This blog looks at the real devil in the detail, the excuses insurers are using to avoid paying claims to those affected by Covid. We also give two reasons why the insurers have got it the wrong way around and a Top Tip for those awaiting a payment from their insurer.
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So what tactics are insurers using when trying to avoid paying? 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.
The general “we can’t afford it” fell on deaf ears
And doesn’t actually add up. If insurers had calculated their losses due to “notifiable diseases” then it is odd that they say they didn’t account for this. SARS has been around for years and is infectious, so are they saying they ignored this when they did their sums. If so, that was their mistake. They didn’t write their policies correctly.
When they do actually pay out, 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 and they said so in Part 3 of their reply to insurers defence.
Insurers are bending words and meanings beyond the imagination of any reasonable person. The FCA have been clear about that in their reply to insurers defence.
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 would probably water the garden in the rain, rather 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. When you respond to a delay the same day, they remind us there is a queue and can’t even tell you when it might end.
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 bare faced 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*). Yet a delayed response when we’re closing in on the claim payment.
*An example is an insurer asking which part of the policy wording we care claiming on? If we say X they say only Y covers it. So we say Y and they say “you said X, so we are holding you to that”. In fact, we don’t say X or Y. It is they that makes such assumptions yet it causes delays. They say “we thought you wanted to claim under X”, we say that is not the case and another 3 days have gone by.
The tone that insurers use is not one of trust. The massive announcements from insurers that “we do not cover this” were a lie. These announcements are unforgivable at times when people are looking for support.
Remind insurers, as we are, that the FCA asked them to “play fair” and “don’t wait for the outcome of the court hearing” 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.