“We’re getting very, very few complaints [against insurance brokers], but we are seeing more than we’ve been used to.”
Those were the words of Financial Services Complaints Limited (FSCL) chief executive Susan Taylor (pictured) when Insurance Business sat down with the financial ombudsman to hear about what’s happening when it comes to disputes involving insurance brokers.
Taylor noted: “We’ve just seen a bit of an increase in complaints over the last month or so, and we expect to see more as the year goes on, particularly complaints from small businesses because small businesses quite often use an insurance broker to place their insurance.
“The common type of complaint that we see is if they’ve had their claim declined by the insurer and then they might try and blame the broker and say, ‘You didn’t get the right type of cover for my particular business’ or ‘You didn’t tell me about this particular exclusion or limit to cover’.
“The reason that they take a while to come through is because the consumer has to go to the insurance company first, obviously, and put their claim in. So, it’s not until the claim is declined that then they might be unhappy with the advice they’ve received from the broker.”
Taylor also cited comments from insurers pointing to the fact that some business insurance claims were taking longer to be processed because of their complexity.
“Sometimes it takes some time until the loss is established,” she said. “For example, if it’s a business interruption claim, you might not know how much that is for some months.”
While the number of complaints against intermediaries may not seem that significant in the grand scheme of things, Taylor believes it’s worth bringing the increase to the industry’s attention.
The FSCL CEO told Insurance Business: “Most of [the insurance brokers], I think, are doing a very, very good job of helping their clients and helping liaise with the insurance company and so forth. So, in terms of the number of claims out there and the number of insurance brokers, we’re getting very, very few complaints, but we are seeing more than we’ve been used to.
“It’s just letting the industry know that this is something to keep an eye on – that we are starting to see more complaints. And perhaps it’s good for them to know whether they can put any processes in place, or just be aware that people are starting to, understandably, get a bit frustrated.”
According to Taylor, by and large, the FSCL would investigate around 25 complaints about fire & general insurance brokers in a year (from July 1 to June 30). Less than three months into the service’s current reporting year, Taylor said they’re already sitting at about a third of that average.
The financial ombudsman went on to point out: “Rather than talking about numbers at the moment, it’s really more on talking about trends, and just letting them know we’re seeing a bit of an increase, which we had expected, of course, with the serious weather events and the sheer number of claims, but it’s taken a while for those complaints to start materialising. They are starting to come in the door now.”
Meanwhile, it’s worth noting that in most cases it’s a matter of setting consumer expectations.
“Often the complaint has been caused by the client having unrealistic expectations around what the policy would cover,” Taylor said. “And that’s still an issue for the insurance broker to think about, because perhaps if they had done a better job, at the time of placing the product, of explaining what the policy doesn’t cover as well as what it does cover, that would have prevented a complaint arising in the first place.”
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