Merlin Claims:: making value disappear

I have never endorsed fraud so am not about to start now BUT I have always winced when I read about the cost to the industry of fraudulent (or inflated) claims. Thankfully, the industry has, belatedly, made great strides in this respect and a great deal of credit should go to IFB who had another major success this week. However unbelievable it may sound, my concern has not been so much the, reportedly, £2.1bn of undetected general insurance fraud!

What I and others (who are not so free to speak out) find particularly disturbing, is the unquantified scale of, what amounts to,  “licensed fraud” that is perpetrated by the industry, against the industry, inflicting yet more reputational damage on ourselves and for which, as customers, we all pay a financial premium. This may go some way to explaining why Roger Williams MP will, again, be raising the issue of Regulation for Loss Adjusters in Parliament after the summer recess!?

I really wanted to go to town on this news story but, you know what, after the news of Merlin entering administration broke, a couple of brief conversations and a few texts, I reckoned I couldn’t have put it any better than these words from a former, Senior (Fraud) Loss Adjuster:

Another Network has gone into administration. Merlin’s short-lived involvement with the insurance market may have cost millions of pounds to building contractors. For how long are CILA members (link to code of conduct – for reference) going to be “authorised to conduct business” with no real business model?

Merlin’s model was to take money from contractors and pretend to insurers that they were getting “value for money Loss Adjusting“.

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Insurance:: “Future risk” and technology [CII report]


image30 yeas ago (and for much of the intervening period!) I never thought I would utter the words, “what a great report from CII” but there you are, I’ve done it now. I’m the “sad” insurance man I never wanted to be.

Well, not quite, because I am very much an outsider as far as the insurance industry stands right now. The main reason being that too many people on the inside don’t want to hear, like or understand what I have to say about the massive problems that the industry is adding to day, after day, after…

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Duncan Watts [presentation]:: The Myth of Common Sense

Duncan Watts is a clever guy! Not just because he is well educated, which he undoubtedly is but because he has the ability to explain why “common sense” works in the appropriate domain(s) – simple, maybe even complicated – but is particularly dangerous in complex or chaotic domains. But, then again, that is what this definition tells us: “sound and prudent judgment based on a simple perception of the situation or facts“. But when I talk about these different domains you should not visualise this as “islands” or separate entities. Rather, as various “conditions” or “states” that can be found within a single complex [adaptive] system, its sub-systems and networks at any given time, as it performs the many inter-connected processes that underpin functionality.

Why is this relevant? Because “common sense” isn’t much use if you are dealing with a system so complex that you CANNOT understand its complexity, track causality or anticipate the unintended outcomes (or unintended consequences)! Where the smallest decisions can have enormous consequences and the smartest decisions can be counter-intuitive, how can they be validated when the crowd advocate “common sense”???

I urge you to watch the presentation (even read the book!) and, if this has whetted your appetite, you may also be interested in what Atul Gawande has to say about surgeons dealing with complexity, Tim Harford talking about Oil Rigs or Dave Snowden a kids party!

Social problems…must be viewed not as the subject of rhetorical debates, but as scientific problems, in the sense that some combination of theory, data, and experiment can provide useful insights beyond that which can be derived through intuition and experience alone.

Freakonomics » The Myth of Common Sense: Why The Social World Is Less Obvious Than It Seems.

Too often we are guilty of over-estimating our own knowledge and underestimating what appears familiar even though we know that appearances can be deceptive – some “creatures” are particularly adept at exploiting this knowledge – and how much we have learnt by looking deeper (into space) or more closely (DNA, bacteria). Living systems come in all shapes and sizes but their true nature and an understanding their “structure” cannot be ascertained without observation at a variety of scales.