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Focus on claims

claims large Historically, approaches to servicing run-off exposures have been somewhat ‘laid back’ and claims have been allowed to lie dormant on the books. This is particularly true when businesses have closed, individuals have moved on, or the situation is complex.

In recent times, spurred on by regulatory pressures on both sides of the Atlantic, reinsureds have begun to take a more proactive approach. BMS is very much part of this trend and as such has developed its very own specialist run off division.

Lack of focus and investment is an issue

Despite this heightened need for better claims management and more effective collection of reinsurance payments, the industry has tended to look the other way and hope that something will ‘turn up’. The broking industry has historically failed to invest in its ‘back office’ and often outsources claims management to a third party, and strategically continues to concentrate its efforts on acquiring and broking new business. Old year issues are not a priority, especially if the client insurance company is no longer a current client of the broker.

Despite this heightened need for better claims management and more effective collection of reinsurance payments, the industry has tended to look the other way

Clients therefore face a significant problem. Either they stay with the brokers who originally placed the business and to whom they have already paid brokerage, sometimes even offering additional payment as a further incentive to do the work they have already contracted for.

An alternative, and perhaps more cost effective approach, is to invest money in a specialist, broker replacement provider for whom old business (whether from closed books or live, long-tail business) is a primary source of income and therefore a priority.

Specialist assistance needed

Specialist replacement services brokers have the time, expertise, talent and, most importantly, inclination necessary to resolve all the issues arising from complex claims. Many insurers are increasingly beginning to appreciate the value that such brokers bring.

Within the BMS Group, specialist teams of claims handlers have been established to work exclusively on individual client accounts, looking both at updating reserve claims, and collecting reinsurance recoverables due to the client.

Experience

At present BMS employs 16 staff to work solely on resolving the claims arising from the liquidation of Reliance National, Liberty Mutual and Resolute. As you may be aware, Reliance is one of the largest insurance liquidations in US history.

This team brings together an enormous breadth and depth of experience of London market claims processes and practices, with some team members having 20-plus years’ experience. While such experience may not be particularly relevant to a company exclusively focused on broking new business, it is invaluable to clients with ageing or problem portfolios.

Having made this long-term commitment to the replacement broker market, BMS is now seeking to leverage the experience of its claims department by actively seeking more business of this nature. No longer seen as the graveyard of insurance talent, run-off is fast becoming one of the busiest and most challenging of environments.

Andrea Viera