I recently read a piece in one of the national personal finance pages that highlighted a trend that The Source identified as an issue a while back.
A consumer contacted their insurer to discuss the possibility of replacing a damaged door panel. A specialist company was sent to assess the damage and quoted a cost of £291 for repairs. As the excess on the policy was £250, the consumer unsurprisingly decided to pay the full cost of the replacement themselves.
Despite the fact that they did not, in the end, make a claim their insurer increased their premium at renewal by £300. Understandably disgruntled, the consumer decided to shop around for a better deal and advised, quite correctly, the new insurer that they had made no claims in the past five years. The previous insurer had, however, placed a zero value claim against the consumer’s account which appears on the Claims & Underwriting Exchange central database. As a result the new insurer finally quoted more than the premium initially indicated.
Even if this particular consumer makes no claims over the coming months, this ‘black mark’ will stay on their record for five years and so they face paying far more than had they never made this simple inquiry.
We have seen insurers increasingly view those consumers who have enquired about a making a claim for a small amount but who have not then progressed the claim as ‘high risk’ – essentially tossing them into the non-standard basket, applying higher premiums or simply refusing to quote.
Non-standard household insurance policies aren’t just applicable to homes that aren’t built of bricks and mortar or roofs that aren’t slated or tiled. As well as covering homes of non-standard construction, listed or protected buildings, holiday and weekend homes and unoccupied properties, these types of policies are also suited for clients who have made a previous claim or simply enquired about possibly making one.
As home insurance rates continue to fall according to the latest tracker from the Association of British Insurers, there’s no doubt that insurers will be looking to push prices up wherever they can. I would expect to see many risks that might have been considered standard 10 years ago fast falling into the non-standard category.
As the case I’ve cited demonstrates, more and more of your clients may well be viewed by many insurers as a risky proposition. This is where the skill and knowledge of their intermediary comes into play as, using a GI provider like The Source, you can access insurers who won’t penalise your client for a mere notification that was never claimed for or for having had to make a claim because the unexpected happened. Hmmm, isn’t that what insurance is supposed to provide protection for in the first place?
Mick Cairns is a director of Source Insurance