Cedric Stephens | Claims knowledge deficit

How can claimants find out if insurance service providers are properly trained and have the know-how to perform their job functions effectively?

Some persons assume that because the provider is employed by an insurer or broker, he has the required knowledge and skills. Is there a database of licensed, insurance company-employed service providers to which one can refer and get objective information? What professional qualifications and experience do these persons have?

When one visits a pharmacy, the service provider invariably wears a name tag. A certificate issued under the Pharmacy Act with that person’s name is often on display in the shop’s drug dispensing section. A similar situation exists at some barbershops. If one wants to find out if a lawyer is entitled to practise, one can visit the General Legal Council’s website. Same thing for real estate practitioners and other professional service providers.

The website of insurance regulator, the Financial Services Commission, FSC – www.fscjamaica.org – does not contain any information or guidance on this subject. One part lists registered entities and individuals. Insurers and intermediaries are the only groups there. The Insurance Act 2001 defines an intermediary as “an agent, broker, sales representative, adjuster, insurance consultant, or such other persons carrying on any business connected with insurance as may be prescribed”.

The term ‘carrying on any business connected with insurance’ can be broadly interpreted to involve the handling, negotiating, and managing of claims.

The law goes to great lengths to describe a sales representative. That person is “an individual employed by an insurer, agent, or a broker to solicit applications for insurance or to negotiate insurance on behalf of that insurer, agent, or on behalf of the client of broker”. There is no reference to those employees whose jobs exclusively involve the handling, negotiating, and settling of claims. The focus is on selling.

Why do claims take the back seat even though this item is often the largest part of an insurer’s income statement? Also, most insurance disputes surface after claims are made. Could this be one reason why some consumers believe that insurance companies are quick to make the sale and slow to pay when a claim occurs?

The law regulating the insurance industry deals with many topics. There is, however, nothing specific in it about how claims are to be managed or about the minimum knowledge and skills that those practitioners should have. There is nothing in it like chapter 10 of the California Department of Insurance’s Fair Claims Practices Regulations. The FSC’s 2019 Market Conduct Guidelines fails to deal with the subject in a detailed way.

This column’s mission is to disseminate useful information about risks and insurance, it will, therefore, try to fill the knowledge gap about claims competencies. The goal is to help consumers achieve more favourable results when they start the long process to get their claims settled.

But first, a few basic facts.

Many front-line claims employees often have a minimal understanding about insurance generally, and few have any technical qualifications. They are invariably unfamiliar with the basic terms and conditions of their company’s’ insurance contracts.

Persons in these positions handle scores of claims and are, therefore, prone to making mistakes. COVID-19 and the practice of working from home have disrupted their normal work routines,

The rate of staff turnover tends to be high, and they have little or no authority.

And these persons are often not properly supervised.

The Chartered Insurance Institute CII) is a century-old institution in the United Kingdom. It specialises in the training and certification of persons in the financial services industries. A few years ago, it published a competency framework for some job positions in the insurance industry. From my interactions with insurance company and broker employees, the local industry – and the FSC – does not appear to have paid any attention to the CII’s guidance.

The CII defines competence as the knowledge and skills that individuals must have to perform effectively at work.

“A competency framework is the structure that sets out and defines each individual competency (such as product knowledge or communication skills) required by individuals across the job roles within an organisation. It is an objective minimum acceptable benchmark of performance. Once established, the competency framework can be used to identify knowledge and skills gaps for both the individual and the employer,” says CII.

“Competency also embraces those knowledge and skills that individuals must acquire to perform effectively. A competency framework can, therefore, also support professional development pathways. By defining different levels of competency linked to job roles, individuals and their managers can identify the knowledge and skills which they need to progress both within their current role and to other roles within the organisation.”

The institute’s competency framework discussed three claims functions within the structure of the large, complex, and internationally focused UK market. Each function comprised four different stages, starting from entry level to expert.

Based on my interactions with the claims representatives of insurers and brokers, few of them have the know-how to surpass stage one of the CII’s claims competency framework. Unless there are significant improvements in how claims staff in insurance companies and brokers are trained and managed, motor insurance claimants especially, will continue to receive poor quality of service that is now the norm and until such time a Caribbean equivalent of an Elon Musk of the insurance industry appears.

Final words: Some years ago, a group of persons affiliated with board members of a big insurance company invited me to participate in an interview for a top position in that organisation.

I do not recall any questions being posed to determine my professional qualifications for the job or what steps I was taking to ensure that my industry knowledge base was kept up to date. What I vividly recall with some amusement was a self-assessment question posed by one individual – who, by the way, is now the chairman of the insurer. Did I have a problem in dealing with members of one of the country’s minority ethnic groups?

The person who landed the job was a member of the minority group. He did not have my professional qualifications and experience.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com