In their second Newsletter of 2017, the Ombudsman for Short-Term Insurance (Ombud) highlights the incidence of claims where the insured provided false, misleading or inaccurate information to the insurer, either intentionally or because of failing human recollection. The Ombud acknowledged that, “Technological advancements and the ever-increasing impact of social media and the big brother syndrome have had a significant impact on the way in which the insurance industry operates.”
Clients are less likely to ‘get away’ with providing incorrect details to insurers as social media and other on-line forums make it a lot easier for insurers to establish the real facts. An example given by the Ombud is where a parent acquires a motor vehicle for a child, but to avoid the higher premium associated with a younger driver, the insurer is informed that the parent is the regular driver. A relatively simple social media search can quickly uncover the truth, resulting in a repudiated claim and a significant loss for the family.
Advisors have a vital role to play in educating clients about the meaning of insurance terminology, how it could apply to their situation and the importance of providing honest and accurate information relating to the circumstances of their risk cover. Almost half (49%) of the matters handled by the Ombud relate to motor and account for 60% of the value recovered by the Ombud for clients. This gives advisors a good indication of the areas requiring increased focus, disclosure and understanding when dealing with clients.
The Ombud also recognised that there should be less reliance on a client’s memory which can often produce vague, outdated or incorrect facts and encouraged the use of technology by insurers at sales stage to ensure more accurate and reliable data. The Ombud said that, “In this regard I am referring to underwriting information that could be easily accessible to insurers through database sharing or information pooling rather than obtaining it from consumers during sales conversations. For example, claims history or years of uninterrupted insurance.” This, in our view, would provide advisors with some relief.
The Ombud’s Newsletter goes on to provide the following important tips for consumers, which we think short-term insurance advisors can use to re-enforce the importance of appropriate cover for their clients:
- “Does your policy cover you for pothole damage? Read your policy wording and know your cover.
- Times are tough, but don’t sacrifice your short-term insurance cover to save money. Pay your premiums and avoid disastrous consequences.
- Motor accidents are the most common insurance claims. If you have a vehicle, you need cover to protect you, your vehicle, your passengers, other drivers and pedestrians.”
To download the Ombudsman’s Briefcase, click here.