Claim shame: Are insurers making it harder for claimants to switch?
Research by the Financial Regulator reveals that home insurers are making it harder for customers to switch to other firms if they have had a pay-out from an old policy, writes Charlie Weston
ARE insurers turning their backs on householders who have had to make a claim on their insurance? The question is prompted by the recent floods in large parts of the country and the big freeze at the start of the year.
There had been lots of anecdotal evidence of insurers loading the premiums of those who have made claims and some refusing to cover people who have had to use their insurance for the purpose they took it out, ie making a claim.
But a story this reporter wrote last week revealing that up to half of the insurance companies are refusing to cover householders who have made a previous home insurance claim has confirmed that anecdotal evidence as being true, and prompted a stream of emails and calls to the Irish Independent. The issue is becoming a real problem for householders.
From being prepared to take on almost any insurance business up to very recently, and discounting heavily in an attempt to build market share, insurers are now cherry picking the market.
This accusation has been prompted by a survey by the Financial Regulator that found a householder who had made a claim for €8,000 after a fire in 2007 was unable to get insurance renewal quotes from FBD, Aviva, ChartisDirect and Lloyds selling through getcover.com.
The research also discovered that many householders affected by the recent floods were finding it impossible to switch to another insurer. When they could get cover they were being forced to accept an excess.
Householders who have been hit by floods are also being told to outline in detail changes they have made to their home to reduce the risk of future floods.
The regulator sought insurance quotes for a number of different houses. But when its staff, posing as householders, sought quotes for a semi-detached house in Bray, Co Wicklow, where a previous claim had been made half the insurers did not want to do business. And all of those insurers who were willing to quote wanted the householders to pay between €125 and €250 themselves before the insurer would pay out on a claim.
The surveyors sought quotes for a house which costs €175,000 to rebuild with contents worth €52,500. The householder had a claim in 2007 for fire damage of €8,000.
The regulator warned: "Consumers with a previous claims history may find it more difficult to get their insurance renewed. Half of the insurance companies did not quote for a three-bedroomed, semi-detached house in Bray which had a previous claim in 2007 for fire damage worth €8,000."
The refusal to quote has been condemned as a form of protectionism, with accusations that insurers were attempting to stop householders who have made a claim from switching to another company.
Consumers' Association chief executive Dermott Jewell accused insurers of turning their backs on people forced to make a claim. "This smacks of protectionism because, by refusing to quote someone who has made a previous claim, insurance companies are forcing consumers to stay with their existing insurer so they can recoup some of the money that was claimed."
Mr Jewell called on the Department of Enterprise to investigate what he said was an attempt by insurers to cherry-pick and segregate the market. Michael Horan, of the Irish Insurance Federation, said that there was still a large choice for householders in the market when it came to home cover despite some insurers refusing to cover people who had made claims. Mr Horan said that insurance quotes have always reflected previous claims experiences, but denied that insurers were now cherry picking the market.
But he said the recent floods and the big freeze had meant the level of series claims had shot up and insurers were losing money on home insurance.
Advice for householders finding it hard to get insurance includes the following:
- Even if some insurers will not provide you with a quote you can still save money by shopping around.
- Think hard about whether it is worth your while to make a claim especially if the amount is small, Diarmuid Kelly of the Professional Insurance Brokers Association advises. If you make a claim for €500 you might only get €250 back because of the excess (the amount you have to pay before a claim will be honoured). Will this be worth the higher premium that will result, Mr Kelly asks.
- If your area is prone to flooding, lobby your politicians to have work carried out to make you home insurable again, Mr Kelly adds.
- A broker may be able to plead your case to the insurer, especially if the company is failing to take account of material facts or changes that will lessen the risks of a similar claim being made again, the regulator says.
- Fully disclose all details of any previous claim as a way of demonstrating the once-off nature of the claim, Ciaran Phelan of the Irish Brokers Assocation advises.