It was recently reported in the Insurance Times that recent research by the Financial Conduct Authority (FCA)based on the experience of 100 SME’s (Small and Medium Enterprises – which are companies with under 250 employees or less than £40m turnover) who have suffered material damage claims over £5,000 has shown a high level of dissatisfaction with their claims experience.
Some of the common complaints were that the businesses felt that the claims process was slower than it should be, there was poor communication and not enough help and support and that claims settlements were often less than anticipated.
Some of the main contributing factors that the FCA noted are:
Delays in the loss adjuster visiting the claimant of up to three weeks.
Claimants unclear on how to reduce business interruption which can increase costs and time taken for claim to be fully resolved.
Unclear who is responsible for the claim outcome (whether it’s the loss adjuster or the insurance company etc.).
Lack of clarity over the steps involved in the claims process.
On top of this there are other further issues that can cause problems. Often claimants do not know the difference between brokers, underwriting agents, insurers, loss assessors and loss adjusters which can lead to confusion.
Brokers are professional intermediaries who place your insurance for you and assist with your policy, they act on your behalf. As such where possible they are duty bound to assist you in favour of insurers, though they might not get involved in claims they can often provide advice or assist if required.
Underwriting Agents often seem like brokers in that they provide quotes and can give access to specialist covers but they act on behalf of the insurer! They may or may not have claims authority.
Insurance Companies are who receive the premium less any fees and commissions and offer you cover in return. Normally it is the insurance company who has final say in any claim but not always.
A Loss Assessor is a specialist in claims appointed on behalf of the claimant to help them with the claim if it is complex or they choose to have one (normally at their own cost). Their duty is to assist the client with most elements of a claim to help obtain a faster and better resolution.
A Loss Adjuster is someone that specialises in claims from an insurance company (or underwritings agents) perspective and their duty is to check the claim is covered and process the claim as per the terms and conditions of the policy.
A key factor that causes problems for many insurance buyers is how they value things and their understanding of how risks truly impact them. This is a key reason why so many companies that buy insurance direct (so they receive no advice from qualified professionals) and often end up underinsured . Previous figures have suggested as many as one third of claims bought direct are thrown out due to not being covered or much less is paid out than anticipated. With sums insured being too low in 20% of the cases and insufficient business interruption cover at an even higher rate.
Many customers do not realise underinsurance will lead to a proportional reduction in any claim settlement and think they will be covered up to their sum insured, which is only true if their sum insured is correct.
If in doubt speak to your friendly local broker who is best placed to assist with advice that can hopefully prevent you becoming one of the dissatisfied statistics we read about.