Biba accuses insurers of not paying out on claims

The ABI and insurers have reacted angrily to accusations they are making it harder for policyholders to make claims and that brokers have had to work harder to secure insurance payouts on behalf of their customers in the past year.

New research from Biba showed its members believed insurers were becoming stricter on paying claims as a result of the economic climate and fraudulent claims.

It said nearly two thirds of brokers felt they had to fight harder to get claims paid for their customers and nearly three quarters of brokers have overturned a claim rejection by an insurer in the past year.

Nearly 70% said they had secured an increased claim payment for a client, with 43% of brokers saying that the average percentage uplift on claims that they regularly negotiate on behalf of clients is between 11% and 20%.  

But in a statement the ABI flatly rejected the accusations. In a statement it said: “We do not accept any suggestion that it is getting more difficult for genuine claimants to be paid and we have seen no evidence pointing to this.

“The priority of insurers is to pay all genuine claims as quickly and efficiently as possible. Every day insurers pay out around £28m to help get household and motor insurance customers back on their feet when the worst happens.

“During last year’s floods, insurers pulled out all the stops, dealing with over 20,000 claims at an estimated cost of around £400m for flooding up until November.

“The industry makes no apology for its determination to tackle fraud, which is in the interest of honest customers to ensure they do not end up bearing the costs of the dishonest through higher premiums. Insurers will look to properly investigate suspected cases of fraud, but not at the expense of genuine claimants.”

 Aviva’s UK General Insurance chief executive, Robin Spencer also rejected the Biba research saying: “Settling our customers’ claims quickly and effectively is a key priority at Aviva and we disagree with any suggestion that we are making it harder for customers to make or receive claims.

“When our customers need us - whether after a road traffic accident, falling ill abroad or a flooded home – we take enormous pride in helping our customers through what is a very difficult time. To put it into context, on average we settle over 2,200 claims a day at a cost of over £8m – around £3bn a year.

“By way of example - during the recent floods we used our flood mapping technology and advanced weather warnings to deploy our claims staff in ‘at risk’ locations so that we were able to help customers whose homes were uninhabitable by providing alternative accommodation or making emergency cash payments for essentials (such as clothing).”

However, Biba chief executive, Eric Galbraith said the economic climate had led to stricter policy interpretation and anti-fraud systems by insurers meaning customers were having claims reviewed in more detail.

The research highlighted an example of a claim worth £35,000 for a stolen car which was initially rejected but where the biba said the broker’s knowledge of and involvement in the claim ensured it was paid in full. Biba also highlighted a commercial theft of stock claim where the claim payment increased by 40% following the broker’s involvement.

Biba’s head of corporate affairs, Graeme Trudgill, added: “You only find out the value of your policy at claim time. Brokers not only support you in a claim but can help ensure that you purchase appropriate cover and make relevant disclosures to minimise the risk of claims being rejected.”

The row comes just a week after the Financial Ombudsman Service (FOS) said consumer complaints about insurance companies had increased by 12% in the past year. After complaints about payment protection insurance, complaints about motor insurance made up the bulk of the claims said the FOS. It also comes less than a fortnight after insurers were accused of cutting corners in vehicle repairs for their own policyholders, while ramping up the costs on rival insurers in a Channel 4 Dispatches documentary.