| Normally there are a number of reasons why | | | | talk about their retention rates which is the |
| insurers fail to pay or deny insurance | | | | percentage of policies renewed annually with |
| claims. The principal ones are: | | | | them yet many are struggling to maintain |
| | | | retention rates of between 85-90% with only a |
| 1. Non Disclosure of material fact; | | | | few performing in the low ninety percents. |
| | | | What this means is that insurers are losing |
| 2. Failure to abide by the doctrine of the | | | | annually anywhere between 5-15% of their |
| utmost good faith; | | | | client base. Most insureds are unaware of |
| | | | this as the only time they know the value of |
| 3. Fraud and/or overcapitalisation of loss | | | | what they have bought is when they have a |
| but the latter only applies to deny that part | | | | claim. In some cases they are less than |
| of the claim; | | | | impressed. |
| | | | |
| 4. Arson as a subset of fraud; | | | | Internal disputes resolution was introduced |
| | | | by insurers to provide a better outcome for |
| 5. An inability of the insured to provide any | | | | their clients. Unfortunately some insurers |
| or adequate strict proof of loss; | | | | treat claims as a process and have |
| | | | commoditised them. This is supposed to |
| 6. A breach of policy conditions; | | | | produce a better outcome for clients and, to |
| | | | be fair, in some cases it does, yet in others |
| 7. A failure by insurers to properly apply | | | | it cannot as one process does not fit all |
| policy conditions (eg. co-insurance, average | | | | claims. Some insurers believe that by |
| or a misapplication of theft or burglary | | | | treating claims in this way they are able to |
| sub-limits as applied to jewellery or the | | | | provide better customer service, speedier |
| misapplication of the condition precedents, | | | | resolution of claims, more effective control |
| or condition subsequents to the policy); | | | | over costs, reduced claims settlements and |
| | | | improved retention rates across all classes |
| 8. A failure by insurers to properly | | | | of their business. It cannot work for all as |
| investigate and assess a claim. | | | | it does not take into account the individual |
| | | | circumstances of individual claims which fall |
| Unfortunately some insurers lack real | | | | outside the norm and which therefore require |
| insurance claims expertise as too many people | | | | a different approach. It is in this area |
| are leaving the insurance industry. Despite | | | | where real expertise is needed and as is so |
| the rhetoric most claims are treated as | | | | often the case many insurers do not possess |
| commodities. Many customer service officers, | | | | it due to high staff turnover as claims is |
| individual client service managers or claims | | | | not seen as being "sexy" nor providing a |
| clerks have very limited experience whether | | | | secure career path. Unfortunately |
| they are dealing with corporate, commercial, | | | | inconsistent claims decisions means that |
| business or personal lines or domestic | | | | sometimes the insured fails to achieve true |
| claims. The reality is that there are more | | | | indemnity under the policy whilst the insurer |
| claims to be processed and less capable or | | | | loses a client. This could amount to having |
| experienced people to deal with them which | | | | the claim denied, refused in part, |
| affects claims decisions. This is not helped | | | | incorrectly quantified or misunderstood. |
| because some insurers are so totally | | | | Whether you be an insurer or an insured and |
| shareholder and cost driven they overlook the | | | | you become involved in a problem claim seek |
| need to protect their client base. Insurers | | | | independent legal advice from LAC Lawyers. |