Second blog from the Chair of the Claims Working Group

1st August 2017

Originally published 14 August 2015 as a BIBA blog

Having issued the first of the blogs from the Industry Claims Working Group, I must say that the feedback I received was both encouraging and surprising. This was principally due to the fact that the blog received quite more engagement than I had anticipated, but I am pleased that people found the information that I provided to be informative.

It has been a busy time since my last communication as representatives from the Group met with the Financial Conduct Authority on Friday 19 June, which was quickly followed up by a meeting of the main group on 2 July 2015.

We were pleased that the broker representatives of the group who met with the FCA were able to speak directly with Simon Green, ?Director, General Insurance & Protection at the FCA, John Parker who headed up the Claims Thematic Review for SME’s (TR15/6) and Tim Humphreys who was also involved in producing the report.

The Regulator reiterated that the review into the handling of insurance claims for small and medium sized enterprises was part of three pieces of work carried out into distribution. The Regulator was looking to find consistency of outcome and consistency of approach in all aspects of the delivery of insurance services to customers.

Their findings were discussed by the group, which, to remind you, includes representatives from insurers, brokers, loss adjusters, loss assessors, the ABI and other stakeholders from within the industry, all of whom are referenced to some degree in the FCA report. It must be identified that the group are generally supportive of looking to improve customer service and customer outcomes in the areas of weakness identified by the review as it is one of the three terms of reference for this group.

The findings of the latest thematic review differed from the previous review of personal lines in that the FCA found there to be a gap between the expectations of the customer in terms of service and project management of the claim and the reality. Poor communication with the policyholder throughout the process and identifying a plan which the client could follow were also areas where the FCA consider that improvement is necessary.

Underinsurance was found the be prevalent in around 20% of cases, which applied to both property sums insured and also business interruption. BIBA has already been working on what would be called PI Book 6, which is looking to identify how brokers can play a part in giving better advice and guidance to customers on how to avoid under-insurance and the consequences of under-insurance in relation to claims.

Dummies guide
Steve White and Graeme Trudgill launch the BIBA Small Business Guide for Dummies

BIBA has already contributed to a guide called Small Business Insurance for Dummies and is also looking to develop existing links for the Federation of Small Businesses with a view to promoting the message of arranging insurance at the appropriate sums insured to avoid under-insurance, which is something that the FCA have already expressed an interest.

Under-insurance was also reflected in one of the AXA of Transparency Guides, which was the subject of comment in my previous blog and others who are represented by the group are looking at how they can assist in promoting the message to customers.

This latest meeting was extremely constructive and included some discussion on the implications on claims of Flood Re, which is something that we may return to in future agendas. But a large part of the meeting revolved around the implications to claims, and the industry generally, of the biggest change in insurance legislation for over 100 years, which is the Insurance Act 2015.

Insurance Act guideBruce Hepburn from MacTavish, who is a member of the group, provided us with a presentation of his first impressions post the Act receiving royal assent, which fostered constructive debate throughout the group. This again is a topic that we will return to over coming months ahead of the Act taking full effect. In conjunction with BIBA, Aviva and QBE, MacTavish have assisted in producing a guide to the Act which has proven to be well received by BIBA members and the wider market alike.

As always if there are issues that you feel that the group should look at as part of its general work you are free to email us at [email protected].