The General Insurance Code Governance Committee (CGC) says that training for external experts has emerged as an area needing improvement in the insurance sector.
In a report, titled “Oversight of External Experts”, the CGC says that it has noted that external experts provide opinion outside the scope of their expertise, potentially leading to poor claims decisions, disputes, and complaints.
“While insurers had programmes for initial onboarding, they often lack depth in crucial areas and ongoing formal training was insufficient or absent,” said Ms Veronique Ingra, chair of the CGC.
She added, “Our inquiry highlights crucial gaps in the monitoring and oversight of external experts. While we found all insurers made efforts to monitor and evaluate the performance of their external experts, too often they prioritised considerations of time and cost over quality.
“Effective oversight mechanisms are crucial for identifying and addressing performance issues promptly, ensuring that assessments are accurate and reliable.
“The findings of our inquiry emphasise the importance of raising standards and practices across the industry. By improving the training and monitoring of external experts, insurers can ensure more consistent and fair decisions. This can reduce the likelihood of disputes and complaints and builds trust and confidence among customers.”
The report is based on an inquiry that set out to evaluate the practices of six insurers, exploring the effectiveness of the systems, processes and policies they had to ensure compliance with paragraph 75 of the General Insurance Code of Practice.
Paragraph 75 of the Code reads, “We will engage an external expert only if we believe they have the appropriate expertise to provide the opinion we ask them for and that they comply with the rules and regulations relevant to their area of expertise.
“An external expert is defined in the Code. External expert means: a) a company, entity, or a person who is not our Employee or a Service Supplier; and b) that we contract solely to provide an expert opinion about the likely cause of your loss or damage.”
Recommendations
The report makes seven recommendations, as follows:
1. Insurers should ensure their external experts only provide factual evidence based on the area of expertise, and do not provide recommendations on the outcome of a claim.
2. Insurers should provide training to external experts that is clear on the expectations for assessments and reports. Training should cover:
a) ensuring a full and detailed investigation of the damage and cause
b) ensuring the report is factual and supported by evidence
c) ensuring a specific and demonstrable link between the loss and wear and tear or lack of maintenance to support a view that damage was caused by normal wear and tear or lack of maintenance rather than an insured event.
3. Insurers should ensure that they check that external experts understand training before allowing them to conduct assessments.
4. Insurers should provide at least annual compulsory training to external experts on the obligations in the General Insurance Code of Practice and dealing with vulnerable customers.
5. Insurers should ensure that, as part of their performance monitoring:
a) they conduct regular QA audits of external experts' assessments and reports and provide regular feedback
b) they consider the quality of an external expert’s work, not just time and cost in comparing and ranking external experts
c) they have systems in place to track and monitor themes over time and identify trends in the performance of external experts.
6. Insurers should improve the quality of the data they hold on external experts’ work. They should ensure that they are able to track the complaints made about each external expert and the number of assessments and reports completed by each one.
7. Insurers should ensure that their monitoring processes are effective in identifying concerns with and providing feedback to external experts.