BIBA response to the Riots Communities and Victims Panel
20th January 2012
The British Insurance Brokers' Association (BIBA) is the UK's leading general insurance organisation representing the interests of insurance brokers, intermediaries and their customers.
BIBA membership includes just over 2,000 regulated firms having merged with the Institute of Insurance Brokers (IIB) in November 2011.
General insurance brokers contribute 1% of GDP to the UK economy and BIBA brokers employ more than 100,000 staff.
BIBA helps more than 400,000 people a year to access insurance protection through it’s Find a Broker service, both online and via the telephone.
Brokers provide professional advice to businesses and individuals, playing a key role in the identification, measurement, management, control and transfer of risk. They negotiate appropriate insurance protection tailored to individual needs.
BIBA is the voice of the industry advising members, the regulators, consumer bodies and other stakeholders on key insurance issues. BIBA provides unique schemes and facilities, technical advice, guidance on regulation and business support and is helping to raise, and maintain, industry standards.
BIBA read with interest your important interim report ‘5 days in August’. There are a number of points that we would like to highlight that we feel would make your final report more accurate. BIBA has consulted with small, medium and large insurance brokers to ascertain the experiences of their customers.
Please remember that under Agency Law brokers are the agent of the client and act in their best interests. Our members want to see claims settled as quickly as possible.
First of all we should point out that our members have advised their experiences of the claims handling by insurers were positive, with no significant complaints.
Brokers reported that damaged shop fronts were mostly boarded up on the following day and then re-glazed a few days later.
Significant efforts were made to find home owners alternative accommodation, which was paid for by insurers. Businesses with business interruption cover were paid interim payments and alternative premises were found where possible.
Our members worked quickly and closely with clients to try to support them during these difficult times.
So why are you receiving negative feedback? We believe there could be a number of reasons:
1. Time to reinstate a property
Insurers appoint loss adjustors to ascertain the damage and correct course of action to repairs/reinstate/replace whatever was lost during the claim. Numerous properties suffered significant damage and this takes time: to clear rubble and to make safe and rebuild in accordance with current building regulations. Particular instances have occurred where the client’s premises was designated as a crime scene and therefore insurers were not able to access the premises to either ascertain or begin repairs for some time.
2. No insurance broker to represent the client
BIBA has canvassed our members and has not received any negative feedback regarding the claims they have dealt with. They have been pleased with the responses from both Insurers and Loss Adjusters. Brokers add support to the claims process and act as an advocate for the client during the claim. BIBA do not believe the complaints you have received are from business arranged through the insurance broking distribution channel.
3. Time to calculate business interruption loss
It takes time for the loss of profits to become clear and insurers can only pay claims once the losses are established and compared to an equivalent trading period.
4. If Insurance is part of a social housing municipal scheme
Claims here are likely to be more complicated as it will involve the local authority. BIBA believe this may be the case with some of the claims the BBC referred to in Tottenham and would urge greater co-operation between Local Authorities and insurers of municipal schemes.
The positive response from the insurance industry
We do not believe the interim report fairly reflects the enormous effort made by the insurance industry, with the majority of cases being settled quickly and efficiently without any problems whatsoever. We understand insurers have settled property damage claims of around £12 million and dealt with at least 3,400 claims.
This was an unprecedented event. BIBA is keen to look into any matters with our members where there may be concerns.
We have discussed with one of the leading loss adjustors the progress of the thousands of claims that they have dealt with. Again they advised there had not been any complaints or significant problems reported to them.
We are interested in the comment on page 74 of the interim report that a single source of support would have been helpful. BIBA worked closely with loss adjustors and government with the aim of creating a new claim form for the Act. This was launched on 15th August 2011. A new government centralised claim centre was launched on 17th August 2011 to deal with claims for insured and uninsured claims alike.
On page 79 there are detailed comments about the insurance industry. We note the comments that a number of residents have told you they are unhappy with the way insurance companies are communicating with them via third parties.
We feel the report would be better balanced if it also mentioned how many respondents have been happy with the responses from the insurance industry, insurers, brokers and loss adjustors.
Insurance companies often use third party loss adjustors, who are professional claims specialists who advise the policyholder and insurer on the repair and reinstatement. Loss adjustors are situated across the UK, ensuring quick responses on behalf of insurers. They are also able to advise on security and safety following an incident. We believe this third party involvement to be a positive one.
We feel it is unfair for you to highlight individual cases of SME’s who had not received insurance payments from their insurer if the insurer has no right of reply. You do not know if the premium was paid. There may have been issues involving premium payment the level of cover purchased non disclosure or other matters.
Riot Damages Act
We note on page 88 of your interim report you recommend the scope of the RDA be extended to include loss of trade or that the government commits to an awareness campaign to encourage business to review their insurance arrangements and ensure their coverage is sufficient.
BIBA would support government awareness raising campaign for this and are keen to develop this idea further.
We would also support your proposal to extend the notification period from 14 to 90 days to give citizens sufficient time to quantify and prepare their claim.
BIBA is working with the Cabinet Office to produce a guide for SME business continuity. We believe there is a direct link between the output from this group and the issues raised in this report.
We would suggest a meeting with you to discuss this in further detaill
We also attach our submission to the Home Affairs Select Committee which you may find interesting.
If you would like to meet with our CEO Eric Galbraith please feel free to contact me to arrange.
Graeme Trudgill ACII
Head of Corporate Affairs
0207 397 0218