Insurance Brokers are more than specialists at reducing the cost of insurance. Any Broker worth their salt would develop a long-standing relationship with their clients, advise them towards a product that benefits them in the short- and long-term, and stand by them when a claim must be processed.
When it comes to the preparation, submission, and motivation of claims, the Broker becomes the go-to for most of their clients. It is their experience, expertise, insider awareness, and direct lines of access that their clients typically rely on.
When a Broker submits a claim to an insurer, on behalf of a client, they typically expert the claims process to proceed in line with their long-term experience. But what if that has changed, if that is changing, or if it is about to change? How can the Broker best advise, assist, and represent their clients when the dynamics change dramatically and if insurance repudiations increase?
Not only does the client become disenfranchised with the insurer, develop anger towards the industry, and feel cheated, exploited, or abused – if their claims are unfairly repudiated – they invariably vent to the Broker, and expect some kind of assistance, intervention, or representation.
WHEN THINGS GET TECHNICAL
If the repudiation is administrative, such as when premiums have not been paid, or if a particular type of loss claim is not covered under the policy, the Broker is left with no tools to assist the client, short of advising on the content and meaning of the policy terms – but what can Brokers do if it gets technical?
When repudiations are based on any of the following issues, the disagreement is no longer over policy wording, interpretation, or cover, but rather over the interpretation of the merits of the claim, especially in motor vehicle collision cases:
- Not being truthful during the claim.
- Failing to take reasonable steps to reduce risk.
- Not operating a roadworthy vehicle.
- Exceeding the speed limit.
- Acting in a reckless/negligent manner.
CLAIMS REPUDIATIONS SEEM TO BE ON THE INCREASE
Stan Bezuidenhout from IBF Investigations International weighs in on the issue of an increase in insurance repudiations: “I have been in this industry since 2000, and I have seen more clients approach us due to repudiations in the last four years than in the total period of sixteen years before that. We have seen repudiations for reasons that we would consider completely irrational.”
And he doesn’t simply talk from the perspective of opposing insurance claim repudiations, either. Stan has done work for some of the biggest names in insurance, in South Africa, including the likes of Mutual & Federal, Santam, and Auto & General, SA Underwriters, Paladin, Trucksure, AIG, Aon, One Insurance, and others. Stan continues: “In all my time, working for insurers, I have always been told that repudiation is a last resort. Someone from one of the leading brands even told me that they are in the business of paying claims – not denying them. This trend persisted until about 2017 when we saw a sudden spike in repudiations. We were immediately inundated by people complaining that their insurance claims were repudiated – typically after an expert was engaged, and a report produced that frames them as violators of their policy terms.”
While you can argue whether this is because the use of experts, by insurers, has highlighted how many people have been getting away with false or fraudulent claims, or that there are experts who will rather find in favor of repudiation, in exchange for more work or a longer-term income stream, the result remains the same: claims are being repudiated more than before, in Stan’s experience.
EXPERT REPORTS ARE USED
In practically every single repudiation Stan has been approached on, there has been an expert report declaring the insured party at fault. In one trend that Stan has detected, the same formula and technique are even used in what he describes as a “Pro-forma report,” inconsiderate of the dynamics of the collision, its complexity, or the elements involved. “I find it highly suspicious that the same expert can investigate different cases with completely different merits, but still use almost entirely only one report format, with the same mathematical formula used, and the same outcome, no matter the variables that are entered – that the client is wrong, speeding, or acting recklessly or negligently.”
“While I might only be approached in matters when people have their claims repudiated, I am inclined to suspect that the majority of cases would not be paid, where expert witnesses are involved – especially when those reports declare clients at fault, based on what sounds like a compelling scientific analysis,” says Stan.
As a Road Traffic Collision Reconstruction Specialist, Stan is often required to produce reports and determine how collisions occurred, and also to review the work of other experts, where reports are presented in support of a particular finding. In those cases, it is his job to interpret every part of the expert report and to divide the elements he agrees on from those he does not. It is when two experts do not agree that the “fight” typically starts, according to Stan.
Whenever I am engaged to review an Expert Report from someone I know and whose history, training, and expertise I am familiar with, I can almost predict the areas of concern: Some consistently use the same formula, others never examine vehicles, and almost none of them ever produce scale scene diagrams, or retain their field investigation notes for later comparison.
INSURERS OFTEN REFUSE TO COOPERATE
“In several of my cases, I am unable to fully comment on the expert report that formed the basis of repudiation, because it contains little or no additional evidence, no methods used, or only some photographs. The reports might also be in black and white, or of very poor quality, for proper analysis. When we ask for proper copies, all photographs, and all measurements, we often find insurers flatly refusing to supply them – even while a complaint is in process with the Ombudsman for Short-Term Insurance (OSTI),” says Stan.
Stan continues: “Insurers seem not to understand that I cannot properly review the findings in an expert report if I am not placed in possession of the same evidence that the expert relied upon, to form that opinion. If an expert took 100 photographs, for instance, but only includes 5 or 10 in their report, I might not be fully informed about the motivations for their finding. By refusing to disclose evidence, the insurer and/or their expert is possibly interfering in my ability to potentially agree with their expert and nothing more than further delays are achieved. If the matter proceeds to trial, the legal discovery process will probably give me access in any event, so the delay makes no sense, other than to frustrate the efforts by the client to challenge the repudiation.”
Since experts are supposed to be objective analysts of the physical evidence in the matter, and since they are typically supposed to appear in trials to assist the court in any event, no matter who appointed them, the prediction would be that an open-door policy would exist, to allow the insurer’s expert and the client’s expert to share all the physical evidence – which belongs to both parties in any event – in every case. But this hardly ever happens.
WHAT CAN BROKERS DO?
As a Broker, you can assist your clients in a variety of ways. Rather than act as a passive conduit for the administration of claims between your client and the insurance, you could empower your client by providing them with information about repudiations and the reasons for them, if they affect any other clients. Perhaps one client faces repudiation because of a failure to update his risk address. This would be a perfect opportunity to remind all your other clients that they should update their risk addresses.
If a client faces repudiation because the primary driver was not correctly reported, you could inform all of your clients of the risk of not doing so, and offer the service of updating their policy to reflect the latest information.
If a client faces repudiation because of a technical reason, based on an expert report, you could immediately engage the insurer to secure a copy of the full report – not only an extract – and direct your client to an expert, like Stan, or an entity like IBF Investigations. You could also negotiate special rates, or minor membership fees to secure a review by IBF Investigations, at minimum cost. You could introduce a standard request email, asking the insurer for the following information in each road traffic collision case, to ensure that you are prepared, should you need Stan to review the repudiation:
- A copy of the complete Expert Report that the repudiation is based on.
- Copies of all photographs taken by the Expert for the Insurer (in unaltered, original, digital format).
- Copies of all measurements done by the Expert for the Insurer, in preparation of the report.
- Copies of any/all digital, audio, or video recordings produced in consideration of the claim.
- Copies of any/all field notes, measurements, or observations made by the Insurer’s Expert, in the preparation of the report.
- A detailed investigation diary, outlining the Insurer’s Expert’s movements, efforts, and investigations, concerning the repudiation.
- A copy of the complete, detailed, mandate supplied to the Insurer’s Expert.
- Copies of any Assessor’s Reports, with supporting quotations and communications.
- Copies of all photographs taken by any Assessors (in unaltered, original, digital format).
Whether the insurer will supply it, or not, is a matter for consideration in each case, but at least the complaint to the OSTI can then include a complaint relating to the refusal by the insurer to cooperate and allow the client to properly dispute the repudiation. Also, it will immediately alert you to the tone the dispute will take, going forward. An insurer that is open and accommodating right from the outset is more likely to review the complaint and any responding expert report objectively than one who starts to “lawyer up” the minute the client merely requests further information.
BROKERS SHOULD HELP CLIENTS COMPILE PROPER COMPLAINTS
Many insurance clients submit claims with little or no consideration for the specific wording of the policy they agreed to. Without realizing it, they may very well expose themselves to the risk of repudiation, based on the incorrect wording contained in their claim, or they may be priming the insurer for repudiation simply by providing vague information, in their initial submission.
As the educated party in the relationship, Brokers should interpret the policy wording and guide or caution their clients on the need for accuracy and the careful description of the information provided in their claim forms. Stan has an example of how your words can be twisted against you: ”One of our clients was driving a vehicle and a third party was approaching from the opposite side. The client, the third party, and an attending police officer described the event the same way: The third party swerved for a pedestrian, and run into our client, on their side of the road. When the client prepared an insurance claim, they explained that it was a head-on collision, as it also appeared in the police report. The client considered it as such since they were moving in opposite directions when the collision occurred. The insurance repudiated based on fraud since their expert’s opinion was that it was not a head-on collision as far as the damages were concerned.”
Since the client was not a crash specialist and called the collision a “head-on collision” and not a “side-swipe collision, with vehicles moving in opposite directions,” the insurer accused them of fraud and repudiated. This may sound like something highly unlikely to happen, but Stan insists that he is seeing more and more of the interpretations of this kind: “I can sometimes only shake my head at the things I see, and go through the motions of providing opposing analysis reports, as we await the invariable long journey to a court of law.”
BROKERS SHOULD EMPOWER THEIR CLIENTS
Insurance Brokers could protect their clients against all manner of unfair or unjust repudiation by helping them avoid it in the first place. Stan insists that they could collaborate with IBF Investigations to compile information packets, short videos, or email campaigns, to alert clients to the various challenges they may face during claim submissions, or as a result of unnecessary repudiations. By forming a partnership with the likes of IBF Investigations, Brokers can become much more than claims administrators, add great value for their clients, and save them from the frustration, additional cost, and long-term damages – such as when their whole policies are canceled.