Blog

The past 14 months have been tumultuous for the insurance sector, not just in the UK but around the world.

The pandemic created an environment in which we all had to learn to live and discover new ways of working and dealing with our customers.

UK insurers have gone to great lengths to ensure that customers are served across the spectrum – motor, property, travel, emergency – and the sector has essentially done very well.

Of course, we often scream slowly about our successes and fall for perceived mistakes, which of course applies to business interruption insurance (BI) last year and perhaps still today.

We have been beaten and, to some extent, our “dirty laundry” was extremely visible thanks to the FCA legal process and the results that came with it. What seems to have been forgotten are some basic points. BI losses are complex.

They even tax the experts. We faced not only the routine complexities of BI, but BI losses due to a pandemic. Was it covered? If so, when did the interruption start?

Have businesses closed due to the government lockdown or the area outbreak of the disease? Should vacation pay and subsidies be taken into account?

And all of this before the courts checked the complexity of the policy formulation and the claims appraisers even looked at the customer’s information. This information in support of claims can vary.

Each case requires careful consideration – a standardized list of documents supporting the claim is provided.

In some cases, this has been viewed by insurers as an attempt to delay, when in fact it couldn’t be further from the truth. There are countless examples of a full review of the information available to customers receiving higher payments than they expected.

Some customers were also disappointed when calculations showed that either no damage was caused or the policy unfortunately did not respond. We need to better educate customers about what a policy covers. Customers need to understand what coverage is available.

It must be written in easy-to-understand language and it must be clear from the start what information is required. The industry has taken significant strides over the years to use simple language, but there has clearly been a lot of variation in the commercial SMB market – some easy to understand, others could have been better worded.

Let’s face it, the guidelines have had to be reviewed by the country’s highest court – and we still have uncertainty. Some have talked about standardized language and that is common sense, but competition law can prohibit it.

What is clear is that we need to restore confidence, but we should do so by being more explicit and proud of the really good things that the sector has done and achieved. Then we need to scrutinize our approach to clients in terms of wording and make sure we are as clear as possible