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Monday, March 2, 2015

Assessing the ICNZ Revised Fair Insurance Code - Part 3

This post considers the final part of the Revised Code. As we move towards the way claims are processed there are welcome improvements.

 

Pages 8 & 9 What happens when you make a claim

Our responsibilities

Paragraph 26:

We will manage your claims quickly, fairly and transparently.

As noted previously,  the issue of what is meant by “fairly” remains unresolved. Who determines what is “fair”? The customer or the insurer?

Paragraph 27:

When you make a claim, we will:

  • explain how to report your claim

  • explain what information you must give us to process your claim

  • explain the steps we will take while handling your claim

  • tell you that the information you give us must be honest, complete, up-to-date and relevant

  • keep you informed of the progress of your claim

  • settle all valid claims quickly and fairly

  • clearly explain how we reached our decision

  • clearly explain the reason or reasons, if we decline your claim

The sixth bullet point states the insurer will “settle all valid claims quickly and fairly”. What does “fairly” mean? An insurance policy is a legal contract and whatever is decided must be in accordance with the terms of the contract.

There are two essential matters missing from this paragraph.

    • An undertaking to ensure the customer's wellbeing and financial position are not jeopardised by the insurer, or those acting on behalf of the insurer. As part of processing the claim the insurer must undertake and ensure that any agents or contractors used will meet all agreed deadlines, legal and quality requirements and protect the customer from additional expenses when legal or agreed requirements are not met.

    • An undertaking that the customer will be advised of their review or appeal options where a claim is decided. Review and appeal options aren’t just for claims that are declined. Although an insurer may accept a claim it may be in a way that is unsatisfactory to the customer.

Paragraph 28:

When you make a claim, we will:

  • acknowledge receipt within 5 business days of receiving your claim, and

  • determine whether or not to accept your claim within 10 business days of the date we have all the information we need to determine your claim

Okay, but note that the 10 day requirement in the second bullet point applies only after all information has been obtained. The actual time taken from start to end may, in more difficult circumstances, take much more time and this is covered in the next paragraph.

Paragraph 29:

We may not always be able to determine whether or not to accept your claim within 10 business days. You might have a complex claim which takes us longer to evaluate, or we might depend on receiving information from third parties. If we cannot meet these best practice timeframes for whatever reason, we will:

    • explain why

  • tell you how long we expect it will take to determine your claim, and

    • update you at least once every 20 business days, or another such interval as we may agree with you, until your claim is resolved.

It would be interesting to know the origins of this best practice time frame. Has there been research in this area? Was it New Zealand based?

Paragraph 30:

We will ask for and take into account only relevant information when investigating and making decisions about your claim.

This is an important Privacy Act issue. See the comments for Para. 32 below.

Paragraph 31:

You have a right to:

  • access the information that we have relied on in evaluating your claim, and

  • ask us to correct any mistakes or inaccuracies in that information

There should be a reference to the Privacy Act (Principle 6) as this is a statutory right, not one allowed by the insurer.

Paragraph 32:

We can withhold that information from you in some circumstances. If we withhold information from you, we will give you reasons. You can ask us to put our reasons in writing. You can request a review of our reasons through our complaints handling procedures or the Privacy Commissioner. You can contact the Privacy Commissioner on 0800 803 909 or www.privacy.org.nz

This paragraph needs to state the legal grounds for withholding the information (Principle Six).

The fourth sentence introduces a risk of confusion and delay. It states “You can request a review of our reasons through our complaints handling procedures or the Privacy Commissioner.” A primary and statutory role of the Office of the Privacy Commissioner is to determine issues relating to access to personal information. As the insurer’s complaints handling procedures have no statutory force, nor even published guidelines, unintentionally or otherwise the Revised Code is creating unnecessary hurdles and delays for the claimant.

Paragraph 33:

We will treat your information confidentially, including where you have given us permission to pass this on to third parties, such as advisers and assessors, repairers and supplies.

The insurer is obliged by the Privacy Act 1993 to protect the information, ensure it is not passed to those not entitled to it, and retain it only while necessary. Again, this should be stated in the Revised Code.

The last word in the paragraph should be “suppliers”.

Your Responsibilities

The next three paragraphs contain long standing requirements of acting promptly, being open and honest when making a claim. 

Paragraph 34: Okay

Paragraph 35: Okay

Paragraph 36: Okay

 

Page 9 What happens in a catastrophe or disaster

The insurance industry has gained from it’s experiences of the issues and problems that arose from the Canterbury earthquakes. The paragraphs in this section (which I haven’t reproduced for brevity’s sake) are a positive reflection of that.

Paragraph 37: Okay.

Paragraph 38: Okay

 

Pages 10 & 11 What happens when you make a complaint

Again, the insurance industry has learned from the issues and problems that arose in Canterbury, have accepted some of the criticisms and suggestions from external agencies, and the paragraphs go quite some way to addressing them.

The paragraphs have not been reproduced except where a comment has been made.

Paragraph 39: Okay

Paragraph 40:

If we cannot put a customer service issue right for you, you can make a complaint.

Okay – assuming the insurance policy outlines how the complaint is to be made.

Paragraph 41: Okay

Paragraph 42:

Any complaint you make will be referred to our internal dispute resolution process.

The operation of the internal dispute resolution process is explained in the next paragraph.

 

Our responsibilities

Paragraph 43:

If you make a complaint to us, we will:

  • Acknowledge receipt within 5 business days of receiving your complaint.

  • Give you the name and contact details of the person handling your complaint.

  • Ensure that someone experienced who has not been handling your case fully investigates your complaint.

  • Respond to your complaint within 10 business days of the date we have all the information we need to determine your complaint.

  • Where further information, assessment or investigation is required, we will agree reasonable timeframes with you. If we cannot agree on reasonable timeframes, you can contact our independent external dispute resolution scheme about those timeframes.

  • Update you at least once every 20 business days, or another such interval as we may agree with you, until your complaint is resolved

An important provision as it provides more certainty for customers of what they can expect to happen and when, once a complaint is made.

The third bullet point is a most welcome introduction as it provides a fresh pair of experienced eyes to consider the situation.

Paragraph 44:

If we cannot resolve your complaint to your satisfaction through our internal dispute resolution process within 2 months, we will explain our reasons to you in writing and provide you with a ‘deadlock’ letter so you can take your complaint to our independent, external dispute resolution scheme.

Very useful as it provides certainty as to timing and processes.

Paragraph 45:

If you feel your human rights have been breached you can contact the Human Rights Commission on 0800 496 877 or through its website: www.hrc.co.nz

The change stands alone and is unfortunately reactive rather than proactive. It does no more than give the address of the statutory ambulance waiting at the bottom of the cliff.

If staff were given the benefit of training that covered statutory obligations, including human rights, problems would be reduced or not occur at all. The comments on Para. 10 have highlighted this deficiency in training obligations.

 

Your responsibilities

Paragraph 46:

If our internal dispute resolution process does not resolve your complaint, please let us know. You may be able to refer your complaint to our independent, external dispute resolution scheme. We must tell you which scheme we are registered with and provide you with their contact details.

It is not clear whether the complaints covered by this paragraph must be accompanied by a letter of deadlock to access to the external dispute resolution scheme. It would provide certainty if there was a sentence that stated: “A letter of deadlock is (or is not) necessary to take your complaint to the external dispute resolution service.”

 

Page 11 What happens if we breach this Code

Paragraph 47: Okay

Paragraph 48:

Our independent, external dispute resolution scheme can consider breaches of this Code. We are bound to comply with the decision of that scheme

Okay.

Paragraph 49:

We can be reprimanded, fined or expelled from ICNZ by its Board for significant breaches of this Code. The independent, external dispute resolution schemes report significant breaches of this Code to ICNZ for this purpose

Until more information is known about the mechanics of the Code Compliance Committee (CCC), how it meshes in with disputes resolution services, what will trigger the CCC, how it will conduct its business, it is impossible to make an assessment. That said it is appropriate to pose some questions such as:

    • can a customer complain to the CCC or is the complaints process managed within the insurance industry?

    • can the CCC award compensation to a customer who has suffered as a result of a significant breach of the Code?

    • how transparent will its activities be? Will they be open to the public? Can a complainant attend?

 

Page 11  How we will promote this Code

Paragraph 50: Okay

Paragraph 51: Okay

 

We have now reached the end of the Revised Code. The next couple of posts will cover the FAQ that accompanies the Revised Code.

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