WEATHERING THE STORM A History of the Loss Adjusting Profession Part III Evolution and Recognition Chris E. Hardy WSIL 339 - Weathering the Storm.indd 312/21/2009 7:09:31 PM v FOREWORD Ever since non-marine insurance started in the 17th Century, there has been a need to agree a fair settlement of claims. The small beginnings only required the personal attention of an officer of the insurer but as the market grew, they needed to call upon creditable builders, estate agents and churchwardens to assist. All this is admirably detailed in the first volume of the history of loss adjusting, Order out of Chaos by E.F. Cato Carter. By the end of the 19th Century, there were a number of professional assessors who were engaged wholly in the settlement of insurance claims. With the rapid growth of the insurance market, both in volume and complexity, the work of the adjusting profession became more demanding and important. It was this background and the pressures of wartime working in the 1940s, which led to the formation of the professional institute as described in A Profession Emerges by Charles T.H. Sharp, the second volume of this series. The convulsive transformation of all business and commerce in the latter part of the 20th Century was very apparent in the insurance world. Changes in statutory regulations and methods of processing claims brought about rapid changes in the structure of loss adjusting business and corresponding changes to the professional body. This book will consider the important period of an evolving profession between the years of 1970–1995, during which time loss adjusters became an intrinsic part of the insurance industry, providing a service of claims experts to both insurers, and in time, policyholders. WSIL 339 - Weathering the Storm.indd 512/21/2009 7:09:32 PM ix C.I.L.A. 1970 – 1995 Contents Chapter I: The Winds of Change Cultural and Political Change 1 Legislation and Consumerism Fundamental Changes Chapter II: Developments in the Market Changes 5 Insurance World New Challenges Internal Reappraisal Chapter III: Adjusting to Change Evolution 15 Influence in the Market The Need to Respond Chapter IV: External Pressures Restrictive Practices 27 Advertising Value Added Tax Chapter V: Good Housekeeping Re-organisation of the Secretariat 35 Move to Manfield House Grant of Arms WSIL 339 - Weathering the Storm.indd 912/21/2009 7:09:32 PM x Chapter VI: Growth of Education Development of Examination Board 47 Production of Text Books Reviews Chapter VII: Adjusters’ Support and Personnel 53 Development Extent of Responsibilities Membership, Database, Library Chapter VIII: Wider Horizons Early Approaches from Australia 57 Problems Identified Problems Solved Chapter IX: Australasian Division Resolution 63 Status First Diplomas for Overseas Associates Chapter X: Instruct a Profession Disaster Plan 69 Flixborough Thames Barrier Chapter XI: Into the Eighties New Horizons 77 Growth of Membership Education Conferences Chapter XII: Adjusting in Relationship with N.I.O. 81 Northern Ireland Political Role Adjusting in the Province Chapter XIII: FUEDI Origins 93 CILA Role U.U.K.L.A. Chapter XIV: One Profession Historical Position 101 Negotiations between Institutes Amendments to Charter and Bye-Laws WSIL 339 - Weathering the Storm.indd 1012/21/2009 7:09:32 PM xi Chapter XV: Business with a Variation A Cyclical Business 109 Serious Rioting Two Distinct Market Needs Chapter XVI: Market Forces Image 115 Insurance Ombudsman Bureau Increase in Fraud & Dishonesty Chapter XVII: Independence Challenged Office of Fair Trading 121 Independence and Impartiality Profiles Chapter XVIII: Natural Disasters Resources Stretched to the Limit 139 “The Hurricane” Floods Chapter XIX: Disaster Means Work Substantial Claims Experiences 149 IRA Bombs Overseas Losses Chapter XX: Into the Nineties Shaping the Future 163 Australasian Division becomes Independent Delegated Authorities Chapter XXI: Fifty Years a Profession Bi-Centenary Celebrations 169 Time to Reflect Continued Professional Development Chapter XXII: The Crossroads Victim Culture 179 Media Influence Horizons Sources 191 Appendix I: CILA Historical and Archives Committee 192 WSIL 339 - Weathering the Storm.indd 1112/21/2009 7:09:32 PM xii Appendix II: CILA Past Presidents 193 Appendix III: CILA Australasian Division Presidents 194 Appendix IV: Membership of CILA as at 31st March Each Year 195 Appendix V: Council of CILA 197 Appendix VI: CILA Chairmen of Education and Examiners Committee 198 Appendix VII: CILA Council Members who Served as Honorary Treasurers 200 Appendix VIII: CILA Prize Winners 201 Appendix IX: A.F. O’Shea’s Presidential Address, 1st October 1962 202 Index of Names 205 General Index 207 WSIL 339 - Weathering the Storm.indd 1212/21/2009 7:09:32 PM 93 Chapter XIII FUEDI FÉDÉRATION DES UNIONS PROFESSIONELLES D’EXPERTS EN DOMMAGES APRÈS INCENDIE ET RISQUES DIVERS We are part of the community of Europe and we must do our duty as such Lord Salisbury 1830 – 1903 Speech at Caernarvon 10th April 1888 I n 1968, the European Federation of Loss Adjusting, later to become FUEDI, was founded in Paris, but Britain was not a member. Its early meetings between 1968 – 1971 were held in Brussels, Paris, Milan and Baden Baden. The membership comprised a number of leading national associations which offered independent loss adjusting services and were known as ‘Experts’ in most European countries. These highly skilled professionals specialised in handling particular classes of insurance claim e.g. engineering, forensic science, property damage, business interruption or legal liability. Interestingly their activities, in the main, were confined to investigating the circumstances and measure of specialised losses, it followed that more than one Expert was likely to be engaged to deal with claims requiring multi disciplines. In the majority of States, all issues relative to consideration of policy liability remained the preserve of instructing insurers thereby, in effect, depriving claimants of impartial consideration of policy liability. Thus, there was a fundamental difference in working procedures between UK adjusters and the majority of their European counterparts. WSIL 339 - Weathering the Storm.indd 9312/21/2009 7:09:39 PM 94 Weathering the Storm The main objectives of the Federation were threefold: to provide insurers throughout Europe with an unparallelled • professional adjusting service; to ensure compliance with a strict code of conduct; • to promote the loss adjusting profession by means of high standards • of training and mutually recognised qualifications. Early in 1972, Lucien Gallix of the Compagnie des Experts, who represented France, contacted Jack Redfern of Robins Davies and Little, who was a Vice President of CILA, and invited him as guest of honour to a meeting of European Presidents of the Federation at the Hotel Westbury, Brussels on the 13th May. At the subsequent meeting, it became apparent that all members of the Federation worked on the instructions of insurance companies, principally in the settlement of fire and special perils claims. In France and Belgium, Experts worked exclusively for insurance companies, whereas other Experts also acted for claimants. In Germany, Holland and Italy, the Experts acted for either side; assessors acting solely for claimants were unknown. Jack Redfern explained the philosophy and objectives of CILA and agreed to report to Ronnie Baird, the CILA President, who was to be invited to the next meeting of European Presidents. On receiving the report, Ronnie Baird established an EEC Committee drawn from existing members of Council, John Hilton Spence, R.G. Mathew, J.B. Guild and Jeff R. Probyn, with a brief: to establish a better understanding of the Federation of the • Association of Experts in Claims after fire and other risks within the framework of the EEC; to determine the rights and obligations of membership of the • Federation, should CILA be asked to join; to consider the rules of the Federation; • to keep CILA advised of the ongoing position and make • recommendations regarding possible entry into the Federation. One issue that was soon highlighted, which caused a difference of view, concerned adjusters dealing with cases in other countries. The existing members believed that the draft regulations should include the following provision: “Each associated member adjusting a claim outside the country where he usually operates, but in a member country of the Common Market (except for offices already established abroad) must work through the intermediary of a colleague of the country concerned, who will act in a way as his double and who will help him professionally to carry out his task on a fee basis”. WSIL 339 - Weathering the Storm.indd 9412/21/2009 7:09:39 PM 95 FUEDI Understandably, the proposed suggestion was not to the liking of CILA’s Council and clearly was not in the interest of its Members. Ronnie Baird so advised the Federation Presidents in advance of a meeting on the 7th October 1972, at which John Hilton Spence, as Chairman of the EEC Committee, and Laurie Girling attended as observers. In the event, in subsequently reporting to Council, they indicated that the draft statutes, equivalent to Articles of Association, were acceptable. However, disagreements existed regarding several aspects relative to the internal regulations e.g. whether members could act for claimants and procedures if working abroad. Despite these matters which were in dispute, the delegates urged the CILA Council to take steps to join the Federation, as delay would deprive CILA of the opportunity to influence progress, and force it to accept the rules imposed by others, if or when the Institute joined in the future. At an AGM of the Federation in Paris on the 12th May 1973, the matter was brought to a head. On that occasion, CILA delegates were Jeff Probyn, who was now President, with Messrs Spence, Girling, Guild and Saunders in attendance. At the meeting, although CILA delegates were no more than observers, they confirmed that CILA was willing to accept the Statutes and the members approved these unanimously. The Bye-Laws were then discussed at some length, but agreement could not be reached regarding Articles 3 & 4, dealing with claims outside a Member’s country of origin. The UK delegation could not accept that it was obligatory to work through agents in countries where losses occurred. However, in an attempt to resolve the problem, the UK delegates suggested that whereas representatives of the Federation were seeking to make it mandatory for Agents to act in Member States, such arrangements should be no more than a ‘recommendation’. The proposal was not accepted and the meeting closed with the President of FUEDI, Jacques Petit of France, requesting all delegations to write to him expressing their views regarding the Articles, in an effort to clear the deadlock. The argument continued into 1974 and on the 18th May, the Presidents and the Committee again convened in Brussels. Jeff Probyn and John Hilton Spence, representing UK adjusters at that meeting, had prepared an alternative wording for Article 3 for consideration, which read: “Collaboration between Associate members of FUEDI is recommended where an adjuster is dealing with a case outside his own country. Such collaboration is to be at the discretion of the adjuster and his principals”. Two delegates from the Insurance Adjusters Association (IAA) were also present at the meeting, as representatives of the alternative but smaller UK adjusting body. This resulted in the UK delegation being asked to comply WSIL 339 - Weathering the Storm.indd 9512/21/2009 7:09:40 PM 96 Weathering the Storm with Article 4 of the Statutes, which stated that no professional organisation could be represented by more than one representative body. To comply with this obligation, provisional arrangements for joint representation were initiated. The UK proposals for a variation of Article 3 were discussed without concessions being made. However, the UK delegation maintained that mandatory proposals for the use of Agents in other states, embracing words such as obligation and duty were not acceptable, but as a concession they proposed adoption of the words strong recommendation. Mr. Rousseaux of Belgium, who was chairing the meeting for Lucien Gallix, who had been obliged to leave early, sensing that agreement could be reached and under pressure from UK delegates to resolve the matter, ventured the proposal that the Article should be varied to read: “Where an adjuster being a member of FUEDI is charged with the settlement of a claim outside his own country, it is recommended that he co-opt a local colleague in the country where the loss occurs. Such collaborating adjuster must necessarily be a member of FUEDI. Such collaboration is recommended in the event of technical grounds or in order to comply with the Laws in force, customs, or professional practice in the country concerned, where the principal adjuster is not familiar with them”. Finally, a proposal that could be supported by all parties had been found. Although it may seem absurd that so much time should have been spent by so many on the wording of an Article in a By-Law, the implications for UK adjusters will be appreciated, had alterations not been achieved. Coupled with this, restrictive practices did not accord with the spirit of ‘free trade’ which was supposed to be one of the objects of the EEC. However, while the British Insurance Market was better organised than the majority of its European counterparts, the need for other members of the Federation to safeguard their interests was perhaps understandable. On the domestic front, in July 1973, a meeting was arranged between representatives of CILA and the Insurance Adjusters Association (IAA), in an attempt to find a formula for essential joint representation on the FUEDI Committee and at general meetings. There followed a series of requests from IAA to join CILA, but the terms for such a union could not be achieved because of a number of fundamental operational differences, especially in relation to qualifications. There was a perception amongst sections of the CILA membership that the IAA’s examination process was less arduous than CILA’s. In July 1975, Laurie Girling, who had become chairman of the EEC Committee of CILA, met IAA representatives. While explaining that CILA was not amenable to an amalgamation of the two UK adjusting organisations, CILA was prepared to support the following proposals: WSIL 339 - Weathering the Storm.indd 9612/21/2009 7:09:40 PM