Cross border claims: time for a new approach

External and internal regulators in the insurance industry are making increasingly stricter demands on insurers with regard to ‘being in control’. Nevertheless annually insurers pay out about 150 million Euros, excluding costs, as a result of car damages which involve foreigners, often without having any control over the claims management. CED, specialist in the field of claims management, loss adjusting and research, examined this practice and offers the trade a solution in the form of standard processes for the claims management and an own network in Europe.

Annually approximately 45,000 collisions take place which involve a Dutch policy holder and a foreigner. The claim costs for Dutch insurers as a result of this, such as we can derive from European statistics, amount to approximately 150 million Euros. These claims are managed according to the Green Card and the Fourth European Motor Insurance Liability Act directive. In approximately 80 per cent of 45,000 foreign claims a German, Belgian or French motorist is involved. Followed by the favourite holiday destinations Spain and Italy, but together those countries still only account for approximately five per cent of the total. Expenses made for the management of all the claims are estimated by CED at 18 up to 20 million Euros. “So it concerns substantial amounts”, says Stef Witteveen, “and for CED that was the reason for market research among its clients in the Netherlands into the quality of these claim settlements and the degree of claim costs control.”

Remarkable research results
Stef Witteveen: “In 2009 we did research with a number of large insurers which are served in these different ways from abroad, how those claims management and financial processes work exactly, what the quintessence in these processes is for these insurers and also how they assess the course of it. Subsequently we gave feedback on the outcome of this research and it turned out that all the clients who we consulted recognised these. From the research, among other things, it transpired that insurers actually have no good insight into the claim and financial processes of their foreign claims partners. Moreover they turned out not to be familiar with the competences of people who carry out the processes and do not have control possibilities over the claims settlements which are carried out abroad on behalf of them, or have no knowledge of this. In other words annually 170 million Euros are, as it were, issued as blank cheques.”

Hardly any consistency
Furthermore it was determined in the research that there is no consistency in the claims processes in different countries, even when these are carried out by the same party. Large sums of money are paid out without it being certain whether the legitimacy has been determined sufficiently, or it is first necessary to hold complicated discussions in order to find out more about the claims. Stef Witteveen: “The world in which insurers, and we as well, work, is not possible without a large degree of trust in each other, but the current situation is no longer justified because of an increasing internal and external control within the insurance sector. Rightly so, more and more often, extra guarantees are requested for processes to go as they should go. Probably quite a few employees at insurers feel sick to their stomach about this story, because they know very well that they are not ‘in control’. This does not mean that, for example, with regard to a claim in Portugal you need to know exactly how the Portuguese liabilities or claims payment law works. However, you must be able to trust that your partner has a recognizable claims process, in which adequate controls are built in, and that this process is carried out by people who have demonstrated their competence. Unfortunately, in many cases, this turns out to be totally unclear, with the most important consequence that insurers usually cannot recognise the final result of the claims settlement as a logical result of the accident and cannot explain it to their policy holder. That leads to a much-heard cry in foreign claims departments at insurers that as a Dutch citizen you are always ‘wrong’ when abroad. We think that things can be done better and for this reason we sat down to think up a solution.”

Standard processes
In essence the solution to the outlined problems in the development of standard processes lies in the total European work area. Anyone who wants to bring about a consistent, transparent and recognizable service cannot do so without such standard processes. Possibly the working method behind the scenes can differ per country - for example the settlement must take place according to the legislation of the country where the collision has taken place - but the way in which the result is presented to insurers, must be the same from all the countries, so that at least on that point we can speak of a controlled situation. A second requirement is the availability of a network in the most important countries, so that control is possible with regard to the processes and the people who are responsible for them. Finally, it is necessary that these people do not have to work with all kinds of different systems, but with one central claims system. The intended standard processes must naturally be designed in line with the wishes and needs of the insurers. Designing and managing efficient standard processes which lead to customer satisfaction is precisely one of the strengths of CED. For this reason CED has made an inventory of the components and decision points of claims management that are essential for insurers, so that these are in any case recognizable and transparent in the standard processes. “We could set up that network ourselves” says Witteveen, “but we could also look around first to see whether there was anything for sale. We were looking for a partner who was large enough to get to work on this, but not so big that they would want to tell us what to do. Eventually we ended up at the German organisation Interiura.”

At the right moment
CED took over Interiura from legal protection insurer ARAG in 2010. Interiura was established in the nineteen eighties and, except for international legal protection questions on behalf of ARAG, it especially deals with Green Card and Fourth EU European Motor Insurance Liability Act directive claims on behalf of German and other European Motor Insurance Liability Act insurers. Interiura has offices in thirteen countries where, from the point of view of Dutch insurers, a total of about 90 per cent of all traffic accidents with a foreigner take place, and has partners in 28 other countries. It is also important that Interiura has a central claims system.

Stef Witteveen: “After the takeover was completed, we immediately started working on the further development and rolling out standard claims processes and corresponding procedures in the field of fraud detection, claims reservation etc. Within Interiura we have introduced a more process-oriented approach which will lead to a culture which is aimed at an ongoing improvement of processes for clients and employees. We also started working on the output of the claims processes. We feel that it is important that this can be recognised by our clients uniformly from every country. That underlines our philosophy of uniformity within our international claims management company Interiura, in the field of processes, people and technology.”

According to Witteveen it is especially interesting that a web-based reporting system is linked to the automation, under the name Claims Insight™. “With that we can provide our clients with information regarding the status of their claims file seven days a week, twenty-four hours a day. In addition they themselves can download statistics of all files which are managed on their behalf in various countries. With one press on the button that information can be transferred to Excel and then be processed in all sorts of ways. With this reporting system we give our clients a ‘tool’ with which other suppliers are still struggling considerably.”

Client Service Charter
CED can now offer insurers a claims management process that is uniform throughout Europe. In a so-called Client Service Charter it is clearly laid down when and how important decisions take place, by whom these are taken, how the decisions can be influenced by the client, and what the output is of the claims process in critical times. Within the process uniform tasks, responsibilities and powers are defined and employees are classified in accordance and based on their knowledge and experience. This makes the organisation transparent and guarantees clients that their files are managed by Interiura employees who know what is expected of them and who are equal to their tasks. On top of all this CED has a central database for the storage and processing of claims data and for the measuring of performance, and via Claims Insight™ the client has all the necessary status information at their disposal at any given moment.

Stef Witteveen: “We continuously monitor our performance and show the client exactly how we score in the areas where it really counts. We also make agreements with the client about this. For all the processes critical performance indicators have been defined, so that we can show that we do what we promise. We summarise all this in a Client Service Charter in which is described exactly what the client may expect from us and also what we expect from the client, so that an efficient and effective claims process is created.”

International ambitions
Meanwhile contracts have been entered into with insurers to settle foreign claims via Interiura. REAAL is the largest of these. As of the 1st of January 2011 REAAL has contracted out the claims management of Green Card and Fourth EU-directive claims in Belgium, France and Spain to CED. Discussions are being held with other insurers or it has been agreed that firstly the existing agreements are served out. “We are determined to turn this into a success”, concludes Stef Witteveen.

“For CED, it is, of course, a priority that our clients get a good product and that they can guarantee their end customers that their interests abroad are in the best hands. But for us there is more at stake. For CED, Interiura is the springboard for our international ambitions. From Interiura we will reinforce ourselves abroad in the field of claim management, loss adjusting and research, by taking over local organisations or setting up new branches. As far as this reinforcement is concerned we are already big in Belgium and we are working hard to realise a third home market in Spain. This strategy requires our optimum commitment to succeed in our new approach for the management of foreign claims!”