Why sorry can be the hardest word
What would you most like someone to say to you when they have made a mistake at your expense? Would it be, "I'm sorry"? Time and again customer service research reports that saying sorry to a customer is the best way to start to resolve a difficult situation and it also helps to maintain your reputation. Compensation will not be far from the minds of the aggrieved party as well, in most cases but, curiously, the acknowledgement that something has gone wrong can mean a lot more than one can put a monetary price on. So why doesn't it happen more often? Why do we resolutely refuse to apologise?
The UK has acquired for itself a culture of blame and compensation and it is widely believed, both in business and in consumer affairs, that saying sorry is an admission of guilt or of liability. Insurance companies, in trying to preserve for themselves the integrity of their policyholder's legal rights and remedies, actively discourage any admission of any kind. This is a sound legal precaution for the insurer but it does have unintended consequences; particularly its propensity to antagonise the parties and promote a rapid escalation to costly litigation that usually fails to serve the best interests of either party or in fact, the insurers; they pay the legal bills. Moreover, it immediately causes reputational damage that could otherwise be avoided.
Sometimes you will know straight away that your company has made an error; it is as plain as a pike staff and it is only a matter of putting things right. On other occasions you may not agree that you have done anything wrong at all, in which case saying sorry needs a caveat.
In either case, a simple acknowledgement, that the outcome is not what either party had intended or foreseen when they entered into the bargain, is a powerful and persuasive antidote to the perils of the alternative; full-tilt litigation. That, after all, is the commercial rationale for apologising; to reduce the potential cost and damage.
Consider this typical example of how we deal with a complaint:
Thank you for your [letter] of complaint dated 1st January 2010. Without admission of liability we confirm that we will treat your complaint seriously, in accordance with our company's complaints procedure. You will be hearing from our representative within the next 14 days who will take details of your complaint. In the meantime we will suspend all work on your account pending the outcome of this matter. If you have any questions about this please call our complaints manager on............................
I (director/Partner) am sorry that [the outcome] is not what you expected or foresaw and I would like to reassure you on behalf of my company that we will do what we can to put things back on track. I would like to arrange a meeting to discuss the matter with you informally and gauge the exact nature and extent of the problem.
It would be helpful if you would bring your papers with you to the meeting and I look forward to being able to help to sort this out for both of us.
If you received these, which would most encourage you to talk and sort it out? Which would make you resolve to bring them down?
Stating the obvious
In the second example the word "sorry" is slipped into the text as a qualification of stating what is perhaps the obvious; no-one set out to get to this result, and so it is clear that something has to be done to "get things back on track" to what was reasonably expected.
In effect you are saying "I am sorry that you have had an experience that gives you reason to complain about us at all. It is the last thing we want for our clients".
Isn't that what we really mean by "I'm sorry"?
The fear of being polite
The fact is, though, that there is a real fear for most people in saying anything that may come close to "I'm sorry" because they fear that insurers will deny insurance coverage if they do. The purpose of this article is to shine a little bit of light on what could become a softening of the extreme and expensive approach that we have drifted into over the last twenty years or so.
Can the Law support "Sorry"?
Interestingly, there is encouraging law on this point. It is covered in the Compensation Act 2006:
“2. An apology, an offer of treatment or other redress shall not of itself amount to an admission of negligence or breach of statutory duty.” [Emphasis added]
This is pretty clear that in law an apology does not have the catastrophic consequences that are generally feared. There may be, somewhere, a law report that suggests that an apology within the terms of the Act has led to a finding of negligence and we openly invite readers to tell us of any such case.
Objective and Solution
Insurers (or rather their lawyers) will say, generically, that giving an apology of any kind, in any form is just not acceptable. This is because it can put them at risk if you (their policyholder) does it badly. So what is the solution?
Firstly, what is the objective? The best outcome from any complaint or dispute is a negotiated settlement where the parties still talk to each other and continue to do business with each other. No one should surrender the commercial benefits that arise from adopting a human approach to complaints. No one should let the world of law, via insurers or not, take over and control their valuable business relationships if there is any other possible way out.
In our considerable experience of negotiating disputes and insurance claims we find the following:
- People receiving a complaint are fearful of losing the business and reputation as a result.
- The same people are equally, if not more fearful of losing the cover from their insurance by saying or doing the wrong thing to the insurance company.
- Insurers report that the cost of legal advice and loss adjusting services that they habitually engage to be ever more costly and can easily suffer from "consultancy creep"; so they are keen to cut their cost of dealing with claims.
- The firm or company against whom the complaint or claim has been made is very often knowledgeable and able to contribute to valuable loss reduction and mitigation without any intervention from outside parties but they do want their hand held to know what to do and what not to do, in law - especially procedural law.
This is the making of a "win win" solution for everyone.
So how do you start?
Every policyholder has the right and option to ask the insurer to conduct a claim in a particular way. If the proposal is fair reasonable and likely, in the insurer's (experienced) opinion, to achieve a positive outcome they will very often give the insured permission to carry on and report back to them on the result. Working in tandem with insurers reduces time, friction and cost, none of which is covered by the insurance policy in any case.
More importantly, it allows the parties to the matter to remain in control of the negotiations and outcome whereas, once it is in the hands of lawyers, the due process of legal practice and protocol takes control away from the parties.
Mediation is an excellent early stage settling forum and should be used more than it is; it saves time and money and more than 70% of mediations are successful in coming to a settlement.
Establishing a relationship with the claims team at the insurance company is the most valuable asset of the insurance policy if it is done well.
So what about the law?
The British legal system is adversarial so, by nature, the legal profession will be content to battle it out in court. Sometimes there is no practicable alternative to a full-blown litigation but very often there is and it is a highly desirable option. There are no guarantees of success in litigation. Where a matter can, in principle, be resolved without recourse to litigation then the lawyers are invaluable in advising the parties upon points of law, and above all, procedure and practice in law so that if the wheels fall off the negotiation at the last minute no prejudice to your position has occurred and the lawyers can pick it up and run with it.
This approach is the logical follow on to saying "I'm sorry" and if said in this context and with the full support of insurers it can be the most cost and time efficient method of dispute resolution and you can carry on doing business. If it only reduced claims costs by 5% then for some that could mean immediate profit.
Flaxman Partners Ltd
Insurance Claims Advocates