Insurers have been accused of shortchanging policyholder payouts by tens of thousands of pounds, or unfairly rejecting claims, as they take a tougher line during the downturn.

The claim is being made by the British Insurance Brokers’ Association (Biba) which said its members are having to intervene more often to secure a fair settlement for clients.

A recent survey of 132 of Biba’s members found that 75 per cent of brokers had secured an increased payment for a claim after they challenged the insurer’s initial lower offer.

Almost all brokers who took part in the survey said they were regularly securing higher claims payouts of up to 20 per cent on claims for clients, both commercial and individuals, who they had placed business for.

Nearly 70 per cent of respondents said they had to fight harder with insurers, on behalf of clients, to get claims paid during the recession.

In one case cited by Biba, a broker was able to obtain a claim of £400,000 for a business client for material damage and business interruption due to a fire, after the insurer had initially offered £170,000.

In another case, an insurer put forward a settlement of £4,500 for a claim for water damage to a kitchen. However, after discussing the claim and obtaining more information, the claim was eventually settled at £20,000.

One broker, who responded to the survey, secured an £1,800 settlement on a laptop computer that was lost when initially the insurer repudiated the claim entirely.

Biba said getting insurers to pay claims in the economic downturn has been harder due to stricter policy interpretations and an anti fraud clampdown.

”I recognise that with fraud being a major issue, there is a need for insurers to validate claims,” said Eric Galbraith, chief executive of Biba. “However these statistics seem to suggest a too frequent reduction in the amount offered in claims settlements.”

The findings from the Biba research reflect recent trends at the Financial Ombudsman Service, a free dispute resolution service for consumers unhappy with the way a company has dealt with their complaint.

“Some businesses are clearly taking a more legalistic approach, consumers are increasingly less willing to concede, and there is a growing reluctance to reach agreement,” said the Ombudsman in a recent newsletter. “As a result, a larger proportion of the cases referred to us are those that are particularly complex and difficult to resolve – with increasing numbers of disputes requiring final ombudsman decisions as the last stage of the process.”
















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