Why Insurance Claims Are Not Paid

Normally there are a number of reasons why insurers fail to pay or deny insurance claims. The principal ones are:

1. Non Disclosure of material fact;

2. Failure to abide by the doctrine of the utmost good faith;

3. Fraud and/or overcapitalisation of loss but the latter only applies to deny that part of the claim;

4. Arson as a subset of fraud;

5. An inability of the insured to provide any or adequate strict proof of loss;

6. A breach of policy conditions;

7. A failure by insurers to properly apply policy conditions (eg. co-insurance, average or a misapplication of theft or burglary sub-limits as applied to jewellery or the misapplication of the condition precedents, or condition subsequents to the policy);

8. A failure by insurers to properly investigate and assess a claim.

Unfortunately some insurers lack real insurance claims expertise as too many people are leaving the insurance industry. Despite the rhetoric most claims are treated as commodities. Many customer service officers, individual client service managers or claims clerks have very limited experience whether they are dealing with corporate, commercial, business or personal lines or domestic claims. The reality is that there are more claims to be processed and less capable or experienced people to deal with them which affects claims decisions. This is not helped because some insurers are so totally shareholder and cost driven they overlook the need to protect their client base. Insurers talk about their retention rates which is the percentage of policies renewed annually with them yet many are struggling to maintain retention rates of between 85-90% with only a few performing in the low ninety percents. What this means is that insurers are losing annually anywhere between 5-15% of their client base. Most insureds are unaware of this as the only time they know the value of what they have bought is when they have a claim. In some cases they are less than impressed.

Internal disputes resolution was introduced by insurers to provide a better outcome for their clients. Unfortunately some insurers treat claims as a process and have commoditised them. This is supposed to produce a better outcome for clients and, to be fair, in some cases it does, yet in others it cannot as one process does not fit all claims. Some insurers believe that by treating claims in this way they are able to provide better customer service, speedier resolution of claims, more effective control over costs, reduced claims settlements and improved retention rates across all classes of their business. It cannot work for all as it does not take into account the individual circumstances of individual claims which fall outside the norm and which therefore require a different approach. It is in this area where real expertise is needed and as is so often the case many insurers do not possess it due to high staff turnover as claims is not seen as being “sexy” nor providing a secure career path. Unfortunately inconsistent claims decisions means that sometimes the insured fails to achieve true indemnity under the policy whilst the insurer loses a client. This could amount to having the claim denied, refused in part, incorrectly quantified or misunderstood. Whether you be an insurer or an insured and you become involved in a problem claim seek independent legal advice from LAC Lawyers.

•Claim Brokers
Many corporate, commercial and business insureds shrug off the idea that they won’t get a fair deal from their insurer because of their buying power and they have an Insurance & Risk Manager, a Company Secretary/Finance Director and/or an Insurance Broker who are there to ensure this can’t and won’t happen. Think again. Yes, in some very limited cases this is true but we are now post-HIH/FAI and insurers will no longer make settlements which will compromise their bottom line. ASIC will...

•What Insurance Crisis - Is There Really One Following The Collapse Of HIH And FAI?
Many commentators have gone out of their way to suggest there was an insurance crisis and that it arose out of increased litigation, more successful claims and higher awarded damages which led to the unaffordability of public, products and professional indemnity insurance. There is no doubt that the liability market was a hyper-competitive one and the premiums were far too low and insurers lacked the discipline to apply or increase deductibles to assist them to manage smaller claims....

•Does The Duty Of Utmost Good Faith Apply To Claims
Originally the duty of utmost good faith was a common law concept which applied directly to contracts of insurance. The introduction of the Insurance Contracts Act 1984 (the Act) brought about a fundamental change to this duty - the Act states ‘a contract of insurance is based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good...

•Employment Law – Unfair Dismissal And The Workplace Relations System
The Federal Government has announced widespread changes to the Australian workplace relations system, by relying upon one of the heads of power under the Australian Constitution, namely the Corporations Power. This allows them to make laws with respect to Australian companies including constitutional corporations. It is their stated desire to have one set of laws governing workplace relations for the whole of Australia. Effectively where this is not possible the Australian Government wishes...

•How Can I Recover Money To Get Defective Building Work Fixed?
Things are already going pretty badly for you. Instead of fulfilling your dreams, your building work has turned out to be a nightmare. So of course, you want to know if there’s some way you can get it fixed. In New South Wales, the Home Building Act sets out a dispute resolution procedure to get the builder to rectify any defective work. If the builder won’t co-operate, then you can make a claim to your home warranty insurer. Ask first First of all, the Office recommends that you try...

•The Civil Procedure Act 2005 (NSW)
The Civil Procedure Act 2005 (NSW) commenced operation on 15 August 2005. The Act represents a major progression in the regulation of civil litigation in NSW. For the first time in history civil proceedings in the Supreme, District and Local Courts and the Dust Diseases Tribunal will be governed by one set of common rules. The sections of various Acts that have been moved into the CP Act are largely sections governing common procedural, as opposed to substantive matters. Those sections...

•Taxation Law - Taking Action (aat & Stct)
Where a taxpayer is dissatisfied with the decision made on objection to the original assessment or the Private Ruling, then the taxpayer may: - Request the Administrative Appeals Tribunal (AAT), which incorporates the Small Taxation Claims Tribunal (STCT), to review the decision; or - Appeal to the Federal Court of Australia. If a taxpayer does decide to seek review or to appeal, the request for review to the AAT or appeal to the Federal Court has to be lodged directly with the AAT or...

•Taxation Law - Changes To Private Rulings
The Commissioner of Taxation does have the power to change a Private Ruling in four situations as follows: 1 Where the taxpayer gives consent to the Ruling being changed; 2 Without the taxpayer’s consent, if the Private Ruling is about an arrangement which has not yet been carried out. This means that if the Private Ruling covered an arrangement which the taxpayer repeatedly carried out over time (for example buying and selling a particular item), the Private Ruling could be changed for any...

•Bullying - Adults In The Schoolyard
The idea of bullying has long been associated with naughty children in a schoolyard. But in recent years, there has been increased awareness and recognition in Australia that adults can be bullies too. Nowhere is this notion more alive than in the workplace, where high stress levels and hierarchies create a framework for day to day life. While the badly behaved child may be ordered to stay away from school for a day, a bully in the workplace risks paying for her or his mistakes in a...

•Criminal Law - How Serious Are Avos (new South Wales)
There is a strong desire on the part of the legislature to reduce the incidence of, and provide protection to, the victims of domestic violence. Apprehended violence orders and bail are the main vehicles chosen to provide this protection. These provisions are fundamentally in aid of the prosecution. Domestic Violence Apprehended Violence Apprehended Violence Orders (“AVO”) are preventative and intended to provide protection against apprehended breaches of the law. A typical order will...

• Mesothelioma Compensation–Claims And Counter-Claims
• Why Claims Are Often Denied By Insurers
• Accident Injury Claims Done Right
• Injury Claims – An Overview
• Whiplash Compensation Claims
• Motorcycle Accident Claims
• No Win No Fee Accident Claims
• Whiplash Compensation Claims Advice
• Personal Injury Claims Process
• Disputes & Claims Under Home Building Act

• Interested In Scofield Farms Real Estate?
• The 3 C’s Of Sterling Silver Earrings?
• Wallpaper Removal Tips 101
• Removing Negative Items From Credit File
• Spanish Property? Declare It!
• How To Locate Wholesale Properties
• Exploring Unique Ways To Make Money At Home
• The 789 Chevy Is One Cool Car
• Visiting Germany
• Plastic Benches - Not All Are Created Equally, So Don't Go Cheap.
• Pros And Cons Of Using A Head Halter
• End Tables - Not For Everyone, But Everyone Could Use Them
• Indoor Wooden Benches - Add To The Home Decor Before Your Next Family Gathering
• Jennifer Lopez's Astrology Analysis - It's All In The Stars
• Term Life Insurance With Return Of Premium
• The Use And Pleasure Of Indoor Water Fountains
• Online Certification
• Chiropractor College
• The Golf Putt | Are You For Dough Or For Show?
• Nights Out In Dunfermline, Fife