It’s a contentious topic in the insurance industry, the tendency to backflip on refusing payouts when claimants go to the media.
Mark Forbes, Director of Icon Reputation, gave his perspective to insuranceNEWS.com.au in an extensive interview.
Insurers should ask if their decisions would pass the pub test - are they morally and legally correct? If they were not comfortable defending it publicly, then they should consider settling, he said.
This article was originally published in insurancenews.com.au.
We see the headlines every week. An insured customer has their claim denied, they tell their story to the media and it’s portrayed as a struggle between good and evil, brave Aussie battler against heartless and faceless corporation.
Quite often the claim is paid regardless of its merits, because the insurer feels its reputation and therefore its brand is under attack. It’s a trend that has some industry leaders – both insurers and brokers – increasingly concerned.
“It’s terrible,” one leading broker told insuranceNEWS.com.au. “I’ve been involved in three claims where insurers have paid to shut the media up.
“It was clear that [the claims] should never, ever, ever have been paid. But you have statements made by people in the media that are completely erroneous, not factual.”
Perhaps the problem stems from the average consumer’s lack of insurance literacy. It’s a recognised issue that the industry knows must be dealt with – product disclosure statements, which were originally envisaged as a simple guide to a policy, have been lawyered to the point that they’re rarely read or understood.
As a result, many believe that if something – anything – goes wrong with their house or car, their insurer will pay. They don’t understand that in fact they’re covered for a specific set of perils and things such as natural deterioration are excluded.
General media journalists often fail to consider such issues, instead painting an overly simplistic picture. Where there’s a victim there has to be a villain. The denied claimant usually has an emotive back story – they’ve paid premiums for decades, and yet in their hour of need their insurer wasn’t there for them.
But by not addressing the precise wording of the policy and how it applies to the claimant’s circumstances, are reporters neglecting their duty to properly inform the public and tell the whole story?
And shouldn’t these claimants first be directed to the Australian Financial Complaints Authority – a free dispute resolution service that’s dedicated to fairness and with the expertise to address any inherent complexity?