Are Insurers Really Cutting Payouts?

There’s a growing body of evidence to suggest that insurance providers are getting stricter over paying out claims, but do the figures add-up?

According to figures from the British Insurance Brokers’ Association; 90% of brokers believe that insurance providers are getting stricter with payouts. And they are pinning the blame on the ongoing financial climate and the growing number of fraudulent insurance claims.

The BIBA report found that in the past 12 months, of the brokers questioned:

  • 66% have had to fight harder to get their clients’ claims paid
  • 75% have successfully reversed a rejected claim
  • 70% of have managed to persuade providers to increase payouts

BIBA’s claims are mirrored by findings from the Financial Ombudsman Service, who reported a 26% increase in car insurance complaints and a 31% increase in buildings insurance complaints in 2012 compares with the previous year.

BIBA’s chief executive Eric Galbraith attributes the stricter interpretation of policies to the economic climate and new anti-fraud systems. The result is that claims are being reviewed in greater details and consequently it’s more important than ever to have an insurance broker fighting your corner.

Graeme Trudgill, BIBA’s head of corporate affairs, added: “Customers only find out if their policy is worth the money when they make a claim. Brokers are important middlemen who can help customers argue their claim, but also ensure they have the right cover giving value for money, while checking the policy is properly drawn up so an insurer can’t easily reject a claim.”

The Association of British Insurers (ABI) also commented on the research, although they had a very different point of view. They believe that there’s no evidence to support the notion that people with genuine claims are finding it more difficult to settle.

“Insurers are not going to apologise for battling fraud.  The action protects honest clients and makes sure they pay lower premiums because dishonest claims are minimised,” the ABI stated.

“Insurers will examine any cases that they suspect are fraudulent, but that does not mean honest claims will not be settled promptly and in full.”

The BIBA research highlighted several examples of the claims that brokers have secured in spite of reluctance from insurers, including a row over the settlement for a stolen £35,000 car. The claim was rejected at first, but with the broker’s involvement, was fully settled. Another case, regarding theft of commercial stock, saw the payout increased by 40%.

As a leading insurance broker we are fully aware of the value we can add. Not only can we help you find the right cover the right price, but we can provide valuable help perusing successful claims.

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