Talking to your insurer, and some myth-busting

Written by Tim Weymouth - Associate Director, ACII, AloL

It’s strange how to some, insurance generally comes with something of a tarnished  reputation as a necessary evil, or that others assume insurers will look at the terms and conditions to find ways to avoid paying claims. 

I have spent much of my working life in insurance and am constantly looking to disprove this myth either professionally or in a social setting when I tell people what I do for a living. 

I accept that such negativity may be an involuntary reaction towards the industry and what is perceived as its role and connection to negative events such as deaths, fires, and car crashes. However, your insurance is there to protect you from the twists and turns life may throw at you. 

An insurance policy should allow you to take a certain element of risk knowing that if the worst happens there is a “parachute” ready to open and provide a ‘softer landing’ if it’s required. Seeing this through a commercial lens, how many start-up businesses would look to take those initial steps out of the plane without insurance protecting them?  It’s also worth considering that all too often these fundamental actions are not set up correctly, so my previous article about free advice is worth a read if you think this may apply to you.

We shouldn’t only engage with our insurance provider when we set up the policy and then almost a year later renewal time. Having more regular conversations and interactions with your provider not only gives your relationship a chance to grow, but will be proof that not all conversations with an insurance specialist are about unnecessary upsells, or you being tricked into sharing information which may be held against us if there’s a subsequent claim. That may well just be another part of the legend surrounding the mythical monsters of insurance, rather than the truth supporting ethical providers. 

At Howden, we’re pretty sure we’re in the ethical camp, and  we’re always seeking ways to increase the level of dialogue between insurers and those they insure. For example your broker should be aware of the types of conditions insurers may look to impose on their insureds, and then push back when it's not possible to comply. In this case scenario, a waste condition where bins have to be stored ten metres away from the premises is a fair standard but how do you comply if your available space is  only five metres long? Open and transparent dialogue between all parties can look to resolve this before a claim occurs and it becomes a much bigger issue. 

Regarding claims, I often like to ask potential new clients to consider what they report to insurers in terms of liability claims. Do they only report actual claims where they receive a formal notice of claim from a third party, or do they set the bar at reporting circumstances which could give rise to a claim? 

My advice on this topic is to always go for the latter. Your insurers would rather have an awareness of a situation and be able to build a potential defence should the formal claim be received, instead of being kept in the dark, receiving a claim, and being on the back foot.  

This is probably most vital in policies written on a ‘Claims Made’ basis. These will often contain a clause which may prevent a claim from being presented to an insurer should an insured have an awareness of the circumstances, which could give rise to the claim in a prior policy period. Therefore, having a clear method of establishing and reporting these types of circumstances is vital for clients who purchase Professional Indemnity, Directors & Officers/Management Liability, Cyber Liability insurance and cover, and other insurances.  

Now admittedly, by having increased notifications, this can have a negative influence on your claims experience, but the key here is again managing the communication as to why so many are being reported. Considering this from a high footfall business in terms of Public Liability insurance, if the broker and the insured can give the client comfort in their internal reporting and recording procedure, insurers can more easily agree on a reporting level of ’when an ambulance is called’, rather than for every incident. 

Finally, it's also vital that your staff feel comfortable reporting things without fear of consequences when the circumstances are unintentional. The following checklist is a pretty good place to start: 

• What has happened? 
• How did it happen? 
• Do we need to inform our insurers (even if it may turn out to be nothing)? 
• How can we stop it happening again? 

Also, have a listen to our podcast on slips, trips and falls to get a better understanding of reporting potential incidents that may or may not become a claim.