Insurance disputes sky-rocket but brokers buck trend

Insurance disputes sky-rocket but brokers buck trend

Insurance disputes sky-rocket but brokers buck trend The general insurance industry faces a record number of disputes - but those against brokers have dropped, according to the Financial Ombudsman Service (FOS).

Over the 2016/17 year, the FOS received close to 40,000 disputes with those against general insurance being the key driver of record numbers, according to John Price, lead ombudsman - general insurance, at FOS.

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Speaking at the 2017 NIBA Convention, Price said that general insurance disputes had risen 28% compared to the previous year, having already risen by 20% the year before, representing a significant increase. Price added that there was no single issue driving up the numbers of disputes in the general insurance industry but said that outsourcing and claims handling disputes are being seen more commonly.

“The pleasing point for brokers...is that only 216 disputes were received against general insurance brokers, down 37% on the previous year so it totally bucked the trend,” Price said.

For brokers, Price noted that 55% of disputes are resolved by the broker which is “excellent” from the FOS perspective.

The most common disputes against brokers concern denial of claim, policies not covering what clients have requested to be covered, and lack of documentation to clearly identify what is being covered, Price noted.

“It is important to emphasise...it is this cultural process that is so important to constantly reinforce. Brokers do have a duty of care. It is a duty of care to act in a professional manner – that of a competent and experienced broker,” Price continued.

Price said that he has heard brokers in disputes argue that the broker involved was not experienced in the line of business they were selling; however, he said this defence will not wash with the regulator.

“Every broker, as soon as you are selling that product, is expected to act in the manner of a competent and experienced broker,” Price said.

While brokers may be a comparative dispute golden child for the insurance industry, Price said that the FOS can be used by brokers to the benefit of clients.

“We encourage brokers to bring disputes on behalf of their customers,” Price said.“It may not be a dispute against the broker but it may be a dispute against the general insurer. It may be that you don’t agree with the insurer's decision and you haven’t, despite your contacts, been able to persuade them to change their view, but you can bring it to the Financial Ombudsman Service.”


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