‘My insurer tried to underpay my £34,000 fire claim by £9,000’

Matthew Tidmarsh

Matthew Tidmarsh wasn’t satisfied by what his insurance firm offered when his home was badly damaged in a fire CREDIT: CHARLOTTE GRAHAM

The average insurance payout for domestic fires and explosions has increased by a third in two years – leading to allegations that insurers are now challenging aspects of homeowners’ claims and seeking to limit payouts as much as possible.

That was certainly the experience of homeowner Matthew Tidmarsh, who was initially offered a settlement of £25,000 by Millennium Insurance, the underwriter of his Paragon Car Ltd policy, when his four-bed family home near Huddersfield was destroyed by a fire in April 2015.

Following a two-year battle and pressure from the Financial Ombudsman – the watchdog which arbitrates when consumers and companies cannot agree – Millennium was ordered to settle the claim with a £33,554 payout, plus 8pc interest and £350 compensation. This was paid in June this year.

On April 10 2015, Mr Tidmarsh’s neighbour called him at work to tell him his house was on fire. It was the day before his daughter Elinor’s 11th birthday.

By the time he rushed home the blaze had been extinguished by two fire engines.

It later transpired that the washing machine under the stairs had caught alight while Mr Tidmarsh’s wife, Emma, was shopping. Luckily, no one was in the house at the time – even the two cats escaped unharmed.

The couple and their three children went to stay with Mr Tidmarsh’s parents who lived 10 miles away.

The insurance company was contacted and a loss adjuster was organised to visit the property the following Monday to evaluate the extent of the damage and recommend the sum of the payout.

The Tidmarsh home was destroyed when their washing machine c
The Tidmarsh home was destroyed when their washing machine caught alight CREDIT:CHARLOTTE GRAHAM

That same Saturday, Mr Tidmarsh had also been contacted by a independent loss assessor, Harris Balcombe, which had found out about the fire in the local press.

It too wanted to visit the property and offer an estimate of the cost of the damage.

Mr Tidmarsh said he was suspicious at first and said he felt like he had been targeted in the same way as with “ambulance chasers”, personal injury lawyers who contact people after they’ve been in an accident. However he agreed to let the firm visit the site.

Both parties assessed the damage and estimated what it would cost to replace and repair.

Harris Balcombe suggested it would cost £35,000 to put Mr Tidmarsh’s home right and submitted the claim in September that year. Millennium offered £25,000.

Deductions based on wear and tear, and depreciation were applied by the loss adjuster – especially where clothing was concerned. This was between 40pc and 70pc, according to the ombudsman.

Millennium, which is based in Gibralter, increased its offer to £27,500 but Mr Tidmarsh was still unsatisfied.

For the next nine months, Mr Tidmarsh said there was a “tortuous” back and forth between Harris Balcombe and Milliennium with both trying to convince the other they had valued the claim correctly. For seven of those months, the family lived in a mobile home they parked outside both Mr and Mrs Tidmarsh’s parents’ homes.

In August 2016, almost a year after the claim was submitted, the case was eventually taken to the ombudsman.

The following April the ombudsman officiating in the case, Ray Lawley, ruled in Mr Tidmarsh’s favour and ordered Millennium to pay £33,554 plus 8pc interest. He also told the firm to pay £350 compensation and half the loss assessor’s fee, because he felt Mr Tidmarsh had little choice but to use one.

Mr Lawley wrote: “The whole settlement offered seems to me to be based on a general assumption rather than anything that applied specifically to Mr Tidmarsh’s claim. The same applies to the deduction for wear and tear.”

The failure to produce the valuation list so Mr Tidmarsh could challenge specific items, the delays and the fact Millennium could not justify its claim were all taken into account.

Mr Tidmarsh at his home
The insurance company initially wanted to settle for £25,000 but the ombudsman ordered it to pay £34,000 CREDIT: CHARLOTTE GRAHAM

Mr Tidmarsh said the whole experience has made him think differently about insurance firms.

He said: “It’s all fine when you’re paying premiums – insurers make you feel like they’re your friend and they’ll look after you.

“But the minute you need to claim, you’re just a number, and it feels like they’ll do their darndest to give you as little as possible.”

James Daley, founder of consumer group Fairer Finance said Mr Tidmarsh’s case indicated issues with the industry.

He said: “Insurers who try and wriggle out of paying a reasonable claim fuel mistrust between firms and consumers.”

Telegraph Money contacted Paragon which declined to comment, saying it was a matter for Charles Taylor, their loss adjusters.

A Charles Taylor spokesperson said: “Millennium aims to provide all of its clients with full and prompt settlement of all legitimate claims.

“In this case the claim was referred to the Financial Services Ombudsman for their opinion.  We fully respected the Ombudsman’s decision in this case and settled the remainder of the claim.  The case is now closed.”

Loss assessors and loss adjusters

The role of “loss assessors” is to manage the claim on behalf of the policyholder.

They value the cost of the damage to your home in the event of a disaster, such as a fire or a flood, and submit a claim. They will also prepare the claim and negotiate with the insurance firm.

They are the antithesis to a “loss adjuster”, which are claims specialists appointed by the insurance firm.

Consumers who are unsatisfied with the insurer’s settlement have the option of hiring a loss assessor to act in their interest.

The Tidmarsh's stairs were completely burnt through
The Tidmarsh’s stairs were completely burnt through CREDIT: CHARLOTTE GRAHAM

There are two payment models. Loss assessors may ask for a percentage of the settlement. This can be from 2pc (in large claims worth hundreds of thousands of pounds) to 10pc (for smaller claims). This is common in contents claims.

For buildings claims the firm may offer clients the option of using  contractors in their network. If chosen, the firm is paid by the contractor on a commission-type basis.

No one can force an insurance company to increase the claim value but matters can be taken to the ombudsman for a resolution.

source http://www.telegraph.co.uk/insurance/home/insurer-tried-pay-9k-less-34k-house-fire-claim/

Families of prisoners pay high insurance premiums and face more refusals

They may be innocent, they may be vulnerable, but the families of offenders face higher premiums and even flat refusals


When people go to prison their families suffer in a multitude of ways. They are vulnerable to poverty, debt and housing disruption when their loved ones are sent down, yet the financial penalties continue even once their partners or children are released home afterwards.

Insurance is a key example of how completely the financial exclusion of ex-offenders can ripple out to affect their families too. Gordon Dewar, managing director of the Salvation Army General Insurance Corporation, is speaking out about “excessive” insurance penalties and the impact it can have on the finances and protection available to households.

Commenting in the organisation’s news publication The War Cry, he warned that insurers treat innocent family members as guilty by association.

“This can result, for example, in a wife either not being able to insure the family home, because of her husband’s record, or being asked to pay much higher premiums or increased excesses,” he says. “If the husband is struggling to find work, the bigger bills put the whole family under extra pressure.”

If the family can’t afford those higher bills then they are left without protection. A fire or flood or burglary could leave them with nothing, amplifying their vulnerability.

The issue is not just for partners; parents of wayward teenagers can find their household insurance rises, with insurers blaming the risk that they might bring home criminal connections.

And the families of sex offenders are penalised by either insurance being refused or the premiums hiked, on the grounds that the home is vulnerable to vigilante attack.

“That innocent families have to suffer is an inequity,” Dewar argues. “They should not have to pay for crimes they have not committed. They have suffered enough.”

Not that niche

This may seem a niche financial concern but it is one that affects hundreds of thousands of households in the UK. There are 9.2 million people in the UK with criminal convictions and one in three men has a conviction of some sort by the age of 53.

The Joseph Rowntree Foundation has reported that families of prisoners face financial disruption as well as additional costs – many send weekly cash to their loved one to buy phone cards, for example.

Speaking to Parliament, the Under-Secretary for Justice Andrew Selous has slammed insurers for “unfair” treatment of these vulnerable families.

“I am concerned that offenders’ innocent family members are being unfairly and wrongly penalised by insurance companies either withdrawing insurance cover or making it prohibitively expensive,” he says.

“In some cases, this is happening while the offender is in prison, and it is hard to see how there could be an additional risk to the insurer with regard to the family home in such cases.”

The situation is not as prolonged as it has been in the past. Only unspent convictions have to be declared and any that have become spent cannot be used to count against ex-offenders by law – the Rehabilitation of Offenders Act 1974 saw to that.

More recent legislation shortened the time some convictions remain unspent. Ex-offenders can work out whether their conviction remains unspent by using Unlock’s specialist calculator tool.

Housing instability

A report from Unlock, a charity that assists people with convictions to move on with their lives, reveals that 37 per cent of the calls made to its helpline related to insurance.

It also revealed a startling issue; that many families of prisoners and former prisoners did not know that they had to declare the situation to their insurer.

The report highlighted a case where a woman’s roof had collapsed but her insurer had told her the policy she had bought was invalid because her husband was in prison and she had not disclosed this.

And many insurers simply have a blanket ban on people with unspent convictions but this can make it harder for people who leave prison to find secure accommodation – which can be key in preventing them from reoffending.

Unlock highlights a case where “Paul” moved home with his father following a four-month stint in prison. When his father came to renew his policy he was refused buildings insurance, which put his mortgage at risk.

Paul says: “At one point my Dad was really worried that he was going to have to throw me out the house as he didn’t want to take the risk with his mortgage.

“I was never told anything about the problems around insurance when I left prison and I don’t see why it makes a different to my dad’s insurance.”

So what can former prisoners do to ensure they succeed in finding cover? Dewar suggests: “One of the drawbacks of quotes over the internet is that insurers apply a one-size-fits-all approach.

“So, if someone ticks the criminal convictions box, there is no room for discussion, and the application fails.

“The better route is to have a face-to-face conversation with a broker or company representative, who will work on a case-by-case basis.”


source http://www.independent.co.uk/money/spend-save/prisoner-families-insurance-high-premiums-refusals-offenders-poverty-debt-housing-children-a7714601.html

Mexico launches pioneering scheme to insure its coral reef

Hotels and local government in Cancún will pay premiums, and insurance industry will pay out if the reef is damaged by storms

 Tropical fish swim among the coral in the Caribbean sea, Yucatán, Mexico.
 Tropical fish swim among the coral in the Caribbean sea, Yucatán, Mexico. Photograph: Seaphotoart/Alamy 

A stretch of coral reef off Mexico is the testing ground for a new idea that could protect fragile environments around the world: insurance.

The reef, off the coast of Cancún, is the first to be protected under an insurance scheme by which the premiums will be paid by local hotels and government, and money to pay for the repair of the reef will be released if a storm strikes.

Coral reefs offer a valuable buffer against storm damage from waves but their condition has deteriorated in recent years, the result of human exploitation and destruction of the reefs, as well as climate change, plastic waste and the acidification of the oceans.

Under the Cancún insurance policy, pioneered by the insurance company Swiss Re and the Nature Conservancy, a US environmental charity, local organisations dependent on tourism will pay in to a collective pot likely to amount to between $1m (£770,000) and $7.5m for the insurance premiums on the policy, and a 40 mile (60km) stretch of reef and connected beach will be monitored. If any destructive storms damage the reef system, the insurer will pay out sums likely to be $25m to $70m in any given year.

Any payouts will be used for restoration of the reef, for instance by building artificial structures that can increase the height of the reef in case of storm damage.

Corals from the reef can be removed and rested for a period of weeks or months, to help them regrow, at which point they can be safely reattached to their native habitat to regenerate the growth of the reef system.

The advantages of such restoration go far beyond the hotels that border the seafront. As well as providing a natural brake against destructive storms, coral reefs provide nurseries for fish when they are growing, and form a vital part of the marine ecosystem. Their health or decline is seen as one of the key indicators of the state of the natural environment globally.

The Cancún scheme, which is to be run by Swiss Re and the Nature Conservancy, with backing from the Mexican government, is thought to be one of the first in the world to tie environmental benefits and the “eco-system services” provided by natural environmental features to firm monetary costs and rewards. It could provide a model for similar projects in the future, linking the protection and preservation of the environment to payouts in case of disaster.

Hotels and private companies are signing up to the scheme at present, and the plan is for a fund backed by the government that will cover the premiums. This is scheduled to be activated in September, with further contracts to be signed in November and December, and full coverage will then begin from next January.

“Public-private partnerships are the key,” said Mark Tercek, chief executive of the Nature Conservancy, in an interview with the Guardian. He predicted that more governments would see the advantages of such an approach when the Cancún scheme begins formal operation.

“I used to get very frustrated that not enough was happening [to protect the environment],” said Tercek. “We have to push business leaders to go further, to stick their neck out to tackle issues beyond the short term.”

Tercek said the Cancún scheme would provide an example for businesses, governments and insurance firms that would be “very scalable around the world”.

A future target for similar insurance products could be mangrove swamps, which also protect the shore against storm damage, and are equally under threat, with many destroyed to make way for housing development or farming, and others in peril from climate change.


source https://www.theguardian.com/environment/2017/jul/20/mexico-launches-pioneering-scheme-to-insure-its-coral-reef

How hospitals could kill the health insurance industry

How hospitals could kill the health insurance industry

Some of the world’s most powerful retailers have been brought to their knees in recent years thanks to the “Amazon effect.” The internet juggernaut has simply been able to provide almost all the goods consumers can buy more conveniently and has effectively taken over the retail industry. It appears people like Amazon founder and CEO Jeff Bezos saw this opportunity all along, and precious few retail investors saw it coming.

But is there is a similar disruptive event on the horizon here in the U.S. when it comes to something just about all of us have to buy? When it comes to the controversial and increasingly all-consuming market for health insurance, the answer appears to be “yes.” And playing the role of Amazon in this scenario is none other than the ever-expanding and powerful U.S. hospital industry.

On its face, health insurance as it’s used today in this country is built on a strange business model.

Insurance plans are generally used as a hedge against major or unpredictable losses. And long ago, the bulk of the health insurance business was based on that model, with plans sold as a hedge against unexpected and major medical costs like emergency surgeries.

But the general rise in all health care costs and the fact that comprehensive health insurance coverage is now mandated by Obamacare have conspired to make health insurance a very different kind of product. Now, the primary purpose of health insurance is to serve as a middleman to defray the costs of certain or near-certain events like regular medical checkups and common medical procedures.

“Hospitals could also simply start to offer customers significant discounts for using their plans or perhaps even stop accepting certain competitor insurance plans altogether. It all depends on how ruthless they want to be, but no one can deny they have the power to do it.”

But just because so many of us are convinced we need health insurance sold by an insurance company, and just because that’s the way the politicians think of things, what’s to stop another industry from offering the same protections more conveniently or maybe even at lower prices?

Nothing it seems. In fact, hospitals, which provide the lion’s share of America’s health care, have already started to sell health insurance plans. Obamacare’s private exchanges made that easier to do logistically, but the biggest impetus is the fact that hospitals have been consolidating and increasing their reach over every aspect of health care from acquiring private practice doctors’ offices to operating nursing homes and rehab centers.

It’s a simple case of an industry that provides every health care service deciding to cut out the middle man.

The financial results for many of the hospitals that started offering insurance plans since 2010 have been a mixed bag. Certainly, they’re not as strong as the stellar profits traditional health insurance companies have enjoyed in that time. But one major hospital system CEO, Michael Dowling of Northwell Health in New York state, says this new business plan is a “long term play.”

He and his peers may not have to wait too long if Obamacare’s generous direct and indirect subsidies are cut by the Trump administration or some kind of Congressional reform of the ACA. And with several insurance companies deciding to exit Obamacare exchanges even with those subsidies in place, the hospital industry may soon find itself playing in a much less crowded field.

Hospitals could also simply start to offer customers significant discounts for using their plans or perhaps even stop accepting certain competitor insurance plans altogether. It all depends on how ruthless they want to be, but no one can deny they have the power to do it. After all, they control the actual product customers ultimately want: health care. And health care and health insurance are two different things.

But it would be naive not to consider one factor that could keep the status quo in place for a longer time. That would be the fact that insurance companies and hospitals have a symbiotic relationship that helps perpetuate the hospitals’ ability to control prices and the insurance companies’ ability to convince almost everyone in America that they need their product.

It works something like this: Hospitals continue to have the most leverage when it comes to setting and raising prices for all kinds of care. But the insurance industry helps mitigate the potentially disastrous response to hospital price increases because people who have insurance don’t pay full price.

In fact, most of us don’t know the actual price of any treatment at the hospital. Imagine running an industry that has the power to raise prices without having to deal with public outrage when those prices are raised because its prices aren’t published.

That’s the advantage most hospitals have in no small part thanks to the insurance industry. You may know what you’re paying in monthly premiums or what comes out of your paycheck to pay for health insurance. But you have to wait until you get medical treatment and then get an itemized statement from your insurer to find out what the list price of that treatment was.

The insurance industry gets its justification to exist by selling the idea that only it can help make those mysterious health care costs affordable. So when hospitals raise prices, it’s very good news for them and the insurers who serve their patients.

But again, the implosion of Obamacare in so many parts of the country is already putting the private insurance industry in jeopardy. When and if the bean counters figure out a way that hospitals can do better without the private insurers around, it’s hard to see why they wouldn’t simply sweep them away faster than Amazon put an end to your local book store.

source https://www.cnbc.com/2017/08/02/hospitals-can-kill-the-health-insurance-industry-commentary.html

Solving the pandemic problem

The size of the reinsurance pie has not grown significantly during the past few years despite an abundance of capital. But as the market slowly begins to accept the permanence of this capacity, players are starting to look for new opportunities in earnest — and one risk that has consistently been overlooked is pandemics.

This is partly because pandemics have typically been viewed as a mortality risk affecting the life market, which has seen much less pressure from alternative capital due to the long-term nature of such risks. While it is understandable to see the risk in this way, the reality is that a severe pandemic is not only a problem for life portfolios. It is a huge potential issue in the non-life sector too.

But it is not clear that reinsurance is an obvious solution. Reinsurers that take a broad view of what happens during a pandemic get a rude awakening, because when they look beyond the insurance risk and consider how their overall position is affected, it becomes clear that the biggest problem is likely to be a collapse in asset values — and this is a much more challenging, systemic risk for the reinsurance industry to cope with compared to a natural catastrophe that has a limited geographic scope.

The worst-case benchmark that everyone in the industry uses is the Spanish flu of 1918-1920, which killed at least 40 million people, many of them young and otherwise healthy. A recent World Bank analysis reckons that a similar outbreak today could cost as much as 5% of global GDP, or nearly US$4 trillion.

At the same time, the capital position of every financial institution on the planet will be severely eroded as fear grips the market and forces a flight to quality that will see share prices and interest rates fall as everyone seeks out the safety of US dollars and treasuries.

Another assumption that is common to risk modellers who look at pandemics is that a major event is inevitable. It is not a question of if, but when. And Asia is likely to be at the heart of such an outbreak as millions more people are packed into increasingly crowded cities that are increasingly well connected to the rest of the world.

It is also likely that the Spanish flu is not, in fact, the worst-case outcome — and therefore there is an added risk that models may be overly optimised around an event that happened in a very different world to the one we currently inhabit. If a similarly deadly strain of influenza were to strike a major Chinese city today, the outcome could be even worse.

Given the systemic nature of pandemic risk, much like climate risk, the best solution might be to focus on building resilience at the source rather than transferring insoluble risks from insurers to reinsurers.

For example, that might mean ensuring that governments around the world are adequately prepared to respond to a major pandemic on the ground. The recent Ebola crisis clearly demonstrated that we are not yet there — and this realisation prompted the World Bank to launch its Pandemic Emergency Financing Facility (PEF) at the G7 Ministers of Finance Meeting in Japan last year.

PEF is an insurance plan for nation states that provides protection against certain types of viruses that lead to severe outbreaks. If an outbreak meets predetermined measures based on severity, speed and size, funding will be disbursed to lessen the effects of the outbreak. The scheme was initiated in collaboration with AIR Worldwide, Swiss Re and Munich Re.

This type of approach is a particularly attractive way for the industry to grow the pie — instead of simply trying to sell more insurance policies to individuals and corporations. By taking a more macro view, reinsurers can identify where the risks in the world are and propose solutions to them at the governmental level.

With the abundance of capital increasingly recognised as the new normal, expect more reinsurers to strike out in innovative ways to build new sources of income. Instead of competing with each other over a dwindling pie, such an approach may take greater collaboration within the industry.


source http://insuranceasianews.com/topics/reinsurance/solving-the-pandemic-problem/