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99.99%of Insurance claims is due to Miscommunication - What to do?

This article doesn’t discuss fraudulent claims where their percentage ranged between 5% up to 20% worldwide depending on factors such as: “Line of Insurance, Size of claims, Region, Claims Expertise, Insurance company transparency in such figures”, rather than the reasons, consequences and solutions of miscommunication in daily insurance operations.

Why most of the time, we hear from customers:  “No one told me that this is excluded? Why no one told me that I have this much excess in my insurance policy? And the list goes long… very long!!

Let’s start with the reasons:
Without Prejudice
1- Sales Executive:
How many sales executives out there skipped (unintentionally) just one point in the Quotation to increase their portfolio? Quite much I suppose!! Please stop it… One wrong move can cause the insurer a multi-million account (All Sales channels included at this point);
2- Quotation structure:
Sometimes, it is the underwriting wrong step that will make you lose a portfolio. One of the most popular complaints about insurance contracts is their longevity and technical complexities (i.e. 10 pages policy with font 8, etc). Therefore, it is the underwriting duty here to summarize the whole policy wording to the maximum and include all the covers, conditions, exclusions, subjectivities, etc …. Without going any further, you all know what I mean!
3- Client’s negligence:
Today’s competitive market and stiff regulations especially in the GCC area have imposed on all insurance providers to be highly professional in its daily operations whether on the technical and marketing Sometimes it is really the client’s negligence that creates the issue. Therefore, it is of utmost importance/duty on all providers to have client’s signature on every page of it and emphasizing on the critical parts in writing.
(Retail & SME segments are set to be the main production drive with the current economic situations, so Insurance providers should be well equipped in all departments to accompany this change by simplifying policies, and avoid complex technicalities that most of the above 2 markets isn’t aware of).
Moving to the consequences, I can just state a couple before heading to our main part, the solutions:
1- Marketing Consequences:
A satisfied customer tells 4 persons about his experience while an unsatisfied one tells 12 persons about it. Just imagine the impact!!
Just imagine yourself pitching on a new client in your area, and he turns out to be one of the 12 persons!!
What I mean to say that a small misunderstanding in a policy pitch has a potential of reaching out to the whole market, thus, losing full portfolios of existing clients if not solved on urgent basis by the insurer.
2- Legal Consequences:
As we all know, the law is always drafted to the favour of the weak party which in this case: “The Insured”.
Having said that, if the insured decides to go legal with his claim, you have to be pretty sure that courts will be next to the insured, unless you were able to prove “Client Negligence” as stated in Part 1 of the article.
Therefore, make sure to always to communicate and document everything with the client and in a “Simple Language” that normal people can understand.
What are the solutions to avoid miscommunication with the insured? How can we communicate the rights & duties for him?
1- Clear documentation & communication:
 We should never forget that the insurance policy is a two-party legal contract, so we should make sure that there is a clear written communication throughout the whole process. Please avoid verbal statements especially when discussing technical issues.
2- Use simple language/avoid complex technicalities:
Some peers think it is more professional, or would be able to hide something in the policy by using difficult technical wordings in the policy. This is really against their own interest, because if the clients go to court, the judge will always take his side in this matter (personal experience). Therefore, the sales team duty here is to convert the hard technical wording of the policy in a simple scrutinized method that they will create clarity and genuine understanding of the policy.
3- Put everything in the quotation:
With all my respect to all insurers, but putting “As per …… Standard Policy terms & conditions” will not escape from the legal responsibility of putting all policy details in the Quotation, and it is the sales team duty to explain it fully to the insured. Again, from a personal experience, this creates unnecessary market issues if not properly handled.
4- Technical training for Sales Staff:
Here comes the funny part… You want to hire an insurance sales executive (Insurance company, broker, and agent)… The first question you ask him: How much is your portfolio size???!!!  Congratulations, losing your market share is just around the corner.
How about if you ask him about his technical skills in addition to his sales skills? How about asking him about his client retention ratio to make sure that his doesn’t make single shots?
It is a serious case that needs to be analysed deeply, because sometimes this problem is happening because they are not well equipped technically and it is surely not their responsibility.
Dear Senior Management, your sales team is your army out there, so please equip them with the correct technical weapons to fight. Thank you!!
5- Risk Management study to the risk in caption before quoting:
I’m not talking here about large corporate accounts where deep surveying studies are done prior to release a quotation, rather than Retail & SME where all insurers are fighting to increase their penetration figures.
Instead of blind quoting, depending on the large capacity you have in the reinsurance treaty, just a small risk profiling will prevent you future problems. How?
·         The insurer is aware of the risk in hand, and he will be able to provide a customized quotation based on it;
·         The insured is aware that all material details are with the insurer so there will be relationship clarity;
·         Preventive maintenance advice is provided to the client, which will create trust on the insured side, and risk clarity on the insurer side.
Finally, miscommunication will never vanish from our daily operations book. However, the insurers are the ones drafting the insurance contracts, and they are the expert body in the transaction, so there is a responsibility on the industry as a whole to cooperate and increase the insurance penetration that the whole market players are striving for it.
As usual, comments are always welcome my peers for enhancing our industry.

Anthony Bechara


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