When obtaining insurance coverage for your business, it’s important to remember that commercial insurers aren’t your friends. While the individual you deal with may have been pleasant, and the insurer may market themselves as friendly and supportive, an insurance company is, above all, a business.
In this blog, we’ll take a look at why it’s better to view commercial insurers as business partners. We’ll also acknowledge their potential for mistakes and conflicts of interest, and shed light on the sometimes unfair practices in claims handling.
Businesses, not friends
Commercial insurers operate with the primary goal of generating profits. They carefully evaluate risks, set premiums, and handle claims to maximise their financial gains. Their main objective is to protect their bottom line, not to foster warm relationships with insured companies.
While insurers do benefit from giving their customers a good experience, and they may provide valuable services, it’s essential to approach them with a realistic understanding of their motivations.
Human error and conflicts of interest
Insurance companies are run by people, and like any human endeavour, mistakes can occur. Employees in insurance companies might misinterpret policies, overlook critical details, or mishandle claims due to human error.
Additionally, conflicts of interest can arise. For example, an insurer may have connections or relationships with certain contractors or service providers, potentially influencing claim assessments and outcomes.
The friendliness facade
We’ve all seen insurance companies project a friendly image through their marketing. This is because they want to create a sense of trust and build long-term relationships with clients.
But remember, these efforts are primarily aimed at acquiring and retaining customers. When it comes to claims, that friendly facade might fade, and insurers may be quick to decline coverage if they deem it not within the policy’s terms and conditions.
Unfair claims handling
In some cases, insurers might unfairly deny or undervalue claims. They may interpret policy language in their favour, or exploit technicalities to avoid payouts unless challenged, knowing that most insured businesses won’t be insurance experts.
The use of loss adjusters can exacerbate this problem, giving an appearance of independence when the reality is, they’re clearly an agent of the insurer. The loss adjuster can also act like a buffer between the disgruntled claimant and the insurer, which can lead to frustration and disappointment for business owners who believed they had adequate coverage.
Whilst unfair claims handling isn’t the norm, and is generally centred around a small number of lower-quality providers, it’s still a people industry, therefore decisions are made by people who may have their own agenda.
Navigating the insurance landscape
Recognising the business nature of commercial insurers is important, but it doesn’t mean all insurers are unfair or unethical. Many insurance providers strive to maintain high standards and prioritise fair treatment of their clients.
As a business owner, it’s advisable to conduct thorough research, read policy terms carefully, and ask questions to ensure you choose an insurer with a reputation for transparency and ethical practices.
The role of the broker
Ultimately, a broker’s value lies in their expertise, negotiation skills, and advocacy on behalf of the insured. A quality broker can fight your corner, picking through the reasons for a claim repudiation, negotiating unfair terms, and sourcing alternative protection when your insurer just doesn’t meet your needs.
By remaining vigilant and actively engaging with an expert broker, businesses can protect their interests and navigate the insurance landscape more effectively. To find out how RiskBox can support you, get in touch on 0161 533 0411, or fill in our contact form.
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