I’ve approached several Executives from different areas of the claims market, to share their thoughts and opinions on a number of topical issues impacting the sector throughout 2023 and looking at the key challenges and opportunities for 2024 and beyond.
Today’s review is with Neil Gibson, Chief Executive Officer, Sedgwick International UK
Whilst over recent years low inflation has meant that salary scales have largely stayed the same, the cost-of-living crisis aligned to a skills shortage has meant that staff are increasingly looking to move to achieve a large salary increase. Are insurers’ fee scales increasing to reflect this and / or how are you seeking to address this?
Although our business has been impacted by cost and salary inflation, our clients have been impacted too. Given the competitive environment, we can’t simply pass on the full inflationary impact through fee scale increases. Instead, we’ve taken a pragmatic approach, partnering with clients to agree reasonable fee increases where clearly justified at the same time focusing on efficiencies through the use of technology to lower operating costs. We also work consistently to ensure the best possible and sustainable experience for our colleagues, balancing a competitive overall rewards package with the many other benefits of Sedgwick employment. These include clear career pathways and development programmes, access to high quality work, and international mobility opportunities across our wider organisation. Despite the challenging economic environment, we’re proud that our colleague attrition level has remained stable. We’ve also increased our employee base by 10% in the last 12 months to support our growth strategy and have been pleased with the number and quality of new applicants who are being attracted to what we offer.
Following the pandemic, home working became ‘the norm’ but many employers are now finding that this adversely affects productivity and is impacting staff mental health. Are you seeking to return to office working and if not, how are you addressing issues around communicating, training and mentoring staff?
At Sedgwick we embrace hybrid working, with our UK office network still playing a key role in supporting business operations. Having sought the views of our colleagues, Sedgwick introduced Flexible First in 2022, acknowledging the shift in preferred work dynamics post-pandemic. Flexible First offers workplace options to support job performance, results and colleague well-being. Rather than being a ‘right’ or ‘entitlement’, it’s an arrangement that joins the needs of our clients with the flexibility of work location agreed between colleague and line manager.
Plans to develop Flexible First in 2024 include enhancing colleague connectedness by spotlighting the benefits of attending an individual’s closest office location. This approach fosters a sense of belonging and facilitates networking opportunities, prioritising flexibility and aligning business needs with mutually agreed work arrangements.
AI is increasingly being rolled out across insurers processes. What is your attitude to AI and how do you see this developing over coming years?
Sedgwick embraces the wealth of opportunities provided by AI in streamlining processes, reducing costs, and improving outcomes for all stakeholders.
We’ve already implemented successful AI solutions. We launched the market’s first entirely self-service claims valuation through to settlement app – i-value – which uses image recognition and machine learning to identify and value carpets. This continues to deliver exceptional results. And we’re also using generative AI technology to interpret technical reports and summarise the key information. This is just the start of our journey and we’re actively reviewing where AI can add the most value across our business.
Our attitude to AI is to be innovative yet responsible, ensuring ethical use and compliance with regulations, such as Consumer Duty. AI is viewed as a supportive tool for skilled claims handlers rather than a replacement, combining the strengths of automation and human expertise. By automating some of the mundane tasks and providing access to expert guidance and predictive analytics, we see real benefits in empowering our claims handlers and adjusters to deliver the best outcome for our customers.
How is the impact of customer duty affecting your business and with many involved in the claims process seeing an increase in complaints, what do you consider the reasons for this to be and what are you doing to address this?
The impact of Consumer Duty on the business is acknowledged, and the slight increase in complaints can be attributed to factors like miscommunication and delayed responses. To address this, a focus on clear communication, efficient claims handling, and proactive measures has been, and will continue to be prioritised. Training, process streamlining, and seeking customer feedback are crucial steps we’ve sought to enhance customer satisfaction and mitigate any deferential impact.
Customer and client requirements and expectations are increasing but staff now expect a better work / life balance and are more aware of the potential impact on mental health. How is this impacting your business?
We view the increasing expectations of clients and customers positively – it acts as a catalyst to drive the innovation and efficiency needed to meet these higher standards. With the customer journey always in mind, Sedgwick has invested in pioneering solutions, resolving claims online and using image recognition to expedite processes.
As the expectations of clients and customers have increased, the shift towards remote work during the pandemic has also heightened colleague expectations. A better worklife balance is sought, and this has benefited the business in terms of colleague productivity – through decreased commuting time, for example. We recognise that remote working isn’t for everyone – some colleagues thrive in an office environment where interaction is more prevalent, and Sedgwick harnesses the benefits of both working environments with its Flexible First approach.
Our hybrid working model doesn’t mean we’re complacent when it comes to the mental health and well-being of our colleagues. These aren’t just legal obligations – Sedgwick’s Caring Counts mantra is central to our philosophy. The focus and attention brought about by our frontline leaders and appointed mental health first-aiders mean our absence rates are no higher than they were pre-pandemic.
A number of insurers have withdrawn from certain markets whilst mergers and acquisitions have reduced the number of potential sources of business for those involved in claims handling. These factors, together with the impact of a hard market has reduced brokers ability to insist on certain suppliers and/ or processes. How has this impacted your business?
Despite challenging market conditions, Sedgwick has experienced minimal pushback from carriers in broker nominations. Feedback suggests a softening of the market although some specialist lines of business such as cyber are still bucking that trend.
Although the proliferation of mergers and acquisitions in the broker market provides them with leverage in nominations and claims handling, lack of investment in IT and a shortage of technical claims staff means that building claims teams from scratch can be challenging. This creates opportunities for adjusters to fill gaps and offer comprehensive claims services.
These dynamics indicate there may be fewer but more substantial partnership opportunities beyond traditional property adjusting nominations in areas such as risk management, Third Party Administration (TPA), First Notification of Loss (FNOL) and more specialist areas such as cyber, aviation, and power/energy.
If not already covered, what is the greatest challenge facing the claims market moving into 2024 and beyond?
The industry as a whole, faces many challenges in 2024, and it’s difficult to pinpoint just one of them. Addressing the industry’s lack of skilled human resources is perhaps the most pertinent. This is something Sedgwick is actively addressing through our British Insurance Award winning UK colleague development programmes.
AI had a massive impact on the claims sector in 2023. Harnessing its power to improve stakeholder outcomes compliantly will continue to be high on the agenda this year, and I look forward to seeing how developments escalate.
ESG sustainability programmes and climate risk will also score highly, and there’s enormous potential for those who are ahead of the game. It’s crucial that the insurance industry steps up and takes wide-ranging measures to tackle carbon emissions.
Who knows what other challenges the sector might face in 2024, but as always, an agile and responsive strategy is vital to strong and successful outcomes.
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All the best,
Gary Pike
Founder & MD Right International
