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Will your car insurance company play fair in a claim?

A Car-Insurance-UK-Supermarket.co.uk Survey

Research Report: 19 Jul 2011

by Eleanor Morris

Introduction

The Association of British Insurers (ABI) along with KPMG recently conducted a survey of 57 major UK insurers in which poor reputation was seen as their biggest weakness by their Chief Executives. ABI Director General, Otto Thoresen, attributed the poor reputation of the insurance industry to the banking crisis, believing that as a financial service, insurers were being seen as rogues by the public as they were not making a distinction between bankers and insurers.

However, their survey showed that the Chief Executives had their doubts about their handling of claims with only two-fifths seeing their ability to help in a crisis as their greatest strength. The survey also found that only 18% of consumers saw their helping with claims as their greatest strength.

An obvious point emerging from this is that while the banking cirisis may not have helped, many of these companies recognised that they could do better in their handling of claims. We therefore were interested in to what degree motorists trusted their car insurance provider to handle claims fairly without presenting obstacles to the succesful resolution of a claim.

Our survey therefore aimed to investigate this issue, that is, what motorists expected from their car insurer, should they need to claim.

Methodology

As our survey was completed on a voluntary basis via our website, we needed to make it quick and easy to complete. We therefore included a single multiple choice question beside the text on the majority of our pages and allowed those that took the time to 'vote' to see the results of the voting up to that point.

Their interest in these voting patterns coupled with the ease with which they could votet led to effective uptake for a survey with this methodology and we were able to conclude the research in under six weeks in June-July 2011.

The simple multiple choice question was displayed on our site like this:

Optional Survey
(If you vote, you'll be shown the results)
If you had to make a claim, which of these best describes the response you would expect from your insurance company?

rapid payment, no problems
rapid payment, some problems
delayed payment, some problems
delayed payment, major problems
severe delay, major problems
severe delay, inadequate compensation
None of these

Respondents selected one of these options. Voting more than once was automatically prevented.

Results

100 completed the survey with the results breakdown as follows:

Option		No. of Votes
rapid payment, no problems:		10
rapid payment, some problems:		25
delayed payment, some problems:		31
delayed payment, major problems:		30
severe delay, major problems:		3
severe delay, inadequate compensation:		1
None of these:		0
Total:		100

From the above, it can be seen that 90% expected problems from their car insurer if they needed to claim. Only a third (35%) expected compensation to be rapid, with 65% expecting a delay and 4% expecting a severe delay in payment.

Over a third (34%) expected 'major problems' while a further 56% expected 'some problems' from their insurer.

Discussion

With as many as 90% expecting their car insurance provider to present problems if they needed to claim, the public clearly do not trust their car insurer to play fair if they needed to claim.

Even of those that expected rapid compensation, five-sevenths still thought it would not be a hassle-free claim.

Do these expectations reflect reality or are the public over-reacting to stories of claims that have reportedly been handled unfairly by insurers?

Well, as we presented in the introduction, even insurance company Chief Executives can be luke-warm in their assessement of their handling of claims while there is evidence from other quarters that compensation is often delayed by several months.

When the Association of Personal Injury Lawyers (APIL) looked at the outcome of 2,000 low value cases (for under £10,000 of damages), they found that in over 60% of these cases the car insurance provider admittted liability outside the prescribed protocol period of three months for claims to be handled through the Road Traffic Accident Claims Portal.

Of course, from the car insurance company's perspective, they have a duty to their shareholders and policy-holders to contain their underwriting costs to improve profitability and competitiveness. They are also aware of the high incidence of car insurance fraud in realtion to applications and claims and they need to be careful in their assessement of all of the claims as a consequence. This process can take a while and insurance companies do need to process large volumes of claims.

Car insurance providers are keen to improve their reputation with the public. Their focus should be in improving customer services in their hour of need to avoid making a drama out of a crisis.

A common reason for a relationship breakdown is lack of enough information. Insurance companies could easily do more to keep claimants well-informed as to where their claim has reached and the probable time-scales. Assigning one person to manage the case through to its conclusion would also help.

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