Insurance firms not offering claimants full entitlements
HOME insurers are routinely offering less compensation than claimants are entitled to, a study of recent insurance claims has found.
An analysis of 50 home insurance claims, commissioned by the Irish Independent, found that 90pc of claimants surveyed were so unhappy with the initial offer from their insurance company that they rejected them.
Significantly, every one of the 45 of the 50 surveyed who appealed their claim offers were successful in getting more cash from their insurer. All of the claims were processed since the start of this year.
The study showed that the increases secured by these homeowners in second offers were 24pc higher on average than the first offer.
The Irish Independent asked loss adjusters InsuranceWorks.ie to analyse its 50 most recently processed household insurance claims with a view to assessing the numbers of challenges mounted by householders to initial offers and, thereafter, the success rate of those challenges.
Its study found that the average eventual payout among the surveyed policy holders was €3,500, indicating a saving per appeal in excess of €800 per claimant.
Loss adjusters can be hired by insurance companies or policy holders to investigate claims.
InsuranceWorks.ie managing director Joe Doyle said: "What we are seeing is that insurance companies are increasingly making lower offers of compensation to claimants, which are less than the cost of replacing the damaged household goods or making repairs.
"The practice was always there but it has worsened significantly since the beginning of the downturn in 2007. It's happening because insurers know there will always be a significant percentage of the population who will accept the first offer – usually those who need the cash most.
"Challenging a first offer is not about 'trying it on' to get some extra cash – it's about striving to get the full entitlement of money that you are rightfully due in the first place under the terms of the policy you have already paid for."
Mr Doyle said his company was also experiencing increasing numbers of clients who had lost out on claims because they had not understood increasingly obtuse and questionable clauses in insurance policy small print.
"In the boom years, insurance companies made most of their money by reinvesting their premiums. The downturn ended that, and, as a result, they have turned the screws on their underwriting teams on whom they're now relying to make their bread-and-butter income," he said.
Declan O'Sullivan, a Tralee-based loss adjuster, agreed there was significant scope for policy holders to increase their compensation payments by rejecting a first offer, particularly if they get professional assistance.
However, he disagreed with the claim that the insurance companies were taking advantage of the downturn.
"Their loss adjusters negotiate just like everyone else. They make an offer. Then you accept it or you don't, or you make a counter offer. Like any other business since the downturn, the money has become much tighter and therefore the negotiating process has become much tougher."
A spokesman for the Irish Insurance Federation denied that insurers were deliberately pitching lower-than-warranted offers to home insurance policy holders and asserted that a survey of 50 claims was small and not likely to be representative of the 150,000 claims made annually in Ireland.
"Insurance companies aim to achieve a fair and just settlement that is in line with the claimants' policies," he said.