Insurance Claims News

The arrival of the storms and gales and the onset of the freezing pipes season always cause a surge in insurance claims, but a survey out this week suggests the average policyholder is dishonestly inflating claims by at least 25%.

The survey, conducted by the Chartered Institute of Loss Adjusters, coincides with a New Year clampdown on fraud by insurance companies, which started to investigate claims on a random basis.

But the Consumers’ Association is urging honest householders not to be intimidated by loss adjusters who try to knock down claims by saying they are “underinsured” or there is unsatisfactory evident – no receipts, for example.

In the past, insurance claims adjusters only used to be routinely employed by insurance companies for claims above £1,000.  Now the threshold is about £300.  In theory, they independently negotiate claims and have the power to raise the amount.  In practice, they are employed to reduce the insurance company’s losses.

Jeffrey Salmon, a leading ‘Loss Assessor’ who battles with insurance companies on behalf of policyholders, says people should always challenge Insurers and the loss adjuster they appoint.  “For some reason, people treat them with the same respect as the Inland Revenue.   They shouldn’t”.

He urges policyholders to be as assertive as they would with, say, a department store over faulty merchandise.  “Take flood claims.  Adjusters tend to quote the cheapest equivalent for replacement furnishings or they deduct ridiculous amounts for wear and tear.”

Original receipts are now crucial when making a claim, though more insurance companies are insisting on evidence of re-purchase or building work invoices rather than estimates.

TSB Insurance, for example, is moving towards a policy of replacing damaged items itself instead of paying out cash when a claim is settled.  Already, claims exceeding £100 for damaged carpets are passed to the retailer Carpet Land.

Companies are also putting up ‘excesses’ (sometimes to more than £200) to deter people from making small claims.

A spokesman for the Association of British Insurers said people with a valid claim had nothing to fear from the new crackdown but added, “Where there is evidence of fraud, companies are not hesitating to prosecute”.  Dishonest claimants may be put on a computer blacklist.

The recession has boosted fraud, but dishonest claims tend to rise in line with premium increases.  Householders have had to swallow swinging increases over the past two years – making household cover three times more expensive in some cases.  Yet fraud merely gives companies an excuse to push up premiums.