Pro Global team reveal the legacy claims insurers should be considering | Insurance Business UK
Working in the legacy claims space requires a Janus-like approach to looking at the world – one eye always fixed on the historic nature of claims, while the other searches for where future trends are likely to emerge. For the claims team dealing with the legacy employers’ and public liability space at Pro Global, this dual viewport is pivotal in maintaining and evolving its market share.
Alan Metzger and Steve Bellingham, heads of strategy at Pro Global, shone a spotlight on what the insurance industry should be considering when it comes to historic books of business potentially impacted by exposures to sports injury, malpractice or abuse claims.
Evaluating the current shape of the legacy market, Bellingham noted the publicity concerning abuse in sport, especially football in light of the recent Sheldon report. Pro Global has been dealing with such claims since about Q4 2016, he said, but also with similar incidents in other sporting environments, from tennis to golf to swimming. Meanwhile, the rumour circulates that the UK will soon start to see some of the claims action hitting the gymnastics field in the US, albeit claims related more to physical abuse and bullying.
Read more: Insurance providers reveal their settlement offer in Nassar abuse case
Over the last four or so years, Bellingham said, the sector has had to acquire a lot of knowledge regarding the activities, geographical locations and connections of individuals relating to such claims. Often the media can draw a distinct line between abuse taking place and somebody being responsible for payment but, invariably, it is not as simple as that.
“Abuse by its nature is generally covert,” Metzger said, “And while criticisms coming through Sheldon and elsewhere all need investigating, that can be difficult so many years after the event. Even when the abuse is established, you need to look for the links between the parties and whether somebody is liable for the activities of the abuser. Lots of this comes through in insurance claims, but abuse also takes place in areas where there is no insurance or there was limited insurance many years ago, where limits of indemnity may have been small, or may now be exhausted.”
There are two key areas for Pro Global at the moment in the sports area, Metzger said, one of which is abuse where claims tend to be more long-tail - and the other is the emerging brain injury claims element. For Pro Global, which deals with legacy contracts sometimes going back decades, as well as more proximate covers for some clients, this gives the team an overview of emerging trends.
The next trend the firm is predicting is around rugby and football and concerns the association between various neurological conditions and events of the past. The questions on the horizon are whether these claims constitute negligence on behalf of any parties, which organisations might claimants seek to pursue, and what allegations of negligence will emerge depending on the role of the accused administrations.
Given the highly sensitive nature of both the more historic abuse claims and the more emergent brain injury claims, the sports injury space represents a complicated picture for the insurance sector. This emphasises the need for expertise in handling the delicate nature of claims, as well as the requirement for insurance companies to understand their historic book of business, what was underwritten, and what their exposures might be if these claims start to hit the market.
“A lot of these historic covers now sit with ‘runoff companies’ as opposed to insurers that are currently underwriting new business and obtaining a regular stream of premium,” Bellingham said. “Runoff companies tend to receive a lump sum to take on a liability and then run that liability off. As a result, it’s perhaps more necessary for them to have their horizons scanning and then emerging risk teams in place and looking for these things because the longer their lead-in time, the better they can prepare for this and the sooner they can start doing their calculations to ensure that they are properly reserved for it.”
This is where the likes of Pro Global come in, Metzger said, as the team has the skills, the resources, the people and, above all, experience in handling these low-volume, high-complexity claims. While this niche sector is probably only a relatively small part of what an insurer does, the firm can pull in expertise and knowledge from across wider books of business necessary to deal with such claims effectively and sensitively.
Read more: Pro Global announces new CEO
Pro Global can keep an eye on the future, as well as dealing with the crises of the past and present, he said, and its overriding mission is to deal with both claims and customers fairly which means acting as a kind of gatekeeper to ensure that only valid claims get paid. Only by looking at the full picture of such legacy claims can their implications and liabilities truly be understood across this complex sector.
Bellingham also issued a warning to insurance companies regarding the need to have such capabilities in place as early as possible. A ‘wait and see’ approach to such claims is ill-advised, he said, as no matter the scenario or injury type, when it comes to compensation claims, claimant lawyers will understandably follow the money.
“And there is a risk,” he said, “that if you deal with the first waves of claims in a certain way, you somewhat set the standard. And it might be a standard that you look back on in a few years and realise wasn’t the best practical approach to take.”