Insurers take action with brokers

Across a broad range of industries companies are looking to cut costs, and insurance companies are no different. Insurers are looking to cut costs by taking a harder look on claims to check there validity, this does not mean that valid claims will be neglected; it means that all claims will be accessed more vigorously to access its validity.

With current economic conditions, there’s increased pressure from regulatory authorities.

Barry Taylor, chairman, SART Term Exco says” as long as consumers are continuing to suffer they are unlikely to cut back on premiums meaning insurers companies need to find new ways to hold down costs.” Taylor further says one of the ways of cutting costs is tightening up on claims settlements “Seeing whether a claim is really valid, rather than just looking to pay.

Intermediaries can assist in the claims process by making sure that claims are supported by all the relevant documentation. Intermediaries are, however, in the frontline of the right for their clients contractual rights and it is their primary duty to point out and motivate against frivolous & opportunistic interpretation by underwriters to the detriment of their claims.”

Companies know have to tighten up on claims settlements to cut costs, by assessing each claim, adding extra assessment would be mandatory. Brokers will know have to be more vigilant to ensure claims settlements are fair not prejudiced by the insures drive to cut costs.

In some cases, insurers are happy to negotiate their contract terms, even looking to settle on a form of reduced service level, but are also seeing a move by some insurers to stick to strict criteria. This is justifiable to a certain extent because even if there is not a high level of service being offered to intermediaries, there are usually various overhead costs associated with maintaining a contract, such as producing monthly commission statements and compliance checks, “says Taylor.

Intermediaries will restrict the use of the number of insures they deal with and therefore choose one or two insures who will offer them a good product range and proper service levels.

Intermediaries are a person or institution empowered to make investment decisions for others. Some examples are banks, savings and loan institutions; insurance companies. These specialists are knowledgeable about investment alternatives and can achieve a higher return than the average investor can.

Another risk that intermediaries need to be aware of is that of insurers cancelling policies if loss ratios become unacceptably high. While suitable notice should be given to allow the risk to be substituted, intermediaries need to accept some responsibility for maintaining the balance between premiums and chains.

Taylor concludes that there are multiple risks intermediaries operating in a tough economic environment but says now more than ever there is a need for intermediaries to fulfil their role in the market by continuously seeking the best solution for each client while prudently choosing the best business partner to carry the risk.