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Changes to #insurance industry reducing work for their lawyers, research claims

By 4th February 2017No Comments

​Lloyds of London: significant fall in number of disputes

Virtually all law firms serving the insurance industry have lost business in recent years amid “a high level of disruption driven by major changes in the underwriting businesses they support”, new research has found.
At the same time, Clyde & Co, Kennedys and RPC continue to be the dominant players, it said.
Gracechurch, a research consultancy to the insurance industry, said its 2016 Insurance Law Report, found there have been some “dramatic shifts” especially in the middle and lower tiers of the market.
“This is mainly driven by a significant fall in the number of disputes, quite often because insurers are less willing to get into conflict with their policyholders.
“Despite this, the top three players have managed to maintain share, mainly because the combination of international and specialist capabilities and coverage are in demand from London market businesses.”
The company said that Clyde & Co received work from 76% of the insurance market, followed by Kennedys (63%), RPC (43%), DAC Beachcroft (33%), and DWF (20%).
Ben Bolton, CEO of Gracechurch, said: “These figures illustrate an emerging group of new, ambitious businesses intent on winning share. DWF and BLM have both increased their share of mind and voice by over 200% since 2012. They appear be mainly threatening the middle ground of the sector. This situation is fascinating, suggesting that the whole area is ripe for change.”
Gracechurch said that the 200 ‘claims decision-makers’ who took part in the research all identified three major trends that were affecting their business: a desire to grow their topline, particularly by entering new markets internationally; cost containment, given that investment income was low and underwriting returns depressed; and client retention – “with market competition fierce, handling claims in a way that retains the right business is vital”.
Mr Bolton continued: “There is no doubt that the law firms in the insurance sector are being significantly impacted by strategic changes in the industry they support. The challenges to insurers’ top and bottom lines means that they want law firms to understand and respond to their commercial aims in a number of ways.
“But it is not all about price. Segmentation of work is particularly important – delivering efficient low-cost services in the high-volume space and technical knowledge and expertise to support complex claims matters.
“Insurers also genuinely want to build deeper relationships with firms. Their desire to create panels of suppliers means they can work with fewer people to create better relationships.
“With better relationships, they find they get a better quality of support. And, with an increasingly global footprint, insurers also want assurances that their legal partners can help them resolve disputes in other parts of the world.”
The report said: “Underlying analysis of usage by business class showed that Clyde, Kennedys and RPC dominate all classes, pretty much in line with their overall market share and maintained since 2012.
“The one exception is in the area of claims advice, where DAC Beachcroft still holds a strong position. The big three also dominate share in the property and PI [professional indemnity] classes, with DAC Beachcroft and a number of others losing share.
“DWF and BLM are making inroads in casualty and property business, with little evidence of presence in PI. In PI there is a wider range of players who have significant share, including Mayer Brown and CMS, both of whom have declined in property and casualty business.
“This indicates that a number of traditional players are moving away from volume business to focus on cherry-picking more complex work.”
The report said contentious work was still the most competitive area. Here too, Berryman Lace Mawer and DWF “have quickly built share so it can be seen that the new competition isn’t just aiming at commodity services”.
By Neil Rose

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Tim Kelly

Tim is a highly qualified Independent Engineer with over 20 years experience as an Engineering Assessor of damaged vehicles.

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