The latest buzz in the insurance industry is going to stir up the online marketplace. Getting insurance is almost always three things:
- Boring
- Hard
- Painful
Filling out forms for insurance, whether it’s car, home, life, health or anything else is not easy. However, it could be set get to get much harder. This is due to the potential change in the law.
Current Law
The consumer is obliged to tell the insurer everything the insurer may want to know when it takes that risk. Well, obviously that places the consumer in the same position as the insurer.
Commissioner David Hertzell.
This means that the consumer is technically always in the guilty position. If the consumer fails to tell the insurer about a particular factor that may have influenced the policy, any claim could be void. There is a huge onus on the consumer to know the required information and to answer with complete and accurate information. Whilst this is a requirement and perhaps a fair one to be truly covered, the proposal is to shake this up even more:
Proposal
The Law Commission wants to end a 103-year-old insurance law that campaigners say has led to thousands of claims being unfairly rejected each year. The Association of British Insurers (ABI) has now given its support to a draft bill for England, Wales and Scotland which is due to be presented to Parliament by the Law Commission next week.
The law would put the onus on the insurer to ask and verify an exahustive list of questions. This should reduce the number of disputed claims and complaints.
Online Forms
The change in law could have a huge impact on online forms. At the best of times, these are complicated and difficult to fill out. What’s going to happen now?
Capital One
Credit Made Clearer
lovemoney
Relationship with Your Money
CashQuestions
Personal Finance Problem Solver
Life Cover
Insurance Made Easy
{ 6 comments… read them below or add one }
I think eventually it will get to a point where it will be impossible to make a valid claim on your insurance as there are too many ‘get out clauses’. I’m sure no-one ever reads the small print anyway.
As far as the online forms go. I think websites are doing a good job at splitting the application process into two parts. The quick quote and then the full quote idea you know?
For example:
Make a simple form for a potential customer to fill out which will have a bunch of assumptions but list them in the assumptions section keeping the form clean and simple and give the person a quote on 5 – 8 details.
If the quote is competitive and to the liking of the person then they may continue on with the full quote which will then obviously be the painful part but they should be compelled enough by the quick quote to stick it out.
Agree, I’ve gone some websites with really hard usage. Just hate it when you fill a form and suddenly with some error everything’s lost and you have to start from the beginning.
Woud think though that website owners will do their best to make the forms easy to fill since it can make them lose customers.
Thanks for the article.
Not sure the “insurers never pay” view is correct. Have long held the view that comparison sites (for home/motor/travel) deliberately skew the questions to get unreal prices.
Then, it is up to the insurers, months down the line, to rely on the “not declaring a material fact” to repudiate a claim. This then gives the insurers a bad name, incorrectly.
The other point Mxa makes is valid, lengthy form filling is a pain, especially when you get to the end and are told for some reason a quote cannot be given.
Have long advocated a combination of online basic form filling and then, shock horror, getting information over the phone from the customer, for our business and commercial buildings.
You can then question to your hearts content and at the same time make the customer very aware (verbally and in writing) of the need to declare fuller details.
We all know that there are people who will mis-declare and then scream from the roof tops how unfair the insurers are when their claim gets kicked into touch. But, this has to be balanced with the vast majority if people who find it boring and when sitting at a PC filling in boxes may not fully understand the long term consequences of not giving all information.
The problem is not going to go away as the comparison sites are having a tougher time as competition increases and recession affects them through less cars etc and more people choosing to go uninsured. Their now venturing into business insurance which, I have always said is not that complex, needs to be dealt with slightly differently and should not be sold/purchased without some human interaction.
No-one wants to go back to lengthy form filling but a combination of asking specific questions, providing a statement of fact document which the insured must read and most of all, making any insured aware that the onus is always on them to advise:-
a) Any material fact that may alter an insurers opinion of a risk and
b) Any changes to the risk during the year
This will run and run, but at the end of the day the Ombudsman (funded by the industry) will be there to ajudicate, usually in favour of the customer.
I think the focus is wrong here. It would be better to make all the insurers and brokers publish a minimum set of information in their xml feeds so that a base amount of information can be obtained for a quote comparison results page.
That would be much better for the customers.
Also, there should be a minimum amount of information required to get a quote, again helping the price comparison sites to get a true product comparison.
The only problem with this is that every price comparison site would end up with the same questions and results so I doubt we will see this approach taken.
@Simon,
That’s a good point but I’m not sure it’s achievable. The benefit of some brokers is that they have access to schemes that are different to most. This means that they may need to ask slightly different questions. As soon as you publish an agreed set of questions, you lose the ability for these niche insurers and brokers to do their job well.