Insurance claims are major business for lawyers, builders, salvage companies, Insurers, brokers, bank managers, Revenue, the Gardaí and loss assessors and loss adjusters alike.
Even though the vast majority of property and injury claims settle perfectly fairly, there is major fraud happening on both sides of the claims process.
This has been going on forever and will continue. The honest claimant is therefore at a major disadvantage in the claim process.
This is for a number of reasons – Insurers write the policy and they dictate what is insured but more importantly what is not insured. Insurers define the claim management process, they use experts and are experts in managing that process and their expertise is supporting their position. It is not in the interest of the Insurers to make it too easy. Insurers adopted the position for many years that the claim process was under their total control and that the loss adjusters acted purely for the Insurer and in fact that the insured was not entitled to independent professional advice.
The game has changed to some extent but there is further to go.
The Consumer Protection Code went some way towards rectifying this position. It has not solved the problem fully. It does require Insurers to notify the claimant that they are entitled to professional advice but at their own expense, i.e. it is not an insured fee. Ironically, this is an area that insurers can, and in some cases do, actually cover in the policy – but they are few and far between. The Insurers that do cover the fees generally try to control who they pay for, and at what price so it may not be a decision for the claimant to make in their own interest.
In my view, it is grossly unfair particularly in larger claims where the costs of processing the claim are driven up in many cases by the Insurers’ investigations. It is wrong that the claimant who has suffered loss and damage to their property or business should have to bear this cost (loss assessors fees), when it is in consequence of the insured event and therefore should be insured.
It is absolutely clear that the claims process is extremely complicated. Even a chimney fire today could involve a broker, an lnsurer, a loss adjuster, the fire brigade, and various builders who quote for repairs. CCTV reports to clarify the extent of damage to the chimney flue possibly even forensic investigations in some instances. The only party who can co-ordinate this with the Insured’s interest in mind is the Loss Assessor.
It is most unreasonable for anyone to expect a person who works in a factory or the owner of a hotel business to understand all the complexities of an insurance policy.
It is a fact now that insurers are reviewing claims history, disclosure at inception of the policy, the cause of the damage, the likely cost of the claim, forensic investigations and many more aspects of the claim before accepting liability and offering to pay any money.
These processes can take many weeks at least and many months at worst.
In the past 10 years in Ireland even though many many claims are settled and paid by insurers and people are generally satisfied, there are equally many claims that end up in the in the Courts or Arbitrations.
Insurers have not, in the recent past, covered themselves in glory, the issues that FBD had in relation to the rebuilding of many of their clients chimneys in private houses hit the headlines a number of years ago. The work was grossly unsatisfactory and it was identified by Engineers that some of the repairs were actually dangerous. This clearly was an exercise by Insurer in saving money that backfired.
We have also recently heard about the RSA issue with claims processing and reserves and how that impacted on the revenues for the company throughout Europe. It is also less known that this approach to processing claims actually filtered down through to the loss adjusters and claims handlers and the whole claim process in RSA slowed down dramatically and became grossly unsatisfactory. The Chief Executive lost his job in consequence but that didn’t help the unfortunate whose house burnt down or flooded.
We are also all well aware of the Quinn Insurance methods and approach to their client’s claims and how the public view of the claim process in Quinn insurance was far from acceptable in the context of the requirements of the Consumer Protection Code and the needs of somebody whose house just burned down – had a mortgage – in negative equity – and there no access to alternate funds.
This is when you need your insurers to be on side and honouring the contract fairly and fully. The doctrine of “utmost good faith” applies to insurers as well as insured but if you are on the wrong side of that issue, it is virtually impossible for a person making a claim to even consider trying to argue that point legally.
Cleary’s have found in the recent past that if your Insurer is causing problems in the claim process, where slow decisions of acceptance of liability or investigations going on for months and months – it is extremely stressful & highly technical. This brings a financial pressure on the claimant that may force decisions one would otherwise not take.
We have a case in process at the moment where Insurers instructed loss adjusters to visit the site on day 2 after the incident. Loss adjusters reported within 2 weeks to Insurers. On day 16 a forensic investigator was appointed who visited the site, interviewed witnesses and also reported to Insurers and this took a further 4 weeks. Four weeks after that, we heard from the Insurer’s lawyers asking further questions and looking for further detail about the site and the circumstances of the fire. We believed complete detail had been presented already to the previous two parties. A letter then arrives from that the lawyers looking for further detail giving us another six weeks to reply. While all of this is going on, liability had not been accepted and the six figure loss is impacting on the client’s business. The client cannot make decisions because the Insurers have neither accepted liability nor repudiated liability. It is now week 16! The owner does not know where he stands. He may actually prejudice his own position if he pays for the repairs himself.
This highlights the inadequacy of our current Consumer Protection Code and indeed the claim processes. The only message is to get your representation early and hope that all goes well.
Clearys Claims ManaWhgers