Fraudulent claims are a thorn in the side of the domestic insurance industry. Julian Cousins explains how to discourage the fraudsters and how to keep good policyholders
All too often, members of the Institute of Registered Valuers (IRV) face the unenviable task of trying to put a value on an item they have never seen, with scant information only provided by the claimant because the item has already been lost or stolen and the insurance company needs a figure to settle. Too late! It's gone! The question of value should have been asked at the time of underwriting, not when the claim comes in.
A familiar scenario plays out: two post-loss estimates from two different jewellers invariably create that uncertainty of quantum and so the arguing begins, possibly ending up on the desk of the Financial Ombudsman; the client's business is lost at renewal and they make certain all their friends know how badly you have 'let them down', all through uncertainty. This tiresome and expensive PR nightmare can be entirely eliminated by the simple adoption of a professional IRV jewellery valuation requirement at policy inception and every few renewals thereafter. By having an up-to-date, fully detailed, researched, quantified and justifiable valuation, not only can a correct premium be calculated and charged from day one, but also claim uncertainty is erased; settlement is unarguable, swift and confident; your policyholder is delighted to renew and tells all their friends and relatives how wonderful you are.
REMOVING THE UNCERTAINTY
"Th e importance of accurate up-to-date valuations carried out by qualified valuers cannot be overstated, when it comes to settling of claims with speed and without question on quantum," says Mark Smith, of TH March Insurance Brokers. Up-to-date valuations are all the more important now because of recent changes in the diamond, gemstone and precious metals markets. Massive demand from China has had a significant effect on these markets and, because they are all priced in US dollars, the post-Brexit vote fall in the value of sterling has exacerbated this effect. For example, since 2007 the gold price has tripled in sterling terms and with premiums calculated as a percentage of value, it is worth considering that, not only is a professional valuation desirable from a claims management position, but also from a premium revenue one.
FIGHTING THE FRAUDSTERS
So how can a professional jewellery valuation help protect against insurance fraud? Firstly, those individuals bent on fraud will be dissuaded from initiating policy cover if a requirement is proof the items actually exist, independent proof of the quality of the materials and manufacture used and what the researched and justifiable value of those items is. If a potential policyholder rejects your request for a valuation from an IRV, you may wish to be on your guard as to the vauation that is then submitted. "When there is doubt about a valuation, or no valuation at all, giving rise to questions and delays that can lead to a poor customer experience, the likelihood is that the final settlement for the customer might not leave them a contented person, with a skewed view of insurance," says Mr Smith.
Not all fraudsters set out with fraud in mind however: these are the opportunists, those who suffer a genuine loss or theft, but who see it as an opportunity to inflate a claim, to commit a 'victimless crime' against the deep pockets of big business. Their opportunity, again, comes from uncertainty, where a nine-carat gold bracelet might be claimed to be an 18-carat gold one; or a commercial quality one-carat diamond might be claimed to be a two-carat D flawless diamond. These claims may be 'supported' by blurry pictures taken at parties.
The benefits of having a jewellery valuation at inception, prepared by a member of the IRV compared to an unregulated document, should now be apparent. By removing uncertainty from the claims handling process, the occurrence of fraud can be mitigated, settlement can be reached with confidence and your market share increased; while knowing that appropriately-calculated premiums have been charged.
Julie Webb of Lark Insurance says: "We are looking for valuers who can relate to clients, who have integrity and will not be unduly influenced by their clients' wishes or expressions, who can indicate damage and condition and who can categorise inventories in the way that will help us to show underwriters."