Brokers increase claims payouts - report

Research published in August by the British Insurance Brokers' Association revealed that 58% of brokers claim they are having to fight harder during the recession to secure claims payment from insurers.

The July and August survey of Biba's full membership asked for feedback on how brokers add value to the claims process.

Examples supplied to Biba included a broker that secured a £30,000 settlement after an initial offer of £6,500 for a fire claim and another that negotiated a settlement of £17,377 for flood damage after the client had originally been offered just over £12,000.

Eric Galbraith, Biba's chief executive officer, said: "This is strong evidence to demonstrate the value of the broker. I also recognise that, with fraud being a major issue - particularly in the current recession - there is a need for insurers to validate claims."

Malcolm Tarling, spokesperson at the Association of British Insurers, responded to the research by praising the valuable work of brokers in smoothing the often-complex process but also stressed that insurers are not disadvantaging the public.

Tarling remarked: "Insurance companies are certainly not making it harder to claim during a recession. A policyholder should be under no disadvantage when claiming where they are not using an intermediary.

"Insurance companies are on the lookout for fraud and that does tend to rise during a recession."

Roy Hebburn, divisional claims manager at Allianz, welcomed the research but highlighted that the recession raised the profile of the problem: "Claims cost control has always been in evidence and I wouldn't want to put it down to the recession. I think people are simply noticing it more."

On fraud, he added: "The threat is very real and one that increases during a recession, yet it is vitally important that our counter-fraud activity does not have a negative impact on service delivery to our honest customers, who are far and away in the majority."

Successful negotiation

The research also found that 91% of brokers have secured increased payments for claims on behalf of a client following an initially lower offer from the insurer. David Williams, managing director of claims at Axa, explained that complexities of individual claims were often a factor and that this was not the same as a broker-insurer fight.

He said: "Many claims are not black and white. The exchange of information is often part of the process and therefore the fact the final settlement changes is natural, not a result of having to fight."

Working together for the good of the customer was a theme Hebburn also touched on. He said: "There will always be differences of opinion but we should work together for the benefit of the customer because it is they that should be at the centre of the equation."

Survey participant Steve Daulby of Chester-based broker Daulby Read told PB that brokers have long been seen as a source of strength for claims. He added: "I'm sure insurers don't want to fight but they do very often open with a poor offer that puts clients' and brokers' backs up. Perhaps they would be better off picking the phone up beforehand to discuss this on the lines of 'we're thinking of offering £x, what do you think?'"

With Biba keen to press ahead using the research in media and political campaigns and insurers keen to talk, this debate will continue.