FCA reveals that SMEs are being let down by insurance companies » SMEInsider

FCA reveals that SMEs are being let down by insurance companies

The Financial Conduct Authority (FCA) has published a new report which explores how insurance companies deal with claims from SME owners.

The report has been labelled Commercial Insurance Claims: Findings from Research with SME Customers.

The findings explore a range of issues, such as claim response times and whether small businesses are educated enough when purchasing protection for their company.

‘‘In an area where any delay could have a serious impact on a business or someone’s livelihood, it is vital that claims are taken seriously and processed promptly. The means putting customers at the very heart of the process,’’ said Linda Woodall, acting director of the FCA.

The review found that most small business owners aren’t properly educated on how to purchase the correct insurance for their firm, so end up having inadequate cover.

‘‘While businesses often talk of being ‘confident’ about what they are covered for prior to a claim, many find that the terms and conditions, warranties and exclusions subsequently prove that they didn’t have the cover they thought they had.’’

‘‘Some customers also readily admit to not being able to understand or engage with the volume of terms and conditions supplied with their policy, leaving them at a disadvantage,’’ explained the report.

The report also uncovers that response times from insurance company’s often ‘‘fall way short of what is required; there are examples of major fires or ingress of water on business premises where site visits have not been made for up to two weeks after being reported.’’

The FCA has gone to great lengths to uncover what exactly goes through the minds of SME owners when their business has suffered an incident which required an insurance claim.

Many of the respondents were claiming for the first time and they all had varied experiences with insurance companies.

‘‘We contacted the broker. They didn’t really appreciate the extent of damage… They visited and drew up an action plan about 2 weeks later. We got no advice on what we should be doing – we wanted guidance as it was our first ever claim,’’ stated a small business owner with a £100,000+ claim.

When we contacted the broker to instigate claim, they were great, we got given a tick list of what we needed to do, such as pulling together the itinerary of items, (and all the other) information needed for the claim,’’ explained an SME owner with a claim between £5,000 – £20,000.

The FCA intend to meet with insurance companies and relevant trade bodies to deliberate the review findings and to create solutions that will improve small businesses’ experiences when they have to make a claim in the future.

If you want to know more about the report, you can read it in its entirety here.