Data insight can help fight claims inflation: Sedgwick UK CEO

Data-driven insight can support the fight against rising claims inflation as the insurance industry faces challenges on multiple fronts, according to Paul White (pictured), UK chief executive officer at Sedgwick.

Intelligent Insurer caught up with White just after the 2022 Airmic conference in June, at which a major talking point was how to provide insight to clients to manage cost and claims frequency.

“There’s a big push on what we’re doing around data at the moment,” he said. “Just saying we have data is one thing but it often comes in a very unstructured format and sometimes from different systems.”

For White, the key thing is to bring this disparate information together to glean valuable insight from it.

“What insight can we provide to our clients to help them manage their risks and costs? This is the real purpose of the data insight exercise. And it’s the main discussion that we’re having with brokers and corporate clients, with insurers—that’s the number one topic for us,” he explained.

White said that data-driven insight feeds directly into the shifting market dynamics in the risk and claims space. “It’s all tied in with costs and rising claims costs, it’s a big topic at the moment—claims inflation is probably running at 10 percent this year on top of last year, and we reckon it could go higher.

“None of us foresaw what was going to happen with Ukraine—it has had a big impact and that continues. The uncertainty caused by such events are challenges for us all, not just the insurance or the claims market.”

With a lot of discussion around how to control claims costs, the benefit of data insight that shows clients what is driving claims frequencies and events within their organisation is a no-brainer.

White highlights an example of where Sedgwick’s data analysis helped an insurer and its client mitigate their claims frequency and risks.

“It was a civil engineering company, which works around the country digging up pavements and roads. With this kind of work you often get what is called a ‘cable strike’ where they accidentally hit an electric cable. Your power goes out because someone in a digger has cut through a cable. It causes chaos,” White said.

Sedgwick worked with the client to identify the frequency, location and geography around cable strikes.

“It turned out that they had one particular subcontractor in a certain area that was causing a large number of claims. Working with the company and the broker we managed to remove that contractor from the list and, lo and behold, the claims frequency improved.”

This type of work helps to manage costs and risks, and can mitigate the inflationary issues that are everywhere at the moment, he added.

Motoring along

White flagged up challenges around motor claims. “We are predominantly a property casualty business in the UK but we do have some motor capability. When you look at what is taking place across motor in terms of supply of parts and labour, these things are not necessarily linked to insurance.

“There are Brexit-related issues, a lack of labour in certain areas, and COVID-19 has caused garages to close,” he said.

These issues are creating challenges in the motor claims process that everybody is wrestling with. “You can’t cash settle a damaged car claim the same way you can on a damaged property claim, so there’s a lot of noise in the system and requests for assistance in terms of provision of resources,” he explained.

White is specifically talking about people resources. He said it isn’t necessarily a shortage of people with major complex loss adjuster skills, it’s about a need for more people with good customer service skills or insurance knowledge to help on a short-term basis.

“We’re seeing a lot of those requests in our organisation at the moment, and I think that will continue. If someone were to ask me about my biggest issue in 2022, I’d say it’s all about people.

“We’ve talked about insight, data and technology but we are fundamentally a people-driven business and industry and attracting people, keeping and developing them, and finding the right balance between office and home working is crucial.”
White said it was a challenge to keep people because of the options available to them.

“With new starters and young entrants into the market, there are so many other options these days. They can do a whole range of different things. Expectations are different in terms of what they want to see from an organisation compared from when I started.

“They’re looking to see what you’re going to do about environmental, social and corporate governance issues, what your work-from-home policy is going to be, so it’s all about people and it will be for the remainder of this year and next.”

Repair limitations

Sedgwick UK has been very busy in the first half of 2022, with a particularly busy period for its property teams, White said.

This has been driven primarily by UK weather in November 2021 (storm Evelyn) and in February 2022 (storm Eunice).

“There were very high wind speeds, so lots of storm/wind damage claims came into our business,” he said.

Quite a few claims are relatively straightforward, he added, but there are some high value, more complex claims as well.

“Some of the more complex claims will take the remainder of 2022, particularly where there is a building repair.”

This is because it can be a challenge to schedule builders and tradespeople in the UK at the moment, at a price that’s affordable, he explained. Sedgwick does have “a very capable network of contractors” that will handle claims the right way and get the right outcome for the clients and customers, he added.

“But there are some new limitations around things such as material and labour. There are one or two signs that it’s starting to ease in certain areas, but I think we’ll have that challenge for at least the next 12 months or so, as supply chains, markets, Ukraine and everything else sort themselves out.”

Despite these challenges, White said the business is “generally in a good place” and he is happy with how it is performing.

“We’re very pleasantly surprised at how resilient the organisation has been over the last three years during the COVID-19 period. Our people have responded fantastically well to that and I’m a very happy CEO at the moment,” he concluded.