We know from our work with small businesses that, when they need to make an insurance claim, then the time it takes and the way it’s handled can make the difference between survival or going under. This makes it all the more important that their insurer responds quickly and appropriately.
But this doesn’t always happen: too often businesses are put at risk because they don’t receive the response they need and deserve. That is often the reason why they turn to us to handle their claim. So it wasn’t surprising to read that the Financial Conduct Authority (FCA) has uncovered ‘poor practice’ in the way SMEs’ insurance claims are handled by insurers, intermediaries and loss adjusters.
The FCA has just announced the results of a review of non-motor claims arising from fire, flood, escape of water, theft or business interruption in excess of £5,000. The main findings were:
- There is a gap between SMEs expectations and the claims service they receive.
- There is an overall poor perception by SMEs of the claims experience.
- Claims are not always being managed effectively in the interests of SME customers – the most common cause of dissatisfaction is a lack of clarity over who is responsible for driving the claims outcome.
- There is often poor communication between the different parties handling the claim and the claimant about progress which leads to delays in reaching a settlement.
Two further issues were highlighted by the review. The first was the delay in an initial visit by a loss adjuster, which has sometimes led to a three-week wait before there was any action. We know just how critical it is to get the claim moving quickly: most importantly, the management of the company needs to know this is happening so they can focus on keeping their business afloat. Part of our role is to enable them to do this: we take over the claim and all dealings with the insurer and their loss adjuster – and we know what to do to speed up their response.
The second was that, in a significant number of cases, the sums insured were inadequate to cover the loss incurred, highlighting “the importance for businesses to accurately assess exactly how much cover they need in the event of a major disruption”. We’ve worked with businesses who have been under-insured: our aim is to mitigate any potential shortfall and identify the best way of using the settlement they receive to ensure their survival.
The FCA is now going to work with insurers and others to look at how they can improve their service to SMEs. We’ll report back on any developments.
You can read how we’ve helped businesses deal successfully with the aftermath of fires or floods here.