A survey of Airmic members, reported in the Insurance Times, has revealed that rejection because of innocent non-disclosure tops the list of concerns from corporate insurance buyers. And that they’re largely dissatisfied with insurers delaying and withholding insurance claims payments.
The survey took place before June’s Airmic conference and revealed that 53% of corporate insurance buyers are concerned that their claim will not be paid because of innocent non-disclosure of information – i.e. failing to fulfil the contract requirements by not supplying all the necessary information. The survey also revealed insurance buyers were concerned by warranties, base of contract clauses and delayed insurance claims payments.
The problem with basis clauses
Basis clauses are the part of an insurance policy that allow insurers to deny all liability in a contract. They can be problematic when used unethically – sometimes a claim is rejected even though the truth behind a false declaration would not have altered the underwriting decision.
After seeing so many complaints about innocent non-disclosure, Airmic said the disclosure requirements imposed on insurance buyers needed to change, so that their claim does not get rejected on the grounds that they didn’t supply information that they were never asked for in the first place.
They also revealed a 60% rise in the number of disputes where a customer has failed to disclose information in personal motor lines. However, does the blame always lie with the consumer in non-disclosure cases? According to the FOS, non-disclosure complaints could be avoided by the provider asking the customer clearer questions when they apply for a policy.
For example, if the insurer needs to know how many fixed penalty points a claimant has on their licence, they should specifically ask, “Do you have any fixed penalty points, and how many?” rather than a broader question about whether the claimant has any convictions. This will make sure the insurer gets all the exact information they need and the claim is never rejected due to innocent non-disclosure further down the line.
The survey results have also launched a series of talking points in the insurance industry, such as how insurers can get the information they need to avoid innocent non-disclosure without asking too many questions.
It’s also led insurance professionals to ask whether non-disclosure is dealt with differently for personal and business clients, and whether a lack of clear questions is a problem for both corporate and personal consumers.
How you can play it safe…
Insurance brokers work by offering impartial insurance advice and discussing the customer’s needs with them to find the best policy from a range of insurers that can be tailored to their needs. A good insurance broker will always operate ethically to ensure the client is always fully protected.