Over the past few days I’ve been involved in a number of fascinating discussions with insurance leaders from claims, product and pricing and repairers, loss assessors, brokers and experts (engineers etc).

The conversation has always led to the role of fairness in insurance. This concept is underpinned by a legal and code structure that requires services and products to be provided efficiently, honestly, fairly, transparently and timely, acting with the utmost good faith.

I have been thinking through a framework that operates as an insurance ecosystem providing procedural fairness delivering fair outcomes. This does not mean pay every claim. Far from it, but an adverse decision would be arrived at efficiently and be part of a robust decision-making process where the insured was an intrinsic part of the process.

I welcome your thoughts on the components of an ecosystem that operates as a fairness mechanism.

I’ve provided some of my initial thinking to promote the conversation:

1. everyone involved in the ecosystem is focused on fairness through conduct, behaviors and compliance with laws and codes;
2. Insurers design and act within fair frameworks and systems. Such as triaging claims and complaints at lodgement so that complexity and vulnerability characteristics are identified early and specialist resources allocated before problems arise;
3. consumer advocates, brokers and claimant intermediaries act as the voice of the customer however the system acts as a customer advocate when the customer is unrepresented;
4. the system starts with a proposition that: the claim is covered unless the evidence shows otherwise; the complaint is valid until the evidence shows otherwise – with short time frames for the evidence to show otherwise;
5. the use of AI to streamline decision-making and ensure that the right people with the appropriate levels of skills, knowledge and authority are involved at an early stage where the policy/claim is not atypical (such as the early indicators of characteristics or complexity and vulnerability);
6. frontline staff act as the guardians of the system and provided with the training, systems and tools to, for example; (1) resolve complaints at first point of contact, (2) identify complexity and vulnerability; and (3) challenge an experts report that they don’t understand so that a defective report doesn’t become part of the ecosystem;
7. the time from ‘IDR-EDR-Determination’, is reduced from months or years to weeks;
8. expert reports are truly independent and factual that anyone in the system can rely on in good faith as the basis for conversation or settlement;
9. product design and distribution flows through marketing – product design and pricing – sales – underwriting – claims;
10. distribution processes align product design to customer needs, objectives and requirements while enabling freedom of choice;
11. unconscious bias is removed from the system;
12. remuneration is merely an output of the value that a person contributes to the system and the system manages inherent conflicts
13. the system ensures that relevant resources are allocated to the complex, the vulnerable, the difficult;
14. the system includes controls that manages, regulates, or directs the behavior of people, processes, or systems to achieve the desired output.

Look forward to your thoughts as I develop a framework that depicts an insurance ecosystem that operates with procedural fairness delivering fair outcomes. What components, concepts, principles should such a system contain in your view ?

Disclaimer: Reproduction of statements made in this article by media outlets, whether in full or in part, is strictly prohibited without the written express consent of the author. The views, opinions, and positions expressed within this article are those solely of the author and Compliance Advocacy Solutions Pty Ltd and not the views of other individuals, companies or organisations they may be affiliated with. The author and Compliance Advocacy Solutions Pty Ltd make no representations as to accuracy, completeness, currency, suitability, or validity of any information in this article and will not be liable for any errors or omissions or any loss or damage arising from its use or reliance. This article is intended for educational and informational purposes only and should not be relied upon as professional legal advice.