Review of Motor Damage Claims Handling published

• Thematic inspection of five motor insurance providers representing majority of Irish motor insurance market carried out
• Inspection focused on how insurance providers engage with consumers during the motor claims process
• Research into the consumers’ experience with motor insurance claims process also published   

The Central Bank has today (28 February 2017) published the outcome of a thematic inspection of motor insurance providers, which assessed how insurers are treating claimants when processing and settling their claims. This supervisory work was supported by consumer research, which was undertaken to better understand consumers’ experience and overall satisfaction with the claims process, from the initial contact with their insurance providers through to the settlement (or not) of their claim.

The Consumer Protection Code, 2012, requires all insurance providers to have appropriate procedures in place for the effective and proper handling of claims.  The thematic inspection found that all of the insurance providers inspected have procedures and processes in place to ensure compliance with these requirements and that while generally firms were meeting the required standards, a number of areas were identified where firms need to improve.  This was supported by the findings of the research, which showed that while 74% of claimants agreed that the claims process is carried out fairly by the insurance company, when prompted on specific issues, 53% of claimants said they were dissatisfied with some aspect of the claims process.

Director of Consumer Protection, Bernard Sheridan said:

“The Consumer Protection Code requires that all policyholders and third party claimants are treated fairly when making a motor insurance claim.  Making a claim following an accident can be a stressful and difficult time for consumers and it is important that insurance companies ensure they help consumers through the process.”

The main findings from the thematic inspection and consumer research are:

Thematic inspection

• All insurance providers inspected have written procedures in place for handling claims.
• In some cases, policyholders were not informed of settlements paid to third party claimants which could potentially impact future insurance contracts of that type, e.g. loss of all or part of no claims bonus, altered contract terms etc.
• The average time taken to decide on declined claims was up to 4 weeks, but at the higher end of the scale up to 16 weeks, leaving some claimants without the use of their cars for extended periods of time.
• Claimants were not always provided with the contact details of the insurer’s independent claims assessor and/or expert appraiser.
• In many cases, claims were handled by more than one claims handler. In some cases, claimants who had more than one claims handler dealing with their claim had to initiate contact on more than one occasion to get an update on the status of their claim, resulting in a poorer customer experience for claimants.
• Where a claimant’s car was written off, insurers demonstrated a consistent and fair approach to establishing the pre-accident value of the car.

As a result of the thematic inspection, formal supervisory requirements, with specific timelines for remediation are being imposed on those insurers where we have identified areas of concern.

Consumer research

The consumer research found that, of the claimants surveyed:

• 74% agreed that the claims process is carried out fairly by the insurance company;
  The majority of claimants (89%) found the overall process of reporting the damage to their car relatively easy.
• Those claimants with just one person handling their claim were more satisfied: 75% of claimants with just one person handling their claim reported high levels of overall satisfaction, compared to 32% of claimants with more than one person handling their claim.
• 77% of claimants, whose claims were accepted, reported that they were satisfied with the settlement offered.
• 23% of claimants, whose claims were accepted, said the insurance provider did not inform them about how the settlement of the claim would impact on their no-claims bonus.
• Only 28% of claimants, whose cars were repairable, said that they were informed that they could appoint their own loss assessor.
• 53% of claimants surveyed said, when prompted, that they were dissatisfied with some aspect of the motor claims process. However, less than half (43%) of these claimants said they informed the insurer of their dissatisfaction.

The Central Bank has written to all other motor insurers, advising them to review their processes in light of these findings. 

Notes:

About the thematic inspection

Recognising that insurers are facing a number of challenges in relation to underwriting, claims and profitability, in its 2016 Consumer Protection Outlook Report (PDF 877.09KB), the Central Bank warned that any cost-cutting measures must not be at the expense of basic customer service, especially in the field of insurance claims, where consumers have already paid for that service through their premiums.

Five motor insurance providers representing the majority of the Irish motor insurance market were selected for inspection, which focused on how these providers are engaging with and / or informing consumers during the motor claims process, in the context to the Provisions of Chapter 7 of the 2012 Consumer Protection Code.

The thematic inspection consisted of a desk-based review of motor insurance providers’ documentation and associated processes and procedures. Onsite inspections were also undertaken at five motor insurance providers, which included a walkthrough of their claims processes, listening to live and recorded telephone calls between the providers and their consumers, examining claim files and interviewing claims staff.  Where the thematic inspection has identified issues, the Central Bank is imposing formal supervisory requirements, with specific timelines for remediation, on the relevant providers to ensure that these issues are rectified without delay.

About the Central Bank’s consumer research

The Central Bank carries out ongoing monitoring of market developments and conducts consumer research to inform its work.  To support and inform our work on this themed inspection, the Central Bank commissioned Kantar Millward Brown to research the consumer experience and satisfaction with the motor insurance claims process.

The research consisted of a quantitative online survey of 284 consumers who had made a motor insurance claim (both successful and unsuccessful) between January and June 2016.  The survey was completed in December 2016.

The research has been published and is available for download (PDF 1.42MB).