Insurers’ claims service lags behind SME expectations
3 August 2017 – According to an independent survey of SME insurance customers, commissioned by Lorega Ltd, the UK MGA and Loss Recovery Insurance specialist, there remains a clear gap between the experiences and expectations of SMEs in the UK* when it comes to making a commercial insurance claim.
- Nearly 70% of SMEs say interim and final claims amounts not agreed promptly
- 6 out 10 SMEs received no advice on loss mitigation as part of the claims process
- Only 16% of businesses had a loss adjuster visit with 24 hours of reporting a claim
- Close to 60% of SMEs had no regular communication from their insurer on claim progress
- Over half of SMEs got no explanation of claims responsibilities
Despite the growing appetite and interest in SME insurance products and distribution opportunities, Lorega’s survey found the experiences of those making claims were still lacking. For SMEs who had made a claim of over £5,000 in the last two years, their experiences revealed insurers still have some way to go to address the concerns highlighted in the Financial Conduct Authority’s thematic review on SME claims published in 2015.
When asked about the support received, only half of the SMEs (56%) said they had received advice and support in preparing the claim. 57% of respondents said they did not have regular communication from their insurer on the progress of their claim.
53% said they were given no explanation of who was responsible for their claim and the same percentage said they were provided with no information on their cover and claim coverage. When it came to claim settlement, nearly 70% indicated their insurance company or its loss adjuster did not agree interim and final claims amounts promptly.
When asked to what extent their insurance company and its loss adjuster understood the impact of the loss on the business, over half of SMEs said they only understood somewhat or partially. Just under 6% said they did not understand at all.
The results of those who made a claim contrasted with what many SMEs expected their insurer to provide.
SMEs surveyed who had not made a claim, had clear views on the most important aspects they would expect to receive as part of the claims service. At the top of the list was for their insurer to provide regular communication on the claim’s progress. This was closely followed by advice and support in preparing a claim and prompt agreement of interim and final claims settlements.
Expectations around receiving information on cover and which sections might be relevant for the type of claim being made and guidance from their insurer on how to mitigate the impact of the loss on their business also featured highly amongst SMEs.
Commenting on the survey results, Neill Johnstone, managing director of Lorega, said: “While the development and distribution of insurance products for SMEs continues to evolve, our survey indicates there remain challenges in the servicing and support available when SMEs call on the policy in the event of a claim.
“The foundation of our business model was to provide policyholders with access to claims expertise; enhancing the service they received when it came to making and settling claims. The results of our survey reveal that this approach is more relevant and necessary than ever before.
“The survey reflects a number of findings from the FCA’s thematic review on the handling of insurance claims for SMEs which was published over two years go. It’s clear that the industry needs to take a more holistic approach to supporting SMEs who suffer claims of £5,000 and over, developing covers that include a responsive claims services with access to professional support and expertise, to ensure the trading and financial impact on SMEs is kept to a minimum.”