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Last August saw the long-awaited Insurance Act 2015 take effect. It was hoped that the new legislation would bring about greater levels of fairness and increased transparency in the business insurance market, where buyers have been complaining of unreasonable delays and challenges when settling large claims.
While it is still early days to judge the success or failure of the Insurance Act, insurers are finding new legal defences under the legislation, while all parties have yet to substantially change the way in which complex insurance is placed, experts say.
According to a report by Airmic, the Insurance Act has not yet resulted in levels of insurer and policyholder enagement envisaged when the legislation was conceived and drafted. The market’s response has been inconsistent, characterised by legal and contractual moves, it concluded.
The settlement of large complex claims continues to be “adversarial”, according to Bruce Hepburn, chief executive and founder of insurance governance firm Mactavish.
“The claims environment is very difficult for large and complex losses, and will continue to be so, as long as insurers remain in a challenging position,” he said.
The market for claims is “hard” compared to the past, and the situation has not appreciably changed in recent years, according to Ian Martin, head of claims, client advisory services at Marsh.
“The issues faced by insureds [when settling large claims] are part contractual and part behaviour. There is not an epidemic of poor behaviour, but sometimes a client might feel that an insurer’s behaviour is not consistent with its statements,” he said.
Small claims are being settled quickly and efficiently, but larger and more complex claims are subject to more intense legal scrutiny, particularly in the soft market, explained Mr Martin.
“Where a major claim is likely to have a significant impact on an insurer’s results, there will be a strong desire to review the contract,” he said.
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