Well, we have finished the 6 month round the UK Masterclasses with Aviva and have presented to over 400 delegates and with our other workshop activity with NatWest, over 400 firms.
We have learnt so much from you, the insurance brokers and from the Underwriters and claims handlers from Aviva. Their openness and desire for working together was refreshing to say the least.
So, we have a host of issues and we promised to follow up with bulletins containing all the highlights.
Rather than send these to you all at once we have decided to limit each bulletin to one or two points to give you a chance to digest the content and discuss with colleagues and insurers where appropriate.
Much of our work has been focused on the duties of insurance brokers and how these are affected by the Insurance Act.
So we are going to focus on main headings to start with:
The duty of an insurance broker to help the client settle a claim.
There are a number of issues under this heading but one of the key worries is that there is a duty to help a client settle a claim and it is clear that in a vast number of cases, currently the client deals direct with the insurer throughout all aspects and steps of the claim and the insurance broker is only advised when the claim is settled.
Typically this is the system that can prevail with small commercial business.
Can we remind you all that if there is no formal written agreement with appropriate warnings that this is the way the client wants claims dealt with, then your firm might be at a disadvantage if there is a dispute later.
The Insurance Act complicates the situation in that, certainly in the early years of the Act being in force, how the insurers use their new found powers of proportionate remedies and whether they are being fair in their interpretation of the Act has to be tested.
Roger and I believe that insurance brokers will have a duty, on behalf of their commercial clients, to assess the fairness of the insurers’ claims offers which reduce or reject the claim and we do not think it will be easy to contract out of those duties.
The term being mooted within the profession at the moment is that there needs to be “collaboration” between insurers and insurance brokers and their clients. This bulletin highlights what we believe is a critical element of that collaboration and that is an agreement by all the insurers you deal with that they will give you reasonable notice of any intention to refuse a claim or to offer a proportionate remedy.
We would be interested to hear the identity of any insurers who refuse this request.
We would also be interested to hear what you and insurers can agree is a reasonable period.
This issue needs to be addressed early as the expectation is that the ABI will be asked to ensure that their members treat customers fairly.
Although it is clear already that some insurers will be more aggressive than others, the fact remains that all insurers will be “feeling their way” in deciding how to use the proportionate remedy legislation and it is only the profession of insurance broking and perhaps their loss settlement advisers who will be in a position to challenge the insurer before the client signs a settlement proposal.
In the event that this challenge is not available due to the inactivity of the insurance broker, it does seem likely that claims of unfair settlements might fall on the insurance broker as well as the insurer.
So, you assessing any offer of settlement which reduces a claim in any way does seem to be a fundamental TCF requirement.
Appointing sign off specialists within your firm
It strikes us that there will be a need to appoint someone (or more than one) who can be trained up and considered competent to make the judgement on behalf of your firm (irrespective of the size of your firm).
If you sub contract your claims settlement then you will need to assess the competence of the individuals who will be given this task.
If you do not have the in-house expertise, you might also consider (if you have not already) developing a relationship with an external claims specialist who can analyse an offer for you.
