Insurer’s blind eye leaves business owners vulnerable

Posted by on 12 October, 2012 No comments as yet

This article looks at why it’s vital for companies to protect their reputation. Employee accusations can really hurt, especially if word spreads that you’ve acted immorally, just because someone is being vindictive.

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Who protects the boss?

 

It’s a real nightmare for business owners when employees get upset. Business is Business yet allegations of discrimination or mistreatment can be quite frightening. This is especially so if word were to get out that a business acted questionably or immorally, simply because someone is disgruntled or being vindictive.

Rumours can easily reach clients, and frequently do, so we often help business people who want to nip these issues in the bud. They reduce the chances of unexpected legal costs, by asking us to help them reduce the impact, if malicious rumours are being spread about them. This is a sensible approach, that proves extremely cost effective, should it ever happen.

Does it always work?

 

Usually it does… yet recently I found an insurance company who wasn’t providing the cover I expected. I was discussing the merits of a policy with the company that issued it. When I congratulated them on having more generous cover than their competitors they seemed surprised.

They went on to look into the policy, and informed me that their generosity was a typo and the cover they mentioned didn’t apply. This was a real shame because I had already mentioned it to my client. Of course I had to withdraw my recommendation.

What about those that have already invested in this protection?

 

I pushed a bit further and decided to enquire “what are you going to tell those that have already purchased this cover?” Nothing, they told me. “not even at renewal?”. Nope, they said.

So there are now businesses up and down the UK whose insurer knows their contract might be inadequate yet their insurer doesn’t care. Regrettably, this is quite often the case. I’ve reported to the FSA and I’ll let you know how I get on if they ever answer my letter.

Wrap up: Insurance companies have very little idea about customer service because they don’t deal direct with business people.

Top tip: At least annually, you should aim to review the risks to your business assets and business income, and think about what could cause damage to your reputation too.

Who to share this with: Managing Directors, Business Owners & Human Resources specialists.

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Solicitors’ “silly season” is not so silly

Posted by on 20 August, 2012 No comments as yet

Silly season is upon us and the PI renewal scramble has already started. Yet it isn’t so mad this year. Read on to find out if that is because of the ABS’, SRA or insurers.

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Rates Are Down

Deck of cards on a graph - Business GambleCould it be that insurance companies are being more amenable because there are now fewer firms looking for specialist solicitors indemnity? Their market is shrinking. Perhaps firms set up as ABS’ have found a better way of meeting SRA requirements? Perhaps new regulations for COLPs and COFAs have lead to fewer claims.

It’s more likely that the new entrance into this specialist market have increased competition. This could lead to short term gains and long term pains, like Quinn.

Are New Entrants Good News?

There is a certain amount of irony here. Over the last few years insurance companies have not accepted proposals from solicitors with shaky finances. Yet solicitors will accept quotations from insurance companies they’ve never heard of, with claims departments that may as well be in Timbuktu.

Solicitors seem happy to rely on the fact that SRA approved the new entrants, and brokers are happy to offer the quotations if it secures them a client or renewal.

Memories must be extremely short because the SRA approved Quinn too, and brokers continued to offer Quinn quotations days before they went bust.

Dig A Little Deeper

It’s a good time for solicitors to take their pick from the available insurance companies. I can still see the logic in getting the best rates, reducing costs and ticking the SRA box.

Now the market is competitive again it would be prudent to delve a little deeper into insurance company service. Does the policy provide the right cover – yes. Will you get assistance from the claims department – probably. Will the way the claim is handled meet your expectations… who knows!

Wrap up: COLPs and COFAs – love the role or hate it, they are the people that can implement lessons that businesses have learnt and solicitors have been deprived of. The identification of near misses and risks that solicitors were previously unaware of, will help practises evolve profitably.

Top tip: COLPs and COFAs can reduce costs and increase profits. Undertaking the role properly will mean both can be achieved independently of each other.

Who to share this with: Managing Partners, COLPs and COFAs.

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When complainants get tough, the tough respond cordially

Posted by on 14 August, 2012 No comments as yet

Business owners dread a call from an unhappy client. This post is about what happens when a meeting causes panic. Read on to find out who is on the receiving end, why it happens, and how to avoid setting dangerous precedents.

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I’ve just had my business arse kicked! Am I covered?

 

Computer keyboard - Press the "any" keyMike phones me at 4pm on a Monday. It’s immediately clear that he’s flustered. It transpires he has just  left a meeting with a client for whom he has been providing IT services for nearly a year. “I feel like I’ve had a good kicking. We’ve been accused of making mistakes and fraud. I really need to know – am I covered for this, especially if they take action?”

This is not an everyday occurrence in my world, but it happens with enough frequency that we are used to it. We plan for it by making ourselves available every day because we want to help when it’s most needed. Mike was “covered” and I let him know immediately. He wanted a good night’s sleep, and the finer points can be ironed out when full details are known.

So what are the chances of keeping everyone happy all of the time?

 

I remember when Mike and I first sat down 3 years ago. His business was, and still is, growing rapidly, and clients expectations change all the time too. The main concern at the time was this type of issue, because IT changes as quick as customer expectations. The unfounded allegation of fraud was the result of a “competitor” getting involved.

It is a real blow when a client becomes unhappy. Yet this particular complainant had been egged on by another company, who probably wanted to usurp Mike. The competition went as far as producing a damming report, with a host of allegations that the client could wave in front of Mike, which the client did, with relish.

Apart from shock and horror, are there other issues?

 

Time. It takes time to answer any complaint. Time should be taken to avoid making the matter worse. What is vital is to take a massive deep breath, work out what has actually happened and make sure communications are clear.

This has since been achieved, and the angry party have calmed down, after they received a considered response. Even so, complainants make unrealistic demands when they’re angry and meetings without agendas set a dangerous precedent.

Wrap up: When a business is growing, learn to expect the unexpected, and plan for it. Keep in mind clients expectations change all the time too, and giving in to unrealistic demands of angry clients is not the most sensible response. Take time out to consider the situation from all angles and ensure all outgoing communications are cordial.

Top tip: In all cases, insurance companies must be kept fully informed of all progress and have lot’s of experience in what works and what doesn’t. It makes sense to lean on them rather than trying to avoid the issue or worry about unlikely premium increases.

Share this with: business owners, service providers, IT people, contractors, and anyone else who gets involved in providing a service to the demanding.

Names have been changed to protect the truly innocent.

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What the hell was that? Homeowners escape collapse

Posted by on 31 May, 2012 No comments as yet

Last week saw the collapse of a roof that hit the front page of the Evening Standard. This posts advises why it’s highly unlikely that the home owner’s insurance company will cover the cost. Read on to find out how it happens, who picks up the tab and why legal action is often the end result.

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How does a roof just collapse?

 

Collapsed RoofIt’s been said that the accident is due to some form of faulty workmanship, crap materials or just old age. However, it’s often difficult to tell when faced with a pile of rubble.

It is highly unlikely that the home owner’s insurance company will cover the cost. Most policies exclude such damage, especially when they are being renovated.

So, who covers the cost?

 

So who pays for this? It’s difficult to say and I think it will most likely end up in the courts. I doubt anyone will want to take responsibility, yet the blame could be a aimed at a contractor, architect, surveyor or even the homeowner. Especially if the appropriate planning permissions were not obtained.

If nobody takes responsibility the owners of neighbouring properties damaged may find themselves uninsured. They’ll probably lay the blame (and cost) at the door of the “guilty” property. It happens from time to time.

 

Last resort, take action? Only if you know who to sue!

 

There is a form of protection that covers works and damage caused after they have been finalised. High quality architects and responsible builders recommend or invest in. It protects neighbours’ properties too.

However, I’ve lost count of the number of people that say they’ll sue someone else if things go wrong, rather than protect themselves. As if they have the money to do that. Do they realise just how much it costs to work out who is responsible for a pile of rubble?

 

Wrap up: Property renovations are a shrewd investment when the cost of labour and materials are so low. The opportunity to increase the value of assets can and should be balanced against the risk of a project going wrong.

Top Tip: Inspect insurance protection of those you allow into your property to complete repairs or maintenance. If they’re not protected, you might not be. Always be careful to survey a property owned by a “DIY Del” before making an offer. Click here for free Property Owners download.

Share this with: property owners, architects, surveyors, contractors, engineers and anyone else who gets involved in property improvements.

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What is the dirty little secret of Insurance? part II

Posted by on 12 April, 2012 No comments as yet

I’ve previously posted how your legal expenses cover probably allows you to take action against anyone except your insurance company. The second in this series moves us all towards the sticky wicket of Health & Safety. This week I write about why legislation is a prerequisite to getting claims paid, why insurer’s don’t make it clear that this is part of the insurance contract and how it is kept a secret.

Read Insurance’s dirty little secret – part I

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Why do insurers do this?

They are businesses. The fewer claims they pay the more their shareholders receive. However, they also need to attract customers, and cynically hiding the worst parts of their products and service allows them to do so. They make the cover out to be wide (using terms like comprehensive or all risks) yet the exclusions seem little (fine print).

They will decline the claim of one company on the same day as they accept the proposal of another (almost) identical company. Both companies will have similar risks yet insurance companies know MDs and FDs would not buy from them if there weren’t going to get a ROI.  So they “sell” the benefits and make sure they have room to wriggle in their policy documents. You might only see the detail after you have parted with your premium.

 

Why is it dirty?

Legislation changes all the time and it’s difficult to keep up with it. Insurers know that businesses struggle, so they provide practical help to the top tier of their clients or those that are extremely high risk. That’s because losses suffered by some businesses are huge and it’s incredibly bad PR for an insurer to decline a ‘front page’ claim.

Brokers know this too.  In a world where every premium increased every year most brokers would be happy. I meet lots of business people who are unaware of important terms and conditions. When a claim is refused or reduced the broker often blames the insurer. Sometimes they charge a client more to move to a different insurance company.

 

How is it kept secret?

The clause that catches most people out is in nearly every policy. It doesn’t even mention Health & Safety – it’s that ambiguous. It’s not even highlighted in the ‘key facts’ documents that the FSA insist make insurance buying clearer.

I know FDs that have checked insurance for years and never understood what this clause really meant. In black and white; if you are not following every piece of legislation current today you may find that a loss that happens tomorrow is not insured. And if they do pay it you might find your premium increases without a satisfactory explanation.

 

Wrap up: Are you keeping up with legislation? Insurers expect you to do your bit before they do theirs. An insurance policy isn’t a guarantee. Insurers are obliged to pay out when terms ad conditions of the policy (insurance contract) have been met.

 

See our top tips section for simple ways to help yourself today.

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Business owner deflated by sinister claims tactics – part II

Posted by on 27 March, 2012 No comments as yet

This is the second part of a two part blog about another dirty little secret of insurance. The attempted application of this one even shocked me, and I’ve had 21 years experience of exposing their secrets. You can read part one here.

Read on to find out how this scenario unfolded, how the secret affects both businesses and families, and what you can do to avoid being kept in the dark.

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Bicycle Theft Leads To Flat Service – Part 2

Having carefully selected the appropriate policy for a client whose family relied heavily on their bikes, it was a big headache when an excessive deduction was presented by the insurer, when our client’s bikes were stolen. This large deduction was not in the policy wording, which is of course a contract between insurer and their policyholder. Rather been dealing with the claim validators, we went straight to the management of the insurance company claims department. We know where they hide (whoops, I mean hang out!).

Case Study of one of our clientsThe claims department agreed that the deduction was not in the policy wording and fair wear and tear would be 20 percent. New bikes were ordered and a long argument avoided

The bicycle suppliers were instructed to send the new bikes directly to the client who was happy that he didn’t have to fork out an unreasonable amount to put himself back to where he was before the theft occurred.

Making sure that people are not financially affected by the unexpected is the main priority for us. Keeping inconvenience to a minimum is an important part of our service.

Deductions are plain wrong as they mean claimants do not get the return they were promised when they were prudent and invested in insurance. Avoiding reduced settlements is not easy, as it seems that staff in insurance claims departments are trained to make claimants feel uneasy.

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Cynics might say that insurance companies purposely make it uncomfortable for people trying to get their valid claims settled. By making them stick to the letter of their own contract these hurdles can be overcome.

An amicable discussion about fact and contract is the way forward.

 

I personally have 20+ years of experience in dealing with claims department and actually help them stick to their procedures whilst getting claims settled. I also agree with the use of new technology, including lie detecting to sniff out fraudulent claims. If you have nothing to hide, it’s fine.

Wrap up: Thousands of business owners are still waiting for their damage and lost profit claims to be settled following the London riots last year. It is prudent to assess if there are risks to your way of working because of the actions of others.

Top Tip: If you have already been given a bike by your employer or company under the bike to work scheme make sure adequate cover is in place. When it comes to finding a replacement the bike should have been insured by the company or the rider. If a road accident is caused by a cyclist’s wobble who pays for the resultant damage and injuries?

Who to share this with: Business owners or bicycle users.

 

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