A Perfect 10 - SX3 2024 Review

Nothing is ever truly ‘perfect,’ but as we mark 10 consecutive years of growth, while consistently delivering full value to our clients, we hope you will permit us a moment of self-reflection. Reaching this milestone is a testament to the principles SX3 was built upon and the trust our clients have placed in us over the past decade.

We founded SX3 on a clear vision – to provide independent, expert support to our peers in the insurance industry. We committed to a set of simple but essential principles that have guided us every step of the way:

1. Deliver Genuine Expertise: Every project is staffed by seasoned insurance practitioners, people who have walked in our clients’ shoes and understand the challenges they face firsthand.
2. Ensure True Value: We only take on projects where we’re confident we can deliver measurable value, ensuring our clients always see a return on their investment.
3. Maintain Independence: Our independence is non-negotiable. We don’t accept commissions for supplier recommendations or introductions, keeping our advice impartial and focused solely on our clients’ best interests.

A decade on, I’m proud to say that we’ve upheld these standards in every engagement, working with over 60 organisations across the insurance market. The feedback we’ve received from our clients reaffirms that our approach continues to make a meaningful difference.

As we enter another year, here are some insights into the ways we’ve been supporting our clients during 2024.

Market Performance

As ever, we start with a high-level view of the trend we have seen through our claims performance reviews across Motor, Casualty and Property claims operations. From the reviews we have carried out in 2024 so far, overall, handling performance has dropped slightly in 2024 compared to 2023, and leakage rates have increased:

Drilling down into the data by specific handling areas, audit performance on recoveries handling has widened between those who have focused on their processes, systems and suppliers, compared to those who have not. The handling audit performance range for recoveries handling in 2024 was 55.17% to 100%, whereas in 2023 the range was 64.29% to 100%.

Total Loss Claims

Following the release of the FCA’s thematic review in March 2024, we responded by providing a bespoke audit/review solution for our clients to test their performance against the FCA’s findings and recommendations of good practice. We also provided validation for data submission requests, and support during Skilled Person audits, helping our clients better understand and explain their situation. The best performers remain those who are able to demonstrate and evidence effective governance and performance oversight of their claims handling and supply chain, whether that is in-house or outsourced.

Consumer Duty

We have seen in practice, with the FCA’s Total Loss review being a prime example, that those who have the consumer at the heart of their claims processes inevitably deliver better audit outcomes. With strong focus already in place by our clients on their in house claims operations, SX3 have been increasingly called upon to look at clients’ external TPA / Delegated Authority claims handling arrangements across a number of classes of business, including Motor, Travel, Household, Warranty, Gadget and Pet. Particular focus has been the practices, governance and performance recording of the identification of Vulnerable Customers, the adaptation of services where required, complaints, and delivery of fair outcomes.

Subrogated Recoveries

This year, through our audit programme, we have identified a deterioration in motor claims subrogated recoveries performance – a key area for hard and soft leakage. There is clear evidence of payment delaying tactics forcing an increase in litigation, adding unwelcome extra cost and delays to claims. ?We are supporting clients both with case handling audits and also reviewing practices and procedures to help shorten case lifecycle, reduce leakage and increase returns.

Run Off Oversight

There are many reasons why a capacity provider may choose or need to put a scheme into run off, but those schemes all still require oversight. We have seen more clients asking SX3 to support that work – not to handle the claims themselves – but to help our clients oversee the performance of the entity handling the claims in run off. That support takes the form of data modelling, performance tracking, troubleshooting and auditing. With so many of our team having managed run off schemes in their former roles, it’s a service where we have been able to add significant value to our clients. Read our case study for the outcome.

Complex Case Support

We have seen an increasing requirement of clients seeking advisory support on individual cases. Examples:

• FOS Complaint – Storm damage claim for buildings was rejected by the insurer due to lack of evidence of storm damage. The insurer’s customer had complained to FOS. FOS requested the insurer arrange an independent survey of the property. The insurer asked SX3 to find and instruct the surveyor, so they could demonstrate to their customer that the result of the survey would be truly independent. Read our case study for the outcome.
• Fire Claim – Our insurer client had received an initial estimate from the loss adjuster of a property fire loss that seemed excessive. As SX3 have a number of ex Loss Adjusters within their Associate network, they asked SX3 to attend the fire damaged property and audit the opinion of the loss adjuster. The result was that it did appear that the loss adjuster had been pessimistic in their assessment, but also that the loss adjuster had failed to organise scaffolding to stop rainwater coming in through the fire damaged roof of the property.
• Building Warranty – Our insurer client was in dispute with their policyholders(who were represented by solicitors) over the extent and cost of remediation work required to two barn conversions that could be attributed to the renovation work covered by the building warranty policy. Our client also had legal advisors. With the case heading to litigation and imminent mediation, they wanted a fresh perspective on the claims to include views on available options for bringing the case to a satisfactory / cost effective conclusion. Following discussions with our client and consideration of key documents, we provided a report examining the timing, prudence and rationale for the proposed mediation. In our report we included a series of questions for the client’s own legal team to consider, as well as a cost benefit analysis of the mediation process. Additionally, we suggested possible alternative approaches to resolving the claims to include having the policyholders refer their dispute to the Financial Ombudsman Service. Our outcome focused analysis provided the client with alternative dispute resolution strategies facilitating an enhanced strategic understanding of how an optimal claims outcome might be achieved.

Ukraine Aid Missions

Our Laura Phillips took over the SX3 driver slot for the latest aid mission (number 7), in Nov 24. John Green, John Gibson and the team have managed to procure 7 ambulances and 4x4s for this mission from the generous donations received already, and provided them to medical rescuers on the front line, as well as to two orphanages.

Laura’s personal journal of the mission can be read here

SX3 People

Our team has grown this past year, with the following additions:

• Richard Pilkington – Head of Audit Services
• Kelly Williamson – Operations Administrator

There was also a warm return for Lorraine Bussey as Client Services Manager and we’ll be appointing 2 further Client Services Managers in January 25. Watch this space.

One final milestone worth celebrating – our Associate network has now also expanded to over 50 members and you can see the full range of our services and coverage we offer here

As we look forward to the next 10 years, SX3 remains steadfastly committed to supporting the insurance industry through those principles of independent expertise and unwavering dedication to delivering value and trust in an ever-evolving landscape.

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