Claims Handling for SMEs

2 August 2015 Steve BaileyCompliance

The FCA has published Thematic Review 15/6 Handling of insurance claims for Small and Medium-Sized Enterprises (SMEs), that can be accessed here.

The Review is aimed at a number of parties involved in the claims process, including insurance intermediaries. SME claims experience was focused upon as they were felt to be similar to retail clients in terms of sophistication, knowledge and experience. A further reason was that SME claims often involve multiple parties.

The Review found that a significant gap appears to exist between SME expectations and the claims experience they actually received:

Overall SME perceptions were poor (some stated they had not been treated fairly);
SMEs received poor communications about claims progress;
Confusion existed as to who was responsible for driving the claims outcome;
Sums assured were often inadequate to cover the loss incurred.

In turn, the FCA has set out its expectations in relation to claims handling. Firms should:

Have due regard to the information needs of their customers during the claims handling process;
Handle claims promptly and fairly;
Clearly communicate any delays in reaching a settlement;
Carefully consider the review findings and analyse what changes they need to make to ensure that SME claimants are treated fairly.

Don’t forget to check Our View about this article and the Actions Required By You

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

The FCA obviously sees claims experience and how the firm treats its customers as strong indicators of a firm’s conduct and culture; measures which, in turn, influence customer outcomes.

As well as meeting the regulator’s expectations, we see significant benefits to firms in ensuring clients’ claims experiences are overwhelmingly positive:

A positive impact on reputational risk;
A more effective and efficient claims handling process;
The potential for client complaints is reduced.

Action Required By You

In our day-to-day work we come across numerous examples of firms trying to do the right thing for their customers (SMEs and others) when dealing with claims. However, we would regard it as sensible for any firm to consider the concerns expressed by the regulator within this Review and use the findings to take stock of how claims are handled.

Therefore, it would be a useful “Treating Customers Fairly” exercise to assess whether, as a firm, you can deliver improvements to your claims handling process:

Your clients are clear on the role your firm will play in dealing with a claim;
Clients can be confident you will update them on progress and explain any delays;
Customers know they can rely on you to provide advice, guidance or other forms of assistance as required;
Clients will not face significant shortfalls in sums assured;
Ask clients what they consider to be a positive experience and outcome and take their responses into account.

For further information, ATEB clients should speak with their account manager as necessary; otherwise contact ATEB here.