You may recall that a few years ago BIBA published anecdotal comments from brokers criticising the claims service many said their clients had received from insurers.
And two years ago, the FCA conducted a thematic review on SME claims, which raised a range of issues for brokers and insurers alike. There hasn’t been much debate or comment in the industry on the findings.
I often talk with brokers about the claims service they provide to their clients. Virtually without exception they believe they have a key role to play in supporting their clients through the claims process to ensure they receive a fair settlement as quickly as possible, but they usually find it difficult to articulate what this support means in real terms and why it is so valuable from the client perspective.
The opposite is usually true when I ask them to describe their renewal process – they can usually describe this in detail, every nut and bolt. So why is there this difference? Perhaps because it is more difficult to create a detailed claims proposition? Or is it simply because it has not received the same degree of attention?
Recently I have heard two similar stories from different brokers about major claims incurred by their clients.
Both related to significant property and BI losses in excess of over £5 million, a size of loss that many brokers will not have experienced.
In both stories the loss adjuster acting on behalf of the insurers arrived whilst the fire brigade were still on site. And on both occasions about the first thing the loss adjuster said to the insured was:
‘You need to behave as if you have no insurance until the insurer accepts liability’
I can only imagine how the insured must have felt – standing watching their life’s work burn to the ground or an important part of their business severely damaged. They are already probably in some degree of shock and emotionally vulnerable, only to be told that no immediate help will be provided by their insurers – the very people they expect to be there for them!
On these two occasions the insurers took one week and five and a half weeks respectively, to accept liability.
I am not criticising the insurers. They must satisfy themselves that the loss is genuine and no warranties have been breached before accepting liability. My question is more about the role of the broker:
- How well had they prepared/advised the insured?
- Did they have a detailed plan of action to immediately trigger in the event of a major client loss?
- Had this been communicated to and understood by the client?
- Did the client have a comprehensive and detailed Disaster Recovery Plan and had it been tested regularly?
If, as a broker, you have not given sufficient thought, time and resource to thinking about what you really want to achieve for your clients when they have a loss, describing why this is good for clients, and making sure you have the processes in place to deliver your proposition, it is probable you will not be able to give them the support they need if they are one of the unlucky businesses to have a major loss.
If you would like to discuss the above topic further, please feel free to contact me via: email@example.com.
Business Growth & Strategy Development