Mediators called in to handle claim disputes

Mediators called in to handle claim disputes | Insurance Business

Mediators called in to handle claim disputes

Insurers and policyholders are increasingly using independent mediators from the Financial Ombudsman Service to resolve disputes.

Between February 2012 and March 2013, FOS conducted 209 general insurance conciliations, and 152 (73%) of these cases were resolved at the conciliation. Most (81%) of the general insurance conciliations involved a home building/contents insurance product.

“We have been using conciliation at FOS for many years now, but we’ve been excited to see an even greater uptake of this option by consumers and financial services providers in recent times,” FOS said.

FOS started conducting general insurance conciliations “relatively recently” but those disputes represent the majority of conciliations conducted by its specialist conciliation team.

Case study

N had a bridge going across a small creek on her property. The bridge was the only way to access her property.

A large delivery vehicle crossed the bridge to enter the property and after it had crossed, the bridge collapsed.

Without the bridge, the property was cut off and no vehicles were able to enter or leave the property. As the delivery vehicle was stuck on the property and unable to leave, N contacted a local builder who removed the damaged structure and installed a temporary culvert as an emergency measure. This work cost $7491.

N lodged a claim with her financial services provider (FSP) for “impact to her bridge by a vehicle.”

The FSP sent an engineer to assess the bridge, they reported that the cause of the collapse was the bridge being under-capacity and vehicle being over-capacity – in other words, the bridge was not capable of holding the weight of the vehicle. The report also stated that the bridge was deteriorating over time and was showing signs of weakening.

The FSP denied the claim for the cost of the culvert and for rebuilding of the bridge. Though it didn’t deny that a ‘prima facie’ claim had been proven (the impact to the bridge), it said that three policy exclusions would apply to allow it to deny the claim: The policy did not cover loss caused by wear and tear, rust, corrosion, deterioration etc; the policy did not cover loss to driveways, paths or paving caused by a road vehicle; and the policy did not cover loss caused by structural or design fault that existed before the event.

The parties agreed to conciliate, and both the FSP and N brought a great attitude to the conciliation.

The setting meant N could describe the circumstances of the event in a way that couldn’t be done through normal insurance claim data.

The FSP was able to discuss the relevant policy provisions and the engineer’s report.

They were able to reach an agreed compromise. While the applicant had initially sought reimbursement for the culvert and costs for rebuilding the bridge, after discussing the matter the FSP offered the applicant an ex gratia payment which resolved the dispute.