Media - The Insurance Industry - It's Image - A Case for Change?
A Presumption of Criminality
A frequent complaint that reaches our ears is that the policyholder feels that they have been treated without courtesy when they make a claim under their policy. Typically: “We were made to feel we had committed a crime”.
Our investigations into such circumstances usually reveal that the insurer, or its agent, is “checking to ensure that the claim is not fraudulent”. If that process, which is undoubtedly necessary from time to time, makes ordinary, honest policyholders “feel like a criminal” then we are not going to improve the image of our industry.
The industry would be safe in presuming that the vast majority of policyholder claimants are honest. They may be misguided as to how insurance works in practice but that is not a fault of the policyholder. After all, how much do we in the industry know about the skills and practices of other peoples’ (our customers) trades and professions?
“The Presumption of Honesty Should Prevail”
Surely, the presumption of honesty should prevail until there are sound grounds for suspecting otherwise and even then there is good reason to treat a customer fairly and with due respect until there is evidence to the contrary that would be relied upon in a court of law.
In our experience, many of the problems encountered with disputes about insurance claims stem from a policyholder’s genuine mis-apprehension as to how insurance works and what is a reasonable expectation and entitlement in the event of a claim. This is not explained to them at the time of a sale of the product and so at the time of a claim it comes as a big shock to most policyholders. However correct the legal / technical explanation given after the event it does not persuade the disappointed policyholder to trust the industry.
Most insurance professionals would prefer to be liked and trusted by their clients and so every effort to engender that trust is worthwhile, both for themselves and for the industry.
“Claims - The Shop Window of Insurance"
The expression “claims is our shop window” is a time-honoured description of the industry. It is usually rolled out at conferences when the industry is telling its peers what “the industry” “must or “should” be doing to persuade the customers to trust it and appreciate its value.
In reality, no customer is interested in how many claims the industry pays without quibble; it is meaningless to them. They only care about how they are treated when, perhaps once in a lifetime, they make a claim. If they are treated well they may remain a loyal customer even when the price goes up. If they are treated poorly they will tell all their family and friends.
Complex and Costly
Claims is a complex, costly and time consuming aspect of our industry and it deserves the best people. The best people will have not only the technical know-how of a CII qualification and perhaps a law degree but they will also recognise the intrinsic purpose of insurance; which is to accept a customer in good faith (or not at all) and to pay a claim in good faith. The law and the technical parameters of insurance law and practice can only be a guide for the regulation of the conduct of our industry. It is not possible for any insurance contract to anticipate every variation on a theme of claim events (e.g. every accident/ event has distinguishing features from all others of its kind) and so no insurance policy can claim to be a perfect match for the needs of the policyholder.
Utmost Good Faith Must Prevail
But that is what the policyholder expects and often what is believes it has been sold. That leaves it open for the professional claims handler to use professional judgement as to how strictly to interpret the policy; to the letter, which often crosses the boundary of acting in good faith, or to the spirit of a contract of insurance issued in “good faith”?
It is interesting to note that the new Insurance Act (2015) retains reference to “good faith” despite, at Part 5, it reminding the reader that reference to the doctrine of Utmost Good Faith, referred to in the Marine Insurance Act (1906), has been “modified to the extent required by the provisions of this act….”
Insurance Act 2015
Clause 14 - Good faith
- Any rule of law to the effect that a contract of insurance is a contract based on the utmost good faith is modified to the extent required by the provisions of this Act and the Consumer Insurance (Disclosure and Representations) Act 2012.
However, whilst the principle of Utmost Good Faith no longer applies, the new Act still requires Good Faith to be the underlying principle in which every representation is made by the proposer/ insured to the insurer. (See below)
Insurance Act 2015
A fair presentation of the risk is one -
- in which every material representation as to a matter of fact is substantially correct, and every material representation as to a matter of expectation or belief is made in good faith.
The implied intention of clause 14 is that good faith will remain an interpretative principle, with section 17 of the 1906 Act and the common law continuing to provide that insurance contracts are contracts of good faith.
What is Good Faith?
The courts will in time, no doubt refine its meaning in the context of the new Act but in plain terms it is telling the absolute truth and being honest and open with the insurer about the facts, information and circumstances concerning the risk to be insured. In return the insurer is expected to be equally honest and open with the Insured and pay claims except where there is a clear, intended and relevant exclusion or breach of condition; or where the Insured has intended to cheat the insurer. Of course, this is capable of infinite interpretation and that is where the judgement of the claims handler and the claims paying culture of the company comes into play.
The “Window Dresser”
There are many hundreds of people in the industry that are playing a valuable part in determining and settling claims. They must always have the support of their masters in a culture that says to the client “we want to please you now more than at any other time in the insurance transaction” This will give claims people a renewed self-esteem and in turn will attract the best people to be in charge of the shop window of the industry.
Time to Make a Difference
Claims management must once again be integrated with the underwriting and risk assessment process. It is nonsense to treat them as separate transactions. The insured is not in the least interested in the process of the insurance company. He believes he has disclosed information in order to obtain a contract of insurance and that a man or woman who settles his claim is close to and ad idem with the person who assessed the risk and took his money.
Client expectation is everything in this industry. So isn’t it time to treat the client with a little more respect?
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