Creating an open culture in which people feel able to highlight mistakes without fear of recrimination is one of the key ways firms can help to combat fraud and reduce risk, insurance industry experts have said.
In a discussion during the Law Society Property Conference last week, Dan Blundell (senior vice president, Paragon), Claire Revell (partner, Beale & Company Solicitors LLP), Angela Hesketh (head of market development UK, PEXA) and panel chair Peter Rodd (consultant Boys and Maughan Solicitors; member, Law Society Property Section Committee) shared expert insight into trends affecting public indemnity insurance.
With human error one of the major causes of consumer complaints and a way in for determined fraudsters, the panel stressed the importance of a supportive environment, clearly defined processes and learning from mistakes.
Criminals are becoming increasingly sophisticated in their use of email hacks, Claire Revell explained, with fraudulent emails disguised so well they can be easily missed during stressful or busy times.
‘You have to really know what to look for, and be vigilant about training teams on exactly what to spot’, she stressed.
“Juniors are often the easiest route in for fraudsters, and there are a lot of Friday afternoon email hacks because criminals know that’s when people will be busy, rushing and stressed.”
Creating an open and honest culture where teams are trained to identify suspicious activity and alert colleagues won’t just help to combat fraud, the panel said. Insurers welcome detailed descriptions of how internal systems support teams – so actively promoting a positive culture can help brokers negotiate on behalf of the firm.
Dan Blundell explained:
“Insurers review hundreds of thousands of submissions, so the more information you can give them to make your submission stand out, the more likely they are to view it positively.
“It’s a good idea to provide a cover letter or business overview of risk-related points, with a briefing document about the type of business. Work with your broker for guidance on what to include, but in general information about workplace culture, supervision processes and policies paints a good picture for insurers and helps brokers to negotiate more quotes.”
If a claim has been submitted or complaint received, honesty is always the best policy, Blundell advised.
“We’re seeing a lot more Legal Ombudsman complaints and SRA referrals coming in at the same time as claims, so a detailed description of the policies and procedures that are in place will help to show that it was an isolated incident, or there is no genuine claim to answer.”
After a claim, articulate what went wrong and what changes have been made to mitigate risk, he suggested.
“The attitude towards explaining what happened is very important, and insurers and the SRA will take that into account. They want to see that the firm recognises the seriousness and impact of what happened. Was it a gap in the system, or a problem with the process or supervision? Identify where things wrong and explain what has been done to address it.”
With AI increasingly prevalent in legal services, the panel also shared insight into what insurers expect to see from firms.
‘The main concern will be around making sure people are thinking carefully about what they’re using AI for and how they’re using it’, Revell said.
“Whether it’s data or programmes to streamline processes, they’ll want to be sure every aspect is properly supervised and checked.”
Blundell agreed, adding: ‘Supervision is as important as the AI itself’.
“Insurers want to see and understand the supervision that’s in place, they want to see the policies that are in place and to be able to rule out any ambiguity in the process. Are junior solicitors using it without the knowledge of seniors? There must be safeguards in place, not an over-reliance on outputs being correct.”
With an increasing focus on digitalisation of the transaction process, PEXA’s Angela Hesketh said insurers are engaged in examining the potential benefits of digital tools and how they can help to enhance visibility and reduce risk.
‘There’s a growing recognition of digital and data-driven secure environments’, she said.
“We could see improvements of up to 50% in relation to risk because of the visibility within digital processes and the way transactions can be tracked. We’re unlikely to see any changes within the next two to three years, but within five years we should see the impact of increased digitalisation, and insurers starting to react with changes to premiums.”
