News Archive
Merlin and L&G express surprise at claims inertia
12/08/2010
Merlin Claims and Legal & General have expressed surprise that others have been slow to copy the claims partnership model they signed 16 months ago, given early results have exceeded expectations.
The agreement put in place in May 2009 includes risk sharing in terms of the indemnity spend and embedding Merlin staff in the insurer's Birmingham office. As a result, the partners revealed L&G is now settling 30% of claims on day one and has seen a 25% reduction in the average settlement time.
L&G is also managing twice as many claims in-house, with Merlin now responsible for 13% of the insurer's claims by volume, compared with more than 30% outsourced previously. However, Merlin's book is worth 54% of L&G's claims spend, an estimated £80m by value.
Merlin chief executive Richard Webster said: "It has been a learning process but both sides feel strongly that this model is different from the usual 'procure and then beat each other up around service level agreements' ones. We have moved away from fees being the be-all-and-end-all."
L&G operations director Andy Webb added: "One of the benefits for Merlin was that we would change the face of the loss adjuster/insurer relationship and that remains the case. Others are now copying this model, but it confuses me why it has taken so long."
Mr Webster concluded: "The inertia to change within this market frustrates me. If you can take a double-digit figure out of your indemnity spend and improve service, why would you not do it? What has an insurance company got to lose, especially if we are partially underwriting it."
L&G targets £1bn household portfolio
Legal & General general insurance managing director Peter Graham, pictured, has thrown down the gauntlet by predicting the business is in shape to grow its household portfolio to a £1bn gross written premium.
He told Post: "When I arrived at L&G in March 2009, two things needed addressing. The first was pricing. It was not that the business did not have the capability, but the emphasis was on top-line growth. That has changed and we have reviewed every arrangement in place to make sure the focus is on profitable growth.
"The other big area was claims. Our relationship with Merlin has helped improve customer service while also reducing settlement times."
Overall L&G reported a £14m general insurance profit for the first six months of 2010 (H1 2009: £6m); £11m of this was attributable to its household book, valued at £280m.
The underwriting result improved to £7m and combined operating ratio stands at 90% (H1 2009: 99%) with household at 91% (H1 2009: 98%).
Mr Graham said L&G has a 3% market share in household, adding: "I can see no reason why we can't double that to 6%, and over the longer term have a £1bn business. L&G is now ready to step up a gear in terms of growth."
Asked if the Nationwide household contract could be part of its expansion) Mr Graham insisted he could not comment on speculation, but added: "A significant amount of our GWP comes from business with banks and building societies, and I'd love to do more."
Pictured: L-R - Richard Webster and Andy WebbAuthor: Jonathan Swift
Source: Post | 10 Aug 2010
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