The flooding affecting the UK has thrown up many issues for those seeking to make an insurance claim. It was no surprise to many that the insurers had processes and procedures to control costs which, in many instances worked smoothly. Unfortunately for others the claims highlighted several many customers have experienced?
1) The true identity of the underwriter and their criteria is obscured
2) The generic information collected by the comparison site is not necessarily the information the underwriter needs to determine if your risk is something they wish to insure
3) The comparison site carries no liability for the product you subsequently purchase through them.
What happens when you use the comparison site and why you must be cautious.
Nowadays you are encouraged to shop wisely, use all the tools that are available to you get the ‘right deal’. Gone are the days when the insurance companies marketed their products on the level of service they provided e.g. Commercial Union ‘not making a drama out of a crisis’. Today you are encouraged to choose your insurance based on price or even the lure of a stuffed doll!
You search or revisit the comparison site that you feel will be able to give you the widest choice of product. You then spend anywhere between 10 & 20 minutes in completing their online form which asks you a series of generic questions that will lead them to produce a list of different insurance products at varying premiums by numerous companies. You then select the product you want having given due consideration to the ‘brand’ and the level of premium you are comfortable with.
Right now you feel you have done the right thing and trust that the product is what you expect.
So what happens next and why is this when the problems occur?
When you select the product you are then sent to the particular insurer or broker’s website where the information that was collected by the comparison site is transferred to populate the questions asked by that insurer. You then confirm the transaction and the paperwork is sent on to you.
Unfortunately, the information required by the insurer/underwriter may not be consistent with the information you spent time completing on the comparison site. As such either some additional questions are pre-populated with answers without direct reference to you, or the questions are not worded in precisely the same way as on the comparison site.
You may not be aware of this and trust that the information you provided has been correctly passed to the broker/insurer. You receive the insurance paperwork along with the receipt of the transaction. The papers you receive will be the Policy Booklet (the contract terms and conditions), the policy schedule which modifies this policy so that is personal to you and finally a Statement of Fact.
The Statement of Fact is the basis of the contract between you and your insurer. This details in full all of the questions that the insurer needs answering to offer you a policy for the premium quoted. This is where the problem arises.
You see, as explained above, the information you provided may not match the information needed by the insurer to offer the policy to you. In fact, we had discovered that in some instances the answers do NOT match those given on the comparison site and in some instances were never asked.
Now you as a consumer may not feel it is necessary to check these documents despite being encouraged to do so. You would have expected that the information you have already provided would be sufficient. Regrettably it is proving not to be the case and as such if you fail to check, quite rightly the Underwriter would be entitled to void a policy or reject a claim. In fact, following the Integra insurance situation, the Financial Ombudsman has provisionally ruled that the underwriter is not at fault and the issue lies with the broker.
All well and good I hear you say, but as I began by saying, there is a MAJOR problem. You see, I have looked at the terms and conditions of the brokers/brands etc that earn significant sums for peddling their products on these sites, and I have yet to find one set of terms that state that the broker has a duty to you to provide a policy that meets your needs. In fact they go as far as saying, in not so many words, you are on your own in ensuring that the policy has been set-up properly and will protect you!
I then turned my attention to the comparison sites. Incredibly, they have a set of terms and conditions that affirm that they receive a commission for introducing you to the broker/insurer but also have no contractual duty or responsibility to you!
So in effect by using the comparison sites, you are purchasing a REGULATED PRODUCT WITHOUT THE REGULATORY OR CONTRACTUAL PROTECTION that you would expect in purchasing any product.
Insurance and its providers are selling you a product that you need to protect the sum of your life up to the point you need to call upon the policy, thereby enabling you to reconstruct your past and create a future. It is outrageous that you are so exposed by the sales process of such an important product and service.
I am aware that the FCA are looking into this, as are the BBC and other parties, but for now I can only caution and warn you of this problem so that you can check you papers TODAY and not discover at your peril that you don’t have the cover you need.
Please share this vital piece of information with your friends and family.
Insurance claim expert and founder of The Right Claim