Law firm Horwich Farrelly has warned insurers not to chase the easy positive PR that comes from settling claims early and appearing high on acceptance league tables.
The Financial Conduct Authority (FCA) publishes claims settlement data, including frequency, acceptance rate and average payout, for UK and European economic area general insurers every year. The 2018 figures were released at the end of January.
Horwich Farrelly, which represents insurers, is concerned that the publication of information that is supposed to help consumers choose an insurer is in fact encouraging the industry to accept too many claims without carrying out proper fraud investigations.
Rick Preston, head of Horwich Farrelly’s intelligence team, explained: “Insurance providers must strike the right balance between settling claims quickly and investigating potentially fraudulent activity.”
“Fraud still costs the insurance industry and its innocent customers a huge amount of money every year, and anything which distracts insurers from cracking down on that has the potential to embolden would-be fraudsters.”
“Of course, insurers have a reputation to manage and should not decline claims without clear grounds. But they cannot afford to avoid investigating claims that do not look correct, as this leaves them open to abuse from fraudsters.”
“After all, what good is it to have the best claims acceptance rate in the industry if no customers are willing to pay the inflated premiums the insurer is forced to charge just to cover its fraud losses?”