When is it time to stop pretending to care about customers and actually start?

I reported on two claims recently which were completely and utterly off the rails. The first being a home where this would be the 4th Christmas the Insured would be out of their home despite having their insurers top of the range product. It was a bush fire situation and there was no suspicion of arson, it was just a case of the panel beater builders completely letting the Insured down. After 15 months of trying, we finally got a common-sense solution, but it has now been 6 weeks that the release has been stuck in legal. How to draft a release was one of the first things I learnt as a claims officer when I was 17 years old and I cannot understand how a claim that has been so terrible handled is dragged on so that it cannot be resolved before Christmas number 4.

I was equally dismayed this morning to see a comment in The Age (21st December 2017) where an Insured has said

“The insurance companies are hopeless I won’t use them, I’ll just try and sell these”

This is a response to the recent hail storm we had in Melbourne.

It is comments like these and the negative feedback from the Insured in the claims that I wrote about recently, which they are saying to their friends and relatives, which caused the great doubt of trust in our industry. An industry which has as its core principles, Utmost Good Faith.

If we don’t address this situation we will suffer as an industry in the long term.

Source: The Age Newspaper, Melbourne, 21 December 2017

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Disappointing that our industry is being bashed up yet again

CautionThe media in New Zealand are having a field day with 15 charges being laid on Youi NZ Pty Ltd. The charges are relevant to deceiving customers which is a particularly important issue at the moment with this year being the 250th Anniversary of the principle Utmost Good Faith.

A link to one of the scathing attacks is here: http://www.radiolive.co.nz/Paul-Henry-reads-out-feedback-on-Youi-after-complaints-of-misleading-customers/tabid/504/articleID/126862/Default.aspx


Hot on the heels of this, an insurance broker has been banned for life for fraudulent behaviour but on a more positive note, it is good to see the Insurance Council of New Zealand acting promptly to consider the future of Youi NZ Pty Ltd in view of their alleged poor behaviour.

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Bouquets where they are due

rose boquetFrom time to time I do vent my frustration at some of the claims handling that goes on and the unfair treatment that people can receive. This includes the concern I feel for insurer’s and loss adjusters that adopt the delay, deny, defend approach to a major claim.

It’s not all bad news and many claims across the country are handled fairly and promptly.

Two examples are that my son, Steven, had a tree fall on his home during a violent storm in Melbourne and he submitted the claim form and quotation at 5.30pm and the money was received into his bank account the following day. There is nothing to suggest that his insurer, Chubb, gave him any different treatment than they would any other customer and that Chubb go out of their way to handle legitimate claims fairly. The beauty for Steven was that he was able to ring the repairer and say that he had received the money and that in turn pushed him to the top of the pile with the repairer. Knowing that he would be paid immediately meant that Steve was able to have it fixed faster than he may otherwise have done so.

The second claim involves a friend of mine who lost their home in the Wye River Fires. As soon as I heard that he had lost his home I asked him to send me a copy of his Policy and I summarised his entitlements under the Policy and sent it to him. I did offer to assist him in discussions with the insurers but he felt that I was already too busy and could handle it himself. He lodged his claim, and without prompting every item of his entitlement including removal of debris, loss of rentable value, the building escalation clause etc were offered by the in house loss adjuster and as it was in agreement of underinsurance and it was not my friends desire to rebuild the home at this time for personal reasons, a cash settlement was offered for the full amount and accepted. In this case it was GIO Insurance.

With so much bad press going on about our industry at the moment particular over the CommInsure debacle which I have commented on it is certainly refreshing to see a relatively minor and large claim go through as they should.


Well done to all those involved!

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Further Commentary on the CommInsure debacle.

Since posting my article yesterday (here) I’ve received many emails, texts and phone calls on the subject. An example of one of these is set out below.

“Hi Allan 

I’m not sure if you’ve seen this article today, but it makes we very angry how the writer simply blankets every insurer as a mug that takes premiums and doesn’t pay claims when they’re valid.  I think that is terrible that CommInsure could allegedly carry out those practices with their Insureds in disregard up utmost good faith in the claimants’ times of need, but to paint every insurer as doing that is plain unfair!  I believe the vast majority of insurers try to do the right thing by their Insureds, whether it’s general or life insurance.   

I’d be interested to hear your thoughts at some stage.  


Adam [surname and email provided]”

The journalist who wrote the article to which Adam refers sets out an experience that the journalist had with what he thought was a simple water damage claim and the fact that he was made to feel like a criminal in putting the claim forward.

While not every insurer puts their clients through this, the reality is that many do and this is why our industry currently has such a poor reputation and has had for some time.

It is a reality that whenever there is a soft market there is more emphasis placed on claims and claims leakage, which can be an euphemism for paying as little as possible regardless of the insureds entitlement.

With all such things, I look at it as a threat but also an opportunity for insurance brokers and even for the claims preparation area of LMI who can now explain the importance of having someone highly knowledgeable in insurance working for the client to ensure that they are fully protected and that when a claim occurs they do receive a prompt and fair claims service.

One of the areas that I would like any inquiry to address is what I would call Claytons Covers. I’ve two situations on my desk at the moment where a customer has sought to have claims preperation fees approved by the insurer and has been refused. In both cases the insured is very elderly and the loss is in excess of $1,000,000 in one case $2,500,000. If an insurer is not going to grant permission to appoint someone to assist an elderly customer in such as circumstance, they are clearly never going to do so and therefore should remove the false cover from the policy. In the case of the Strata insurer, I have written to senior management after a similar episode a couple of years ago in Adelaide seeking that the section be removed but it still remains in the policy and the Insurer has never granted permission on any claim to my knowledge since and certainly is refusing to do so on this latest matter.

The trouble with all this is that it damages the brand insurance, and makes it harder for the thousands of honest, hard working insurance brokers and advisers, underwriters and claims officers who genuinely want to protect their insureds, communities and economy.

As I said in yesterday’s post I hope that it does make those who are involved in the questionable behaviour to have a good hard look at themselves and ask is the risk of reputation damage to their own organisation and brand insurance really worth it for it will out over time.

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Lessons learnt from CommInsure

Honesty and related 3d words including sincerity, believability,Monday evening was the first night that I had watched Australian news for over 6 weeks, and as I turned on the television the whole sorry saga of the CommInsure debacle unfolded.

I felt sick in my stomach when I heard the circumstances as outlined in the program and most disturbing was the allegation made by the doctor that he had been pressured to change his report from what he genuinely believed to be the truth.

There was then a great deal of talk about what sort of inquiries should be held into the insurance industry. There was no differentiation in the reporting between life insurance and general insurance. I was pleased to see that The Australian newspaper however, did report it was life assurance.

Two things immediately sprang to mind in this report. First is that brand insurance issued against damage which can cause the insuring public to lose faith in an industry which is so vital to protect them, their communities and to protect the wider economy. Secondly, even further compliance regulations may be imposed on the general insurance industry when it is operated in such a different way in so many factors. Rather than be a one off sale, typically general insurance is an annual contract with the advises urged to focus on the level of protection, the financial strength rating and the claims service rating of the insurance provider and not on the premium or commission levels.

When it comes to claims the insurance adviser, if one, is engaged by the insured and acts on their behalf to ensure the claim is properly and fairly handled. For more complex claims there are professional claims preparers who work with the insured and/or the broker to ensure the full entitlement is obtained. The major lesson to be learnt from this is that insurance is a contract of utmost good faith. This is not a new principle, in fact the case which set the principle Carter v Boehm (1766) 3 BURR 1905 but we call it the landmark case, celebrates its 350th anniversary this year. Lord Mansfield, the judge in the case, stated “Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact, and his believing the contrary.”

This principle of utmost good faith is enshrined in the Australian Insurance Contracts Act (1984) – refer part II – the duty of utmost good faith.

I have sensed during my working life that as insurers have moved from mutuals and small community based organisations to global corporate giants that the shareholder has become more important than the policy holder. It is incumbent on all of us in the insurance industry to act with utmost good faith, to pay valid claims and to treat our customers with the respect that they deserve. To do otherwise will damage not only the brand of the specific insurer but the wider corporate brand and brand insurance itself. The size of brand damage, the cost to management and to the business generally to meet all the requirements of whatever form of inquiry is made and then make good to all the policy holders that have been affected will be significant. At some stage bad behaviour will come out and this must be remembered by all insurers despite the fact that they may find their profit margins are currently being eroded. If people lose faith in the brand they will seek the protection they need elsewhere. I have a number of general insurance claims where I’m sure the insured would welcome a visit by the reporters from Four Corners at ABC.

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