Horwich Farrelly, leading specialist insurance industry law firm, is highlighting the potential pitfalls for insurance providers focusing too heavily on claims acceptance league tables.
FCA figures recently showed which of the big insurance companies settle the highest proportion of home insurance claims, and the average value of these settlements. This is helpful information for consumers selecting an insurer, and a boost to the company’s reputation, but Horwich Farrelly is concerned that it encourages insurers to accept too many claims without carrying out proper fraud investigations, especially if this trend moves into the motor insurance market.
Rick Preston, Head of Horwich Farrelly’s Intelligence Team commented: “Insurance providers must strike the right balance between settling claims quickly and investigating potentially fraudulent activity. Fraud still costs the insurance industry and its innocent customers a huge amount of money every year, and anything which distracts insurers from cracking down on that has the potential to embolden would-be fraudsters.
“Of course, insurers have a reputation to manage and should not decline claims without clear grounds. But they cannot afford to avoid investigating claims that do not look correct, as this leaves them open to abuse from fraudsters. After all, what good is it to have the best claims acceptance rate in the industry if no customers are willing to pay the inflated premiums the insurer is forced to charge just to cover its fraud losses?”
The latest technology and automated systems are helping to streamline claims management and reduce costs, but Horwich Farrelly believes the human element must remain in order to continue to fight against insurance fraud. The firm continues to work in the market to help insurers build a strong case to defeat fraudulent claims.