Serving customers a distraction from making money

Insurance Helpline With Cedric Stephens

Question: On October 14, 2009, my parked vehicle was involved in a five-car collision. It was hit from behind and pushed into the back of another parked car. It was insured comprehensively. The front and rear of my car were damaged. Even though I was using the services of a broker, it took nearly six months for the insurers to contact me. My mechanic referred me to a repairer. After making two visits to collect the estimate, I became very concerned.

The estimate was vague. I asked for more details. The repairer said it was necessary to dismantle the car in order to comply and that he could prepare a supplementary estimate. I still had doubts and asked my insurers if I could get a second opinion. They said no. The claims process had begun and it would be costly to switch repairers. My car ended up being 'butchered' - literally.

The estimated 10 working days to fix the vehicle turned out to be three months. On the advice of the broker, I signed the satisfaction note under protest. I recorded the things that were wrong with the job. When I discussed these matters with the insurer, they said the case was closed. As a result of my experiences I decided to change insurers. Only one company offered to insure me.

The premium was loaded, even though the accident was not my fault and I had been driving claims free for years. I have since learnt that I am unlikely to recover all of the nearly J$60,000 (excess J$38,500, loss of use J$20,000) that I spent as a result of the accident. I am seeing red and can't think straight. Can you help me?

- A.B.-W., Kingston 10.

HELPLINE: This newspaper reported on April 20 that the Government hopes — note very carefully the choice of the verb — to impose a new code of conduct on commercial banks for the protection of consumers. The code "is meant to set a new benchmark for service and promote 'equal right of access' for all bank offerings".

The article did not explain what the phrase 'equal right of access' means.

Incredibly, banks will be free to choose if they will comply with the code. This is in spite of the horror stories that have come out of the FINSAC enquiry about how banks treated customers during that period. The timing of the release of the code is also significant. Presumably, the findings of the FINSAC commission will not be relevant to the "new benchmark".

My prediction: business will continue as usual. Banks exist to make money - serving customers is a distraction from that goal.

Your ex-insurer, like the banks, is driven solely by the profit motive. This explains why they allowed you to stick with "the repairer from hell" when you had doubts about their competence.

Even though your ex-insurer recorded reasonably healthy growth in its premium income in 2010, and the amount that it paid in claims declined by J$150 million, it ended that year with J$132 million less in profit than it did in 2009. I strongly believe that those results are not unrelated to what happened to your claim.

The Jamaica Observer of April 27 provides additional clues why only one of the other nine motor insurers was interested in doing business with you.

Continuing losses

General insurers, as represented by the published financial results of seven of the 10 operating companies, "saw their net profit decline by 20 per cent in 2010 following a 39 per cent plunge ... the year before."

Continuing losses on their motor accounts and lower returns on investments were some of the things that I believe contributed to those results.

Your brokers performed very poorly in the handling of your claim. The six-month delay was inexcusable.

Additionally, they should have taken action to ensure that the insurers honoured their contractual obligation to you. Comprehensive motor policies promise to provide 'indemnity' to policyholders in the event of loss or damage.

Indemnity, according to my insurance dictionary, means "to restore an insured to the same financial position after the loss (or damage) that he or she was in prior to the loss".

Because of the poor quality of the work that was done to your car, it is quite probable that its value post-accident was lower than the value pre-accident. Situations like these seldom occur when brokers know their stuff.

It would be unfair to blame your ex-insurers or brokers for the partial recovery of your excess and loss-of-use expenses. This is because multiple vehicle collisions tend to be complex. Different rules are applied depending on the particular scenario. In your case, it appears that at least two of the vehicles were parked.

many complications

Other complications arise when some vehicles have insurance and others are uninsured. If your brokers were serious about their professional duty to you and did not limit their claims function to acting as a mere postbox, they should be able to explain to you exactly what happened.

I hope that I have partly helped you to understand some of the issues that surrounded your unfortunate experiences with the insurance system and that the information that I have provided will be of some benefit in putting them behind you.

Disclosure: Some of the ideas in this article were developed after I spent nearly two and a half hours, excluding travelling time, last week waiting in line at two banks and the Collector of Taxes in St Andrew to undertake three transactions and complain about the poor quality of service. An ex-minister of finance was among the scores of persons who were awaiting service at the bank.

Cedric E. Stephens provides independent information and free advice about the management of risks and insurance.aegis@cwjamaica.comSMS/text message to 812-7233