We’ve had a lot of clients trying to claim for covid and we’ve seen insurers try lots of tactics to wriggle out of paying covid claims. So what tactics are insurers using when trying to avoid paying?
The general “we can’t afford it” fell on deaf ears
This doesn’t add up, especially if insurers have done their calculations correctly. SARS has been around for years, it’s infectious and can have a big effect on a business if it hits them. Insurers definitely know about SARS as they regularly exclude any claim relating to it with the small print.
When they do actually pay out on covid claims, they are rarely on the hook for lost sales. They usually pay for loss of profit. And you wouldn’t believe how much pleasure they take in reducing a claim. Some insurers are saying they will pay out following the Government closure of a business yet they are not paying for any drop in business because of Covid before that date. Policyholders are not impressed when the lower profit figure is used. This is frowned upon by the FCA
Insurers are bending words and meanings beyond the imagination of any reasonable person. The FCA have been clear about that in the result of the test case about who’s obligated to pay claims.
There are two reasons behind this. Insurers employees don’t seem to be engaged in the way everyone else is at the moment. All types of people are helping each other yet the insurers have told their employees to be unhelpful on Covid claims. The employees must absolutely dread the phone ringing or an email arriving. They probably rather water the garden in the rain, than see what is next on the to-do list.
The second reason is that the insurers and their claim managers delay on purpose. Perhaps insurers forget brokers have a range of clients with them. So when they pay a claim on a policy that has £2,000 cover do they think we don’t notice when they delay claims on comparable policies with a £200,000 payout? These delays are so mind numbingly boring. We all dread spending hours in a call centre or being stuck on hold, but that’s what people are being made to do just to avoid paying covid claims. We stop this happening to our clients.
This is the first reason they have got it the wrong way around. Paying promptly without fuss is less expensive than paying Solicitors to use jargon. It prevents them losing a client which costs them seven times more, on average, to replace. It also reduces the amount of interest they have to pay in late payment penalties.
Finally, there are the barefaced lies.
One day they tell you that they have been told to run absolutely everything past their solicitors, which (naturally they say) takes days. The next day they respond within an hour. They think we don’t notice when they send us a prompt response when they think they have found a way to reduce a claim payment (i.e. when they think they have caught someone out).
A conversation we’ve had with insurers is:
CCL: We are claiming under section A
Insurer: That type of claim is only covered under section B
CCL: Ok, we’re claiming under Section B
Several days pass
Insurer: As you said section A to begin with, we are holding you to that and will not be taking your claim any further
The worst part is that we don’t even use language such as “section A” or “section B”. The insurer assumes that we did, forcing us both down a path that leads to frustration and time wasting.
The tone that insurers use is not one of trust. The massive announcements from insurers that “we do not cover pandemics” were not true. These announcements are unforgivable at times when people are looking for support.
Since the test case has finished, we need to remind insurers, as we are, that the FCA asked them to “play fair” when handling claims. They need to pay and play fair or pay interest on payments they delay.
It is maddening that insurers put the wrong people in the wrong places (the second reason). They do need people that like to say “No”, the kind that take immense pleasure in confirming something is not covered. The trouble is they are in the wrong department. They should be in the sales department. They are quite happy to point out that “this is not covered” so they should be telling people that are about to buy, allowing them clear choices. However, they will never do that which is why brokers, not just ourselves, are more important now than they have ever been.
You can read about some of them here in the 15 page Framework Agreement, which describes what discussion points have been agreed when the FCA review insurers policy wordings in the High Court. Or click here for the very latest from the FCA, who are doing a good job of communicating.
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