Business owner deflated by sinister claims tactics – part 1

Posted by on 9 March, 2012 No comments as yet

This blog is 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.

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 1

We often protect the personal assets and reputation of clients who have already instructed us to look after the very same for their business.

One such client contacted me just before Christmas after bicycles were stolen from his property, even though they were securely chained and anchored to cement.

Shattered Glass

A determined thief will get past any security. I recently shared a photo on twitter of a smashed jewellers window on Oxford Street when a Christmas shopper had helped themselves to a 100% discount.

In this case I knew that cover was in place for the bicycles because we had specifically addressed this requirement, as well as other specifics, before the cover was arranged.

 

Why don’t insurance companies want to deal with claims?

A lot of insurance company’s outsource their claims. It’s supposed to save them money. Their PR people say it makes them accessible for clients. In my experience it causes delays, and outsourced companies reduce settlements because they think it’s what the insurer wants them do. We deal with all these people on behalf of our clients because the service is so poor it would frighten the most legitimate claimant.

I knew this client used his bike to get to and from work which gave him a degree of flexibility and helped maintain fitness. The other bikes were used by his wife and children and an extended lack of such an amenity is not good for any family.

Cutting losses is fine, yet not when it breaches a contract

The first sign of trouble was when the insurance company used two separate companies to validate the claim. They argued over who was responsible for contacting the client. We were able to jump straight on this, and a series of daily chasers was placed in the diary to ensure the situation was managed effectively.

After daily chasing, the claim companies advised that they were going to reduce the settlement by 80% because they were entitled to make a deduction for wear and tear. So much for the “new for old” cover the insurance company promoted in their literature! They have hundreds of similar lines of small print to clarify the “cover” they describe in their sales spiel. An 80% deductions is outrageous and supports the myth that insurance companies avoid paying out. Which is not 100% true.

Sign up to our RSS feed or return here to find part two of this blog later this month and find out how we got this ended up.

Top Tip: Businesses are taking advantage of “bike to work” schemes because it is a tax efficient way to keep employees healthy. However, who owns the bikes? It’s a grey area. Having a healthy workforce reduces absenteeism, disciplinary procedures and subsequent increased costs of recruitment and training. Yet ownership of the assets can cause complications when an accident happens. Who is responsible if they were at work or on their way to work?

Wrap Up: Keep in mind that public transport in London is going to be problematic during the Olympics so you might want to “mobilise” your workforce as a way of maintaining business continuity throughout the games. Contact me if you would like details of excellent schemes.

Who to share this with: Business owners that are bicycle users.

 

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Categories : All Risks Insurance,Business Insurance,Company Insurance,Customer Service,Personal Insurance Tags : , , , , , , , , , , ,

What is the dirty little secret of Insurance?

Posted by on 1 November, 2011 No comments as yet

There are hidden clauses that loom large in policy documents and some are more sinister than others. Here I explain what the secret is, why it is dirty and how it’s still a secret.

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What is insurance companies dirty little secret?

The insurance market has a reputation of escaping from legal contracts using small print.

When businesses have a dispute they often seek legal recourse. The complainant will sometimes have insurance to cover such disputes. They ask their insurer to cover the cost of taking action yet policies prevent insurance buyers from taking action against insurance companies. Not much help if an insurance  company has refused  to honour the policy they issued.

Insurers do not make this clear. It’s difficult enough when commercial disputes arise, it’s galling to find that you have been given a false impression by the people you had invested in. Insurers paying claims want to reduce the most obvious or exclude them.  It’s unfair when the exclusion prevents you taking action against a supplier that has obviously got something wrong – as is often the case when claims are badly handled. But for insurance companies to close ranks in this manner, that’s pretty low. Whatever their reasons.

Why it is dirty?

Because it’s industry wide, it’s tantamount to a cartel. Have all insurers secretly agreed that they will support claims against any industry except their own? If not, why hasn’t an entrepreneurial insurer stuck their head above the parapet and issued a policy that covers taking such an action?

Insurance disputes are common and it’s not always the broker that makes a mistake. Insurers are often culpable yet it costs almost £20,000 to take action against them. That is bad for UK business. Of course, it could be down to the fact that the insurance actuaries have worked out that insurers nearly always win cases. I suspect this is because complainants often run out of money to fund their legal case. If I’m right the figures will always be skewed.

Why it’s a secret?

I doubt if insurance companies place this exclusion at the back of their policies by accident. It’s not front and centre as you would expect such a sweeping exclusion to be.

There are other secrets in policies that are difficult to unearth and comprehend. Yet the dirty little secret of not allowing your client’s to take action against your competition is the most sinister show stopper.

Wrap up: Insurance companies do not pay claims when the insurance contract between them and their policyholder has been breached. If they refuse to pay a seemingly valid claim policyholders need to dig deep to ensure they get what is due to them. 

Top Tip: Spend time assessing the key risk to your business and make sure you understand your insurance policies which are legally binding contracts. Make sure that important contracts and agreements are not excluded from your policies.

Don’t forget, if you want to reduce risks to assets, income and reputation sign up to our RSS or email feed to the top right of this page to receive insurance tips, new posts plus details of events and promotions that could help you or your network reduce the risks facing them or their organisation.

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Categories : Accountants Insurance,After The Event,All Risks Insurance,Business Insurance,Company Insurance,Contractors Insurance,General Requirements,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors insurance Tags : , , , , , , , , , , , , , , , , , , ,

Accountants insurance is changing

Posted by on 31 August, 2010 No comments as yet

Accountants indemnity changes 1st September

 

I thought you might be interested to hear about the new rules for accountant’s professional indemnity. Here I explain why it’s important to make an early report of claim circumstances, where problems with timing could occur plus a clear definition of what should be reported.

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Why should I report a minor concern?

Some policyholders believe that premiums go up if they report scenarios that are not really claims. If they don’t report a “circumstance” it proves to be a false economy. When the rules change it’s even easier to make a costly late notification.

Claims don’t happen often yet the early warning signs are common. Questioning fees, complaints about service and a lack of communication are typical indicators that a client or third party may become litigious. Especially if they don’t get their own way.

 

Have the new ICAEW rules made it clearer?

The new wording applies to cover effected on or after 1st September 2010 and makes it clear that claims can and will be declined if “circumstances” are not reported before the expiry of a policy. The intention is to ensure that insurance companies are aware of possible claims before the policy expires.

There is no longer a wishy washy wording – previously insurers refused claims notified later than they would like. This was despite the policy being on a “claims made” basis meaning claims made after the expiry would be covered if the work was completed during the period of cover. The terms of notification were not clear.

Now, possible claim circumstances not reported within the policy period will not be covered. Period.

 

What is a circumstance?

Definitions in policy wordings can be subtly altered without the policyholder noticing. Insurance contracts are full of detail. A “circumstance” is anything likely to affect the underwriters view of the risk. That doesn’t mean all complaints should be reported.

It’s ridiculous to report all complaints so ask your insurance supplier to interpret what is termed reasonable by your insurance company. There is no need for the new rule to result in more red tape. The fact that I’m writing about it means it probably will at the change is embedded into the policy wordings. That is not the intention, it’s just the devil is in the policy detail. We all want claims settled promptly and correctly.

 

Wrap up: Attempts to make policies clearer add to confusion. Indemnity policies have strict timescales for reporting claims or circumstances. Guidance on what a circumstance is should be sought before a policy expires, ie. before the renewal date.

Top Tip: Uncertainty is not good for anyone. Ask your insurance supplier for clarification of expiry dates, notification deadlines and clarify what “circumstances” are real in your World.

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Categories : Accountants Insurance,Business Insurance,Company Insurance,General Requirements,Legal expenses insurance,Liability Insurance,Uncategorized Tags : , , , , , , , , , , , , ,

Solicitors frustrated by broker tactics

Posted by on 23 August, 2010 No comments as yet

Now silly season is upon us, I thought I would update you on what is actually happening in the solicitor’s indemnity market. I know quite a few solicitors and I understand their frustrations. Rather than wax lyrical, I’m going to stick to the good, the bad and the ugly in the current market.

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The good

There are a lot of hard working brokers out there who are satisfied that they have strong enough relationships with their clients and are not using “hard ball” tactics to scare their clients into renewal. You probably have one of those on your side and your terms and conditions will be reasonable.

Ensure you provide full and detailed information when requesting your renewal terms.

The bad

There are two realities to explain. A solicitor received his form, returned it and was given terms within 48 hours. He was also given 7 days (make that 5) to make his mind up. That’s not even legal.

Another practice (with the same supplier) has incorrect “claims” on the practice’s record and the supplier is refusing to correct them. Naturally, they are worried that the terms will be provided late and prove onerous.

The ugly

Some practices (mainly SP’s) have been refused terms by their current insurer already and are filling out forms (more in desperation than hope) whilst considering their future if they cannot find cover. Their supplier should have helped them with the complicated forms.

The reason for declinature is not being made clear or doesn’t add up. One broker refused to tell their client which insurance companies they had approached. That is not service as it leaves the policyholder with no real options.

Wrap up: Some suppliers are great at maintaining relationships and have secured excellent terms. Others are playing hard ball when they do provide terms, taking advantage of the fact that the competition need time to offer an alternative. Some are being obstructive or abandoning clients they cannot easily help.

Top Tip: If an application is declined request a detailed reason before applying elsewhere.

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Categories : Business Insurance,Company Insurance,Liability Insurance,Solicitors indemnity,Solicitors insurance Tags : , , , , ,

Litigation expenses insurance – Before or after?

Posted by on 26 July, 2010 No comments as yet

Insurance for legal expenses has evolved along with CFA’s. Client’s may prefer the new “hybrid” offerings that allow them to pay later. Timing is of the essence and there are ways to attract the most favourable rates.

Insurance as an investment

Appropriate policies are an investment if set up correctly. Some insurance companies will accept payment of the premium after the case is concluded and they have a variety of ways to ensure that it is paid. Typically, client’s that have already assessed they have a good chance of winning the case before approaching the insurance market receive the best terms.

It’s important that the terms and conditions of the policy dovetail with other agreements. Only then will the policy pay out, return on investment is guaranteed when everything is in order. As long as the policyholder is aware of the terms and conditions, so they know exactly where they stand.

Interpretation is everything

Insurers will not issue cover without undertaking a thorough review of the circumstances. Provide them with a good case backed up by counsel’s opinion and they will respond accordingly. Investing time at this stage will ensure terms and conditions are favourable.

No two policy wordings are the same so interpret the terms in the worst possible light to exclude shades of grey. If it sounds like it isn’t covered, it probably isn’t. The brochure will paint a picture, the policy wording is the High Definition document.

As an independent broker I am (almost) professionally obliged to say you should refer to an independent broker. Be that anyone you choose, they will be able to interpret the policy conditions and the manner in which different insurance companies handle settlements. Each quotation should be judged on it’s merits.

Timing is of the essence

The earlier you apply for a quotation the better. If clients are relying on After the Event Insurance it is more expensive and restrictive than annual arrangements. As soon as you hear about a claim encourage the participant to at least consider cover. They may already have cover attached to another policy yet it will only apply if a notification is made early.

Delayed applications could mean increased percentages of awards being deducted from your costs or the clients award – if there is one. An insurance company will ensure it receives it’s premium. Where it comes from is up to the applicants.

Wrap up: Insurance is a prudent investment for strong cases. Terms and conditions from a range of providers can be assessed quickly and easily by an experienced eye. A strong case presented early will attract the most favourable settlement terms.

Top Tip: Don’t search the market yourself if your time is worth money.

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Categories : After The Event,Business Insurance,Company Insurance,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Solicitors insurance Tags : , , , , , ,

Solicitor’s professional indemnity concerns

Posted by on 6 July, 2010 No comments as yet

Some solicitors are still punch drunk from last year.

With fewer insurance companies offering cover this year solicitors need more help than ever. Some are rolling with the punches, others have already given up. Here are the options including the good bad and ugly.

Last year the renewal season lead to the dreaded ARP charging solicitors 35% of turnover just to stay in business. Since then, Quinn has proved unreliable and their biggest supporters in the broking community are scrambling round the market for a viable alternative.  The Law Society Gazette reports that mergers are on the up and “the biggest driver over the next few months will be the professional indemnity insurance Read the rest of this entry

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