August 2013 saw the launch of LMI ClaimsComparison.com which provides a star rating of insurers claims service across over 20 classes of general insurance. This led on to the Mansfield Awards for Claims Excellence which were launched last year. The Mansfield Awards being a joint venture not for profit initiative of LMI Group and InsuranceNEWS.
There were three reasons for the development of the free to use website:
- To move the emphasis away from the price of insurance which seemed to me to be the primary determinate for which policy to buy. No one remembers the price of insurance when a claim occurs. What matters is the coverage afforded by the policy, the financial strength of the underwriter, and the quality and fairness of the claims service;
- By measuring the claims service it was hoped that it would drive positive change in the market and at the same time reestablish faith in an industry built on the underlying principle of Utmost Good Faith; and
- Recognise and champion those Claims Departments that are doing the right thing.
Anyone can get a price for their insurance while LMI PolicyComparison has provided detailed comparisons of the features and benefits of general insurance policies since 2003.
With no simple way for a customer to gauge the claims service of their provider until it may be too late, ie, at the time of a claim, LMI ClaimsComparison.com was developed.
As we approach our 5 year anniversary, it is timely to check what difference we have made. To do this I looked at the recent General Insurance Code of Practice Report.
I include charts below that reflect the following in a 5 year period, 2012-2013 to 2016-2017. I would explain this is retail claims which includes, Domestic Building & Contents, Private Motor, Personal Travel, Residential Strata, Caravan, Pet and Pleasure Craft Insurance.
The first chart (Chart 3) below reflects that there has been a 24.07% increase in the amount of claims lodged, over the period.
However sadly in my opinion, the next chart, (Chart 11) reflects that there has been a whopping 67.37% increase in the Retail declined claims.
There does seem to be a far too large and widening gap/ disparity between the two figures above. I cannot accept that many people are making claims that are not claims under traditional policy coverages. Either, the policies are stripping away cover or valid claims are not being met.
From the claims that come across my desk and that of my colleagues at LMI and LMI Legal, we are seeing an increase in the number of claims that are incorrectly being declined and/or where the Insured is being seriously short changed. If the client does not have an insurance broker and/or know of our services then they sadly often accept it and move on. This may appear good for insurers but it will pay harsh dividends for the industry in the long term.
While these figures greatly disturb me, it makes me more determined with both LMI ClaimsComparison, the Mansfield Awards for Claims Excellence and to double my efforts to inform the insuring public not to buy insurance on price alone.
I am also committed to work to have all loss assessors, loss adjusters, investigators, building consultants etc who are dealing face to face with clients and making decisions on whether a claim is a claim or not to be licenced and have at least basic training on general insurance and in particular the 6 underlying principles, starting with the need to act with good faith and also have a basic understanding of the coverage afforded by the contract of insurance they are making decisions under.
I end with the following quote from the court case from 2000 of Ontario Inc. v. Non-Marine Members of Lloyd’s London.