Tailor-made insurance

Posted by on 18 May, 2013 No comments as yet

This article highlights why it makes sense to review the risks a business faces, check that insurance policies are fit for purpose and what can happen if this is not undertaken regularly.

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I have this cover – what is it for?

 

After successfully covering something that the incumbent broker couldn’t, without too much trouble, I was invited to visit their premises, take a look around, and undertake a review. A reasonable way to reduce the time it takes to undertake a business risk assessment is to look at current insurance documentation.

Having collected the information, there was one piece missing, and I received an email to say it would be forwarded on to me as soon as it was received from the broker. At the same time the gentleman said it includes “x cover, and I don’t know what that is”. This is not unusual in my industry. A lot of people build relationships with their brokers and then buy what they recommend. Yet it appeared that the broker had recommended this particular cover, but had failed to remind the client what, or how, it actually protected them.

Does a review mean rates will increase?

 

When the document arrived it was pretty standard. After discussing various cover with underwriters, we got some options. The next step on such a large insurance programme (we are talking about a company who export £1.7million of high quality product to America), is to sit down again and discuss the terms and conditions of the options available to us. The rates we had obtained were 25% less than they were used to so it made sense for the Finance Director to invite us back to discuss in detail.

During this meeting I asked about previous incidents. It had previously been declared that there hadn’t been any in 5 years, apart from a mobile phone being lost. Whilst I collected information about staff, including health and safety arrangements, the Director sighed “staff, our biggest expense and liability.” I enquired how they proved to be a liability if no claims had been made and he said “we don’t have to tell them about things that aren’t insured, do we?” I ventured that they may not have to, yet insurance companies were not that kind. Insurance company requirements often mean that every issue has to be disclosed, no matter how trivial or whether it related to the cover they were providing or not. So the client regaled me with the tale of the dissatisfied employee who had threatened starting a tribunal alleging stress they were suffering was related to their work, and they had settled for £15,000 on the recommendation of their Human Resources consultant.

What do you mean we are covered?

 

I asked the client if they had discussed the stress related claim with their broker. “No” he replied, “we are not covered for this.” I felt it would be cruel to tell him that one of the policies he had in place would have provided him with advice on how to reduce the cost and time spent on such issues. Another may have provided cover for a legal defence and paying compensation if it were awarded. If only it had been explained to the client before the incident happened. This is because some policies only pay out if an issue is reported to an insurer as soon as it crops up.

As I said before, this is not unusual in my industry. Whenever someone tells me that they have insurance, but are unsure of what it covers, I realise that their broker has been order-taking, rather than providing an assessment of risk or any advice. What really sticks in my craw is that the previous broker had sold them a policy which wasn’t much use to them, yet by taking one of the optional extensions they would not have had to pay this £15,000 themselves So, with their current broker they invested over £100,000 and still had to fund a £15,000 claim from their own pocket.

At the last minute, the incumbent broker did try and persuade the FD that he should stay with them, and even resorted to the underhand tactic of trying to approach the insurance company I had recommended so that they could copy the work I had undertaken, and pull the rug from under us. Luckily they were not successful because we have strong relationships with underwriters and they give us exclusive terms and conditions, that order taking brokers cannot access.

The most alarming thing about this rather typical scenario is that the broker could have prevented his client from obtaining the cover he actually desired by trying this underhand tactic. The broker would have known this was the case, but was far more concerned with keeping the business than helping the client protect his.

Wrap Up: At the beginning of the process I had explained that his incumbent broker would probably try underhand tactics and it was best he didn’t tell them that we were involved in a review because it may prejudice his position if he did. He agreed that that was the case, yet when put under pressure by the incumbent, who begged for one more chance, he nearly shot himself in the foot. It happens, regrettably, all too often – yet not to us.

Top Tip: When seeking an assessment of risk, it’s important to request assistance from someone who has a reputation for looking after their clients rather than being an excellent salesperson. The hard sell is all too evident in this industry and masks the underhand tactics that too many brokers participate in, to protect their not so hard earned income.

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Smashing lady is actually a criminal

Posted by on 4 May, 2013 No comments as yet

Geoff calls me to ask if I can help him with protection for a large amount of jewellery he has just bought his wife and we always help our business insurance customers when they need help with their personal asset protection. While working out the particulars Geoff asks me if I have time to hear a short, but interesting story. Geoff is an entertaining guy, and I’m always happy to hear what’s been going on in his world.  He starts regaling me with a tale from a friend of his, who had been at home when he heard a loud bang, and his wife started shouting for him. He sped downstairs and was confronted with the sight of his front garden wall – newly decorated with a BMW.

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Who Done It?

 

A lady who looked physically shaken, was standing in his front garden, saying “a guy crashed his car into mine, knocked me into your wall and then disappeared.” Over a cup of tea she explained how she had been driving down the road, when she had been shunted from behind, left the road, hit the curb, and landed on top of his wall, rather than driving through it. There was no real evidence of damage to her vehicle, so it looked plausible.

The police were called and statements were taken. The lady drove off, regrettably she didn’t know the identity of the perpetrator who had crashed into her.  She didn’t know the make of the car or the registration number, because it had happened so quickly.

She did it!

 

Some time later a neighbour stopped by to ask what was happening with the demolished wall was told the tale of the lady being shunted into the curb and over the wall. At this point his neighbour informed him that his CCTV told a completely different story.

As Geoff’s friend watched the CCTV footage, he couldn’t believe his eyes. The lady’s BMW was spotted travelling down the opposite side of the road that she’d said, and suddenly left the road as her head disappeared from view behind the windscreen. Her car then clipped the curb and demolished his wall.

Fraud, lies and videotape

 

He could not believe what a performance this lady had put on, both for himself, his wife, and also for the police. He was incandescent by the time he had reached the end of the video footage, asked for a copy, stormed down the police station, demanded that the lady be arrested for fraud. Regrettably nobody had kept her details. Fortunately the CCTV recording had the registration plate number. The police are unlikely to investigate the lady for fraud, as they feel the insurance company would deal with the claim. Yet it is an offence to damage property whilst driving and not report it to the Police – check the highway code.

Is this gentleman incandescent enough to launch a private prosecution – probably not! Has he learned his lesson that what is often perceived may not be the case – yet this is what typically happens when anything goes wrong. I told my friends about this scenario and we all agreed it’s rare for people to take responsibility when things go wrong, sometimes because of the financial penalty. Most people don’t plumb the depths this lady did yet they do think their insurance premium will go up if they make a claim – which is untrue because not all insurances have a “no claim bonus”.

Wrap up:  A lot of businesses relationships with their suppliers go sour when it’s found they don’t provide the service they said they would and use their T&C’s to avoid paying a penalty. Let’s face it, some suppliers best performance is in the tender process.

Top tip: Follow me on Twitter to be the first to hear real evidence of the Police crackdown on whiplash claims. It will happen because the Government has realised that it’s caught up in insurance company unwillingness to drive change. This happened in the1990’s when the Police were swamped with claims for car stereos. The Government forced car manufacturers to improve security.

Share this: With anyone who complains about their insurance premium increasing. If it’s car insurance they’re complaining about, we don’t do it because it’s such a mess thanks to direct insurers and their unwillingness to detect fraud. Yet we do have this nifty tool that helps everyone reduce their premium.

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Directors need a law degree to understand their liabilities

Posted by on 19 April, 2013 No comments as yet

When the going gets tough, everybody gets the blame. This article is about how recessions bring increases in claims, why this happens and why insurers are always well prepared.

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Out of touch, means out of pocket!

 

There’s a growing debate on Directors protection (they need protecting from regulators looking to fill Government coffers), fuelled by an article in a legal publication. Directors are finding that the cover they thought protected them actually doesn’t, because of small print. Lawyers are not being paid as a result and they’re starting to wonder “why?”

TheLawyer.com are a bit late in noticing this issue – we highlighted it back in 2010 when we wrote about the withdrawal of legal defence for mad Bernie Madoff.  In mad Bernie’s case, Lloyds of London spent £4 million defending him before they pounced on the opportunity to withdraw cover, when one of his co-defendants pleaded guilty to fraud and admitted Madoff was purposely stealing client money, rather than accidentally stealing people’s money.

I agree with most of the comments in the article, yet the paragraph that says that insurance “will cover all Directors defence costs” only mentions one exception to the rule. There is always more than one exclusion – plus each policy is different. If they weren’t, insurers would be suing each other for breach on copyright, at the very least. And that’s another legal matter entirely.

How do insurers avoid getting caught out?

 

Insurers were prepared for this recession, as a result of the last recession. They’d worked out what caused the majority of claims last time and reduced, excluded or watered down the options they made available thereafter. They sneak most such changes into renewal documents because they know brokers and policyholders don’t read them.

It doesn’t help that a lot of Directors have been advised that a limited company protects them personally. No it doesn’t, as I keep telling them….gently, it covers shareholders. Directors that are shareholders do not get the benefit of shareholder protection. After all, they are supposed to be running the business and keeping an eye on everyone else in it, not turning a blind eye to rogue Directors riding roughshod over clients, employees and shareholders.

 

Wrap up: Not all Directors are the same so why would their insurance be? Work out what could go wrong before embarking on a search for comprehensive cover. It doesn’t exist.

Top tip: Insurers rarely lose so peek at their exclusions to see what they are prepared to take  a chance on.

P.S. Look out for our next blog which highlights how a lady reported the obliteration of a garden wall to a home-owner, shared a cup of tea with them and the “investigating officer”, then (after excusing herself) be unveiled as the perpetrator – only thanks to a neighbour’s CCTV.

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Health and Safety can make you feel ill

Posted by on 16 March, 2013 No comments as yet

This month is about the perils of consultants who, errr, don’t consult, why anyone offering insurance as an “add-on” should be carefully checked, and the scale of the trail of damage they can create.

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‘Elf & safety chancers

 

My hotelier clients are truly wonderful people. Like myself, they ensure that their clients get a good night’s sleep 🙂

One of them called me the other week and asked if their insurance covered them for the new regulations. “I must have missed something… what new regulations?”

It transpired that a Health & Safety consultant had turned up out of the blue,  making out they were some sort of official and asked to look around.  After lots of tutting, he then told the hotel staff that their boss was going to be jailed if they didn’t sign a contract for three years advice.

Putting the frighteners on (best gravelly voice required)

 

The fact the hotel already had an up to date and robust Health & Safety policy hadn’t crossed the consultant’s mind. He just wanted to scare people into signing up. It’s why Health & Safety has such a bad name. It’s used to frighten people into parting with their hard earned money instead of protecting people as they go about their day to day life.

Even worse than “the frighteners”, is the fact he included insurance in his offering. This would have been, in part, a duplication of cover that was already in place. What’s wrong with dual insurance, I hear you ask?  Well, it causes delays at the very least, because each insurance company will suggest that the other is responsible for settlement , a case of “after you, Claude”.

So who pays – not the con man

 

In the worst case scenario, it can lead to claims being declined because insurance companies get a bee in their bonnet when they assume that claimants are trying to claim twice. It’s seldom true – people resent the hassle of insurance, never mind paying for it twice. It can lead to policies being cancelled because of something called non – disclosure.

And it doesn’t end there. If someone’s policy is cancelled by an insurance provider then they must inform future insurance providers of the cancelled policy, at the time that they are seeking alternative insurance solutions. Insurance companies can void the claims of those who have an an incidence of non-disclosed cancellation.

If the current insurer decides to increase their policy premiums because they suffered losses elsewhere in their portfolio, you wouldn’t want to be stuck with them forever.

Wrap up: Health & Safety is important, yet should be treated as a way to prevent issues, rather than be used as a stick to beat people with.

Top tip: Check your Health & safety, employment tribunal and other business protection practices do not include duplicated insurance.

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Cowboys and Insurers catch policyholders in bug fight

Posted by on 11 February, 2013 No comments as yet

This article looks at why insurance companies are not paying out on as many claims as they normally would, why inflated claims are not usually due to policyholders being greedy and how insurance companies can reduce costs by settling promptly.

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Insurance payouts on the decline

 

The Money section of The Sunday Times confirmed that insurers are using the current climate as an excuse to decline more claims than they normally would. The report confirms that 41% more claims are being needlessly declined, and this suggests a shift by all insurers to look at things with a “fine tooth comb”. The Association of British Insurers argues that insurance companies are always willing to pay valid claims quickly and speedily.

However, the Association of British Insurers do not deal with claims on a daily basis… I do, and I can confirm, categorically, that insurance companies are using any excuse and making people fight to get what they are contractually obliged to. Yes, your insurance policy is a contract, and they should be honouring the terms and conditions, rather than using spurious clauses to avoid making a fair settlement.

 

Someone is going to draw their weapon… smallprint?

 

One of the examples The Time reported was when an insurance company tried to decline paying a claim for damage caused by a water leak, by referring to woodworm that was found in the floorboards where the damage occurred. They stated that woodworm was not covered by the policy, and they are right. However, the claim was not for damage caused by woodworm, it was for damage caused by a leak, which every policy covers, unless there is a specific exclusion due to previous claims or unusual circumstances.

There is a good reason why this happens so often. Regrettably, people who are involved in the claims process sometimes make simple situations far more complicated than necessary.  In this particular case, the builder decided to mentioned woodworm in their report, encouraging the home-owner to have the woodworm repaired. On one hand, you can’t really blame a contractor for mentioning it. On the other hand, small print in the insurance contract meant that the home-owner initially didn’t get paid for something they should have been paid for. Fortunately, they didn’t give up.

 

Can’t we all just get along?

 

A better way to deal with it would have been to issue a report on the water leak, and issue a separate report for the woodworm, or estimate for fixing the problem. Sometimes the insurance company appoint contractors, and whenever they do, my head starts to hurt. Recent cases I have dealt with include an appointed inspection company visiting a premises three times because they failed to carry out a correct “validation” on the first and second occasions.

Our nationwide Insurance companies and local contractors can, and should be encouraged to, work together quickly and cohesively, in order to help their mutual clients, because they are clients to both parties. Local work keeps costs down and quality contractors work hard because repeat business is really important to them. Insurers only make a profit on repeat business so it makes more sense to keep clients happy instead of  leaving them hanging.  

 

Wrap up: The Times article finished off by recommending that policyholders enlist the help of their insurance broker. I would not recommend anyone to report any claim to any insurance company, until they have taken the advice of someone who understands why insurers decline claims, and can make sure it never happens.

Top Tip: When you are choosing any insurance always call the claims line before you make a purchase. This will give you clues as to how your claim is going to be dealt with, especially if they fail to answer the phone quickly, put you in a call queuing system, fail to call you back, or are downright ignorant. It is the claims department who will ensure that you get what you deserve, so it makes sense to try before you buy.

Who to share this with: SME Business Owners & Contractors.

 

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Insurance agent or double agent?

Posted by on 8 December, 2012 No comments as yet

A few of our property owning clients seemed confused when I advised them that we handle all their claims personally. Their previous suppliers had been settling claims on behalf of the insurance company. This article highlights how not all insurance suppliers are the same, how to check and what to do if you’re shocked to find your supplier is not on your side.

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Who pays the claims?

 

The insurance company will, ultimately, yet sometimes they will have authorised an agent to manage claims and write cheques on their behalf. This is supposed to speed up the process yet there’s a hidden downside. Agents that pay out less in claims get a bonus from the insurance company. This bonus can amount to hundreds of thousands of pounds. Faced with arranging payment of a few thousand and losing thousands in return is just too tempting for some people. Morals and money are not good friends.

 

How can you tell it’s possible?

 

The FSA thinks these practices are OK. They insist providers make it clear in their documents. Look out for small print stating “we act on behalf of the insurer when settling claims”. It may not be clear but it must be on there somewhere. Most people are surprised when the service they expected doesn’t materialise. Yet the clues are always in the T&Cs.

 

What if your expectation isn’t met?

 

Policies can be cancelled if they are not a “minimum and deposit” wording. As long as a claim has not occurred, refunds can be obtained. If they refuse to refund their fees in a huff it’s not good news. I’ve heard of some suppliers hiding the fact they collect 48% of the annual investment. It’s never too late to check small print (unless the paperwork gets damaged before you get around to it). The law of the sod is the number one law of insurance.

 

Wrap up: Not all agents are independent. It’s not always easy to tell at first glance. Look again.

Top tip: A quick flick through the documents that detail your cover will determine exactly whose side an agent is on.

Who to share this with: Property Owners, Facilities Managers, Business owners that rely on their premises to stay in business.

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