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The Financial Conduct Authority (FCA) has published its thematic review, “Handling of insurance claims for Small and Medium-sized Enterprises (SMEs)”.
The FCA assessed 25 firms involved in the settlement and management of claims, including:
- 5 insurers
- 10 insurance intermediaries (including 5 managing general agents) and 10 loss assessing firms
They also looked at the claims experiences of 100 SMEs. The review focused on larger claims of over £5,000.
The regulator found that there was often a gap between SMEs’ expectations of the claims process and the service that they actually received, with some customers feeling that they had not been treated fairly. For example, in a significant number of cases, poor communication with the claimant led to delays in reaching a settlement.
The review also stated that loss adjusters play an important role in the management of claims and that the greatest value a loss assessor could provide for SMEs appeared to be on claims which had stalled by helping them to progress towards settlement.
The FCA found that that SMEs were often uncertain about the roles of different parties involved in the claims process and unaware that all of the elements surrounding claims can take up considerable time and energy. It added that this lack of awareness can be damaging to both the business and the responsible individuals.
Linda Woodall, acting director of supervision at the FCA, said: “We expect all firms to carefully analyse the findings of the review and make any necessary changes to their approach to ensure that SME claimants are treated fairly.”
Paul Lawrence, Managing Director, Thompson & Bryan, the Chartered Loss adjusters for DAS Loss Assist, commented that the FCA report is very interesting and “in our opinion is representative of the Industry”.
“We agree that there needs to be a raising of standards with better and more transparent communication between the customer, broker and the Insurer,” he continued. “Any action that provides a better outcome to both businesses and householders in the claims process should be encouraged.
“As the FCA has stated, loss adjusters when representing the policyholder can play a very beneficial role in the claims process. However, there is a word of warning in that we have seen a rise in ‘ambulance-chasing’ loss adjusters and loss-assessing firms, especially since the large volume of flood claims, offering a ‘free’ service.
“These arrangements usually stipulate that the customer must use the loss adjuster’s approved building contractors for any of the work. I would always advise that Chartered Loss Adjusters be used to help a customer and that close attention is paid to the offering to ensure that the customers’ needs are met first and foremost.”
The full review can be found on the FCA’s website.