Insurers paying fewer claims says BIBA

by Ralph Savage

New research has accused insurers of becoming stricter on paying claims in the economic downturn.

According to the British Insurance Brokers’ Association (BIBA), 90% of insurance brokers believe that insurers are becoming stricter on paying claims, mainly because of the economic climate and fraud.

Nearly two thirds of brokers said that they have had to fight harder to get claims paid and nearly three quarters of brokers have overturned a claim rejection by an insurer in the last year.

British Insurance Brokers Association claims an increasing majority of members have had to contest claims on behalf of clients since downturn

Nearly 70% have secured an increased claim payment for a client, with 43% of brokers saying that the average percentage uplift on claims that they regularly negotiate on behalf of clients is between 11% and 20%.

Eric Galbraith, BIBA Chief Executive, said: “The economic climate has led to stricter policy interpretation and anti-fraud systems by insurers meaning that customers are having claims reviewed in more detail.  The research demonstrates the importance of having a broker to fight your corner and represent you at claim time.”

In the research, brokers highlighted examples of a claim worth £35,000 for a stolen car which was initially rejected but where the brokers’ knowledge and involvement ensured the claim was paid in full, and a commercial theft of stock claim where the claim payment increased by 40% following the broker’s involvement. 

Case Study

An armed forces family were posted overseas. Whilst abroad they put their belongings into storage.  When they returned, their belongings had been damaged so they took steps to claim from the insurance policy of the storage company.  The claim was unsuccessful due to policy wording interpretation from the insurers and the family was offered £4,000, although their belongings were worth significantly more.

The family made contact with the armed forces trade press who sought advice from insurance brokers.  An insurance broker became involved and helped the family navigate the policy wording and evidence that their claim was valid.  The broker’s involvement and input resulted in the claim being settled for £12,000.

Key Findings

– 89% of broker respondents believe that insurers are becoming stricter on paying claims.

• 77% believe this is because of the economic climate
• 56% said this is because of fraud
• Other examples include insurer reduced investment income and claims inflation.
• 64% of broker respondents have had to fight harder on behalf of clients to get full settlement on claims during the economic crisis.

– In the last year 72% said they had overturned a claim rejection by an
insurer.

– 43% said the average percentage uplift on a claim payment that they
regularly negotiate on behalf of a client is between 11-20%

• 42% said up to 10%
• 8% said between 21% and 30%.

– In the last year 69% of brokers have secured an increased payment for
a claim on behalf of a client following an initial lower offer.

• 53% said this was occasionally
• 16% said that this was often.

– For those that secured an increased payment for a claim on behalf of a
client following an initial lower offer:

• 46% said that the uplift was between 0 – 10%
• 26% said between 11-20%
• 14% said between 21%-30%
• 5% said between 51% and 60%