Consumer Protection – time to level the playing field
The Central Bank of Ireland issued a Consumer Protection Code in 2006 (revised 2012) to develop a suite of regulation around the provision of financial services by banks and insurance companies in Ireland, that were focused on “protecting the consumer”.
This Code was further developed and strenghtened with the backing of statutory legislative powers and sanctions, in an updated Consumer Protection Code 2012.
Some of the critical points in the CPC 2012 in relation to how Insurers should deal with claims include the following:
- acts honestly, fairly and professionally in the best interests of its customers and the integrity of the market
- seeks to avoid conflicts of interest
- does not exert undue pressure or undue influence on a customer
- ensures that any outsourced activity complies with the requirements of this Code
- the regulated entity must offer to assist in the process of making a claim, including, where relevant, alerting the claimant to policy terms and conditions that may be of benefit to the claimant.
- A regulated entity must ensure that any claim settlement offer made to a claimant is fair, taking into account all relevant factors, and represents the regulated entity’s best estimate of the claimant ’s reasonable entitlement under the policy
- Where a claimant has agreed to accept the offer made by the regulated entity to settle a claim, the regulated entity must discharge the claim within ten business days from the date the claimant has agreed to accept the offer
Sadly we regularly come across cases where these provisions are not being lived up to. We have witnessed breaches of the CPC and the exercise of a dominant position against claimants, who are usually a lone voice and in a vulnerable position. They are not familiar with the process or their rights and entitlements und the terms of the policy or how to challenge insurers/loss adjusters positions, and are desperate to get their home or business restored. As one industry insider pointed out “we are all consumers of insurance products, but when you have a claim you are no longer a ‘consumer’ you are a ‘claimant'”.
We would question why an Insurer should be entitled to engage a Loss Adjuster to act in their interests (which is at the expense of all policyholders) and the client has to fund their own representation. We believe, that there will not be adequate consumer protection until the cover provided on property insurance contracts entitles the claimant to professional representation and the fees of the regulated Loss Assessor are covered too.
One critical advice piece that is enshrined in CPC 2012 is: “the regulated entity must notify the claimant that the claimant may appoint a loss assessor to act in their interests but that any such appointment will be at the claimant’s expense”. Some Insurers and Adjusters try to deter claiamnts by emphasising the ‘expense’ of engaging a loss assessor. There is one thing certain, the playing field needs to be levelled and the ‘expense’ of engaging a Loss Assessor makes economic sense as the added value of getting your full entitlement is guaranteed.