Insurer Advice Challenged
Knowledge is power
The very nature of insurance requires that only a few individuals have losses, whilst the many contribute. For this reason, some customers can go through a lifetime with no issues on any of their insurances. This is one of the reasons we often shop and select products based on price. However, when there is a problem, it can often be a distressing time for the customer.
When to defend a claim and when not to
It’s easy when you are insurance brokers to get in the habit of just relaying the insurers communication to the client without challenging the end outcome for customers.
On this occasion, a minor incident had occurred at the premises of one of our clients to a visiting guest. The resultant injury was minor in nature and we were notified of the circumstances.
Insurers felt that the client had grounds to defend this claim and most brokers would just opt to tell the client to go along with these instructions.
Our advice to the client was a bit more comprehensive and we gave them our opinion which was different to the insurer’s point of view.
The issue was that the client had a £5,000 excess and that even if a formal claim was brought in, the costs would most likely fall within this sum.
From the insurer’s point of view, this meant that they had very little exposure.
We advised the client to seek settlement terms with the injured party and potentially look to agree for less the £1,000 as a goodwill gesture to ensure no claim was forthcoming in the future and that no reputational damage was done to the business. Allowing a formal claim to come in may have brought the costs closer to the £5,000 mark meaning a potential increase in premium at renewal date and a blot on the client’s claims experience.
In this case there was no clear right or wrong decision. However our role was to provide a balanced range of options to the customer with pros and cons of each action.
This is the true role of the broker: to be your expert advisor.
In the end, the clients settled for the cost of the treatment which was less than £1,000, mainly to avoid any negative publicity. We received the agreement from insurers to proceed on this basis.
Knowledge is power: make sure you have it on your side.
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