

Added value

We also add value in other areas. If the insured has suffered theft through burglary, for instance, we can offer advice around future security and protection. We walk around their homes and show these homeowners how they can improve their security systems in terms of window and door locks and possibly alarm systems.

There is also a question mark hanging over whether virtual visits provide the appropriate level of fraud protection. When we undertake physical visits, we are much better placed to assess the moral and physical hazard. We pick up on subtleties in a policyholder’s behaviour, how a property is maintained and the nature of the risk itself. 

There are potentially two types of fraud at play. The first covers spurious claims for events that never occurred. The second type covers claims that have happened, but which have been exaggerated. 

For both, there is a tendency on virtual visits to be shown only what the policyholder wants to show. For example, a claim is made due to a large water stain appearing on the ceiling of an upstairs bedroom. The policyholder claims the stain was caused by a leak in the water tank housed in the attic, which the policyholder has since repaired. But how do I know there is even a water tank up there? If I were on site, I could poke my head through the loft hatch and look—confirming the existence and location of any water tank as opposed to the damage arising due to a poorly maintained and leaky roof.

Post-lockdown, some insurers may push for more virtual visits to keep costs down. The only way, however, to know whether virtual visits offer a real cost saving is to run an analysis on average claims costs pre-, during and post-lockdown. Virtual visits have been part of Criterion’s ‘tool bag’ in the high-net-worth space for some years. There is certainly a place for them. Within the volume market on lower value, less complex claims, virtual visits may become the accepted norm. However, in the high-net-worth space, where choice is the biggest driver, I believe customer preference will remain for a physical site visit. Policyholders want the human interaction and attention provided by a personal service. Once the lockdown is over, I have no doubt we will return to physical visits as the primary method of the claims assessment process.