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 Press Office Category : Software, Solutions, Systems  

Press Office Feature : Risky business: how insurers can reduce the number of professional indemnity claims

Company: Wordsure
Author:Mandisa Mbenenge
Email:[email protected]
Posted:09 Feb 2015

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Technologies designed to lower the risk of miscommunication with clients

How can the South African insurance industry reduce the number of professional indemnity claims they pay for? WordSure’s Henk Nel believes communication is the key.

A 2013 PwC report found the short-term insurance industry paid significantly more in claims than they collected in premiums. One of the reasons for this is the volume of otherwise avoidable claims.

Insurance providers are paying out significant amounts in professional indemnity claims every year. Insurers, particularly those that specialise in consultation-heavy professions, face a major challenge in finding ways to reduce the risk of these claims.

Many of these suits originate from poor or one-sided communication.

Claimants who misremember or misinterpret what was said in consultations are often sided with in court due to a lack of evidence to the contrary.

Bad record-keeping is therefore one of the biggest causes of unnecessary civil suits.

Vulnerable professions include the legal, corporate, financial services, chartered accountants and medical fields; however, the weight of these risks differs across industries.

Medical professionals, for example, do take notes during consultations but these are not verbatim nor are they shared with patients.

As a result, indemnity premiums amongst the South African medical industry are at an all-time high, and increasing every year.

On the other side of the fence is the legal fraternity, which is required to take accurate minutes of any consultation.

The minutes are then distributed to all attendees for review and approval, significantly reducing the risk of suits as a result of miscommunication.

How can insurers incentivise other consultation industries to adopt practices as thorough as those of the legal industry? Three actions stand out: education, personalised risk assessments and technology.

Conducting regular workshops and training programmes teaching insured parties how to be better communicators can go a long way towards reducing the mixed messages that often lead to litigation.

The medical insurance industry, for example, requires doctors to attend a prescribed amount of communication and administrative training each year.

Unfortunately, training programmes can only go so far without standardised risk practices. The set-up of the medical risk liability is such that a few doctors racking up malpractice suits push up the premiums of every other member of their specialisation.

The motor insurance industry provides an alternative model that addresses this problem, by offering different premiums based on personalised risk profiles.

Someone who uses vehicle tracking, parks in a garage and only drives twice a week will pay less than a driver determined to be higher risk.

This model is not only limited to motor insurance. Globally, the trend is towards personalised insurance products, customised according to risk assessment, across the board.

This is where innovation makes a big difference. By recommending technologies designed to lower the risk of miscommunication among clients, insurers can reduce the client risk.

The next step is to explore which digital tools can play a similar role to telematics and vehicle tracking in their specific industry, and incentivise these through lowered premiums.

As technologies make more of an impact on day-to-day lives and the rest of the world embraces personalised risk, South African insurers will find themselves at crossroads.

Insurers could find themselves not only changing the face of the industry as a whole, but the overall behaviour of consultation professions.

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