The use of electronic portals for subrogation claims is set to become widespread among motor insurers as concerns such systems could be anti-competitive were quashed by the first companies to use the technology.
Aviva and Ageas confirmed on 21 January they had reached a bilateral agreement to keep the cost of subrogated claims as low as possible and that they would use an electronic portal – designed by Validus-IVC – to make processing subrogated claims more efficient.
Covéa Insurance has since confirmed it is also piloting the Validus portal with senior third-party claims manager Javier Gonzalez telling Post: “This portal is designed to put right some of what’s wrong in our industry around the difficult area of subrogation, which is why Covéa Insurance has committed to this new initiative, at an early stage.”
Indeed, approximately 70% of the market is now signed up to the Validus portal with 10 insurers piloting the system or about to go live, according to Validus chief operating officer Ed van Rooyen.
Validus was selected by the insurance companies through a tender process and van Rooyen said it was important to understand how the portal could be an improvement on previous models that failed to get off the ground.
“The feedback from insurers was they were looking for a piece of technology that can streamline the indemnity and liability phase. [It would] support bilateral agreements but not be dependent on having a bilateral,” he explained.
Aviva claims operations director Andrew Morrish added: “If you go back through the history of trying to get portals like this to work across the insurance market they have ended up getting mired in different opinions. We saw the opportunity to do this as part of our investment in automation and as a solution with potential benefits for customers.”
Morrish said Aviva is in discussions with other insurers and that it hopes the “whole market” will engage in the portal.
“Our aim is to have the majority of the insurance market signed on to this as it becomes the default solution. To do that, we need to be talking and investing heavily with the rest of the market. We don’t want this to be a closed club. For it not to be, we want to be really overt about saying come and join,” he added.
Both Morrish and van Rooyen highlighted anti-competitiveness as a driver behind why such a portal was not previously set-up.
“The portal should be open to everybody. The [bilateral] agreements are voluntary exactly for that reason – because they overcome the risk of things being anti-competitive. If the agreement is between two insurance companies rather than at an overall market level then we do not think there is a risk of them being anti-competitive,” Morrish explained.
“We have been very deliberate in doing it insurer to insurer. Administratively, that makes things quite cumbersome but it does mean you only do it if you agree between insurance companies. Insurance companies with business models dependent on making money from non-fault claims will find it difficult,” he said.
Since the Aviva and Ageas announcement, other motor insurers have expressed their support for a subrogation portal.
LV claims strategic director David Butcher said: “We do not use an electronic portal at the moment and that is not necessarily a feature of subrogation bilateral. It is encouraging Aviva and Ageas have got this process up and working. We are watching closely to see how this process works and how successful they are.”
Leon Wyatt, Axa Insurance motor strategy, planning and best practice manager, added that Axa has a number of bilateral agreements already in place and is seeking to secure more in the coming months.
“Anything that can make the whole process more straightforward is welcome and, as such, portals have an important part to play,” Wyatt said.
ERS claims director Peter Smith added: “Just by use of a portal itself you can see that could give rise to a large proportion of transactions going through a process with minimal human touch and delay, therefore, leaving a smaller balance of exceptions that people spend their time on.”
Appetite for subrogation bilaterals expressed
While Aviva was clear any bilateral agreements it entered into would be voluntary, other insurance companies have expressed their support for such arrangements. Indeed, many insurers contacted by Post already had several bilateral agreements in place.
Esure claims head Graham Hughes said: “We have a number of bilateral agreements in place with other insurers that cover hire car and accidental damage and would potentially support further agreements. We are currently exploring further options that we believe will benefit our customers from a cost and timing perspective.”
LV already has a subrogation bilateral with RSA and Butcher said it wants to enter into as many of these agreements as possible to reduce claim costs.
However, he warned: “It is difficult if an insurer has a model that generates good income for them – it can be difficult to encourage them into a bilateral agreement because they have a lot financially to give up.”