Insurance often gets a bad press for not paying claims, but the reality is that the acceptance rate for our clients’ credit insurance claims is over 96%. Of the remaining 4%, by far the greatest proportion is due to policy non-compliance by the Insured.
We thought it would useful to examine the most common causes of rejection using data collected on claims submitted between January 2015 and July 2016 for Acumen clients, so that you can avoid making the same errors.
With credit insurance, there is a little more involved in ensuring you are compliant with your policy than with say, car insurance, however, it’s in these areas that some policy holders fall down. Your Broker at Acumen will help you ensure that you fully understand your obligations under the policy allowing high levels of policy compliance and claims settlements. So, what are the most common reasons for our clients having been caught out?
52% of rejected claims were due to late reporting of an overdue payment. Credit Insurance relies on the premise that all policy holders have joined the underwriting equivalent of a credit circle. As each supplier experiences negative payment patterns it is important that the risk analyst is party to this information not just to minimise the Insurers risk but also to warn other policy holders of the potential danger. However, late reporting is easy to slip into – your customer has promised to pay you next week so you delay reporting the debt, they always pay in the end anyway, don’t they? Just think how useful it would be to know how they are treating other suppliers? It is easy for customers to come up with reasons for delay, however this simple step can provide valuable information either supporting your approach or perhaps providing a welcome warning.
Credit limits are another major cause of claim rejection, at 41% of Acumen’s rejected claims. Whether it’s just not having a credit limit on the debtor, continuing trading after the withdrawal of a credit limit, or having the credit limit on the wrong customer, without a valid credit limit on a customer their debt is not insured. This is probably the most important factor in managing your policy.
Finally, the minority of claims were rejected due to insufficient justification or supporting documents. Credit Insurance does not require any more documents than you would need to successfully pursue a debtor through the courts. You will be asked to provide evidence of the contract of sale, invoices and proof that you have delivered or carried out the contract.
At Acumen we are never happy when any claim is rejected and we review our own procedures to see how we can best support our Insured’s with their compliance. Our record as being one of the most effective credit insurance claims negotiators in the credit insurance market reflects this fact.
If you have any questions regarding policy compliance and credit insurance claims payments please speak to our team of brokers who will be happy to advise on and assist.