Ah, the life of a Loss Adjustor. Gazing at spreadsheets, working out loss ratios per book on long winter evenings, and explaining why life truly is like a box of chocolates, using ten slides on Powerpoint, in a syndicate room at a Travel Tavern off the A45. It’s pure Springsteen level rock `n’ roll in a nutshell.
But wait, there’s more. Insurance Edge caught up with Questgates Director of Business Development, Alistair Steward at BIBA Manchester recently.
IE: Alistair, we are moving into an era of automated systems; AI, apps and policies underwritten in seconds. Is the old fashioned world of loss adjustment on the way out?
AS: We will always need the human touch and I think we really need to keep that element of the loss adjustment process. When things go wrong people are upset, need help quickly, and that’s what insurance is ultimately all about; a back-up system that delivers when you need it.
IE: Some claims like say the Notre Dame fire do need human input and perhaps ultimately government underwriting as regards rebuild costs?
AS: Actually I’d say it’s the other way round, ultimately benefactors need to step in with things like Notre Dame, or perhaps a hurricane affecting a small island, because governments are always short of money for things like heritage rebuilds. But the valuation point is interesting because as a sector loss adjustment is gradually coming to terms with the problem of guesstimating rebuild valautions – as opposed to market valautions.
IE: So the property boom of the last twenty years or so has led people to over-estimate the value of their buildings then?
AS: Yes, in some cases. It’s like anything else you buy; the market value or the price that YOU paid bears no relation to the rebuilding costs if the place burns down. Let’s look at heritage buildings, like the Manchester Central hall where BIBA takes place: There’s all the pavement, access roads, parking/loading areas, the underground parking and storage areas, and now we move onto the Victorian cantilever roof, vintage brickwork etc.
To give you one exmaple of the huge potential costs involved, it’s worth noting that one heritage re-construction required the re-opening of a particular quarry to get hold of the original stone. Then you have to find stonemasons, centreing carpenters, or craftspersons like stained glass makers for some older buildings – none of these is easy to work out in detail. But someone has to do it right, or the when the claim is settled the maths doesn’t add up.
IE: What about business coming to a halt, for a show complex like Manchester Central – that’s another part of the equation isn’t it?
AS: Yes it certainly is. It’s not easy to calculate exactly how long your exhibition hall is going to be out of action for; one, two…three years? Consider how long it would take to clear the site, negotiate with local authorities and other property owners nearby regarding site access, and then de-contaminate the ground before starting to lay the first brick. Nobody is going to book a show until they’ve seen most of the original halls restored, and many companies book events a year or more in advance. It’s a long process and that has a big impact on your business, which of course is part of the claim.
IE: Tell me about the future, how is tech going to change loss adjustment?
AS: It already has done with things like Google Maps, drone footage and more. These are useful up to a point. But what we would like to see is a system similar to mortgage valuations. When you buy a house, whether you like it or not, an independent surveyor looks at the value of the property, including the estimated rebuild costs.
It would be great to see that system become the benchmark standard within insurance, becasue there is no substitute for delving deep into basements, or poking about in lofts – you have to see, and touch, the entire site to do an accurate valuation. The current set-up essentially allows people to self-value their commercial property, be it a petrol station, Victorian library and meeting rooms, or a modern suite of offices in a busy city centre.
BIBA members can get a Questgates valaution, with full PI cover too, which helps avoid under-insurance and all the problems that can arise if a claim is then made. As a broker you’re getting a clear report, a detailed summary of the risks, which you can pass onto your client. It’s really important that as an industry we are all offering a truly professional service, no matter how complex all the layers of risk might be if a particular building, and the businesses housed within its walls, all stop working suddenly.
IE: Has to be better than putting a finger in the air and taking a guess. Alistair, thanks for your insights.