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Policy mis-selling

Policy mis-selling

Claims management companies are turning their attention to coronavirus-related compensation claims, warns Liz Booth

A total of £38.3bn was paid to customers who complained about the way they were sold payment protection insurance (PPI) between January 2011 andA total of £38.3bn was paid to customers who complained about the way they were sold payment protection insurance (PPI) between January 2011 and the end of 2019. Following the deadline for PPI claims being set as 29 August 2019, many started to speculate what could be the next mis-selling scandal for the financial services profession.

Warning signs are already beginning to emerge – quicker than most people are emerging from their lockdowns – that claims management companies are gearing up for claims relating to cover failing to pay out due to Covid-19 replacing the cash they made from PPI.

Yaakov Smith, director of Logican Solutions, a provider of claims management software for claims management companies (CMCs) told Bdaily News: “We could see a large-scale campaign for compensation claims in a post-Covid landscape. It’s not just one or two valid insurance claims going unpaid during this crisis; it’s hundreds if not thousands.

“We won’t see the full effects until we’re on more stable ground, but once normality resumes, those dodging payouts will struggle to hide. At the moment, it’s all just white noise in the background of the Covid-19 crisis, but you can’t silence ruined businesses and out-of-pocket individuals forever. Unless insurance companies reverse their stance soon, we’ll likely see a deluge in legal compensation claims for unpaid cover.”

A warning note indeed.

WHAT’S THE ISSUE?

So, why should insurers be so concerned? Law firm Kennedys has been looking closely at what’s at stake and what the warnings are.

Chris Stubbs, head of investigation services and Martin Stockdale, partner at Kennedys, explain: “A key component of any claim mitigation strategy must have, at its heart, consideration of an employer’s duty of care. Have we got the right policies and practices in place to ensure we are able to meet our duty of care in relation to the health risks created by Covid-19? And, should claims present themselves, will we be able to evidence those policies and practices?

”The pair previously warned, in mid-March, as the UK was reacting to the pandemic by implementing social distancing measures and advising people to work from home, claims farmers had their minds on one thing – coronavirus claims.

“We have monitored and analysed open-source information to identify how quickly professional enablers have reacted to capitalise on the pandemic and capture any resulting claims,” they said. “Analysis of limited company incorporation data between February and March from Companies House shows 45 newly incorporated limited companies that contain the words ‘corona’ or ‘Covid’ as part of their company name.”

Of these 45 companies, a significant number were incorporated on 18 March and more than 11% of these incorporated companies have names that suggest a link to claims management activity, including:

  • COVID-19 Virus Compensation Limited.
  • Coronavirus Claims Limited.
  • Coronavirus Compensation Limited.
  • Coronavirus Legal Solutions Limited.
  • Coronavirus Refunds Limited.

The legal pair now say, at the time of writing, that Google Trends shows search term interest in coronavirus compensation for the UK peaked on 16 March. But they warn: “We do expect there to be a lag in Covid-19-related personal injury claims, which will take various forms as new areas of duty, breach and loss are explored. This may include disease claims against employers and the NHS.”

Kennedys was already seeing coronavirus-referenced excuses for claims behaviours in traffic accident claims. As early as February, coronavirus-related reasons have been cited for not seeking any initial medical attention. For example:

  • Accident date: 26 February 2020 | Claim date: 27 February 2020

The claimant has been unable to get through to GP to get an appointment for an assessment due to increase in calls due to coronavirus.

  •  Accident date: 3 April 2020 | Claim date: 6 April 2020

The claimant has also suffered with a headache but has not sought medical attention due to Covid-19.

EARLY SIGNS

“It is easy to see Covid-19 becoming the ubiquitous excuse of the dishonest, who recognise a new and universally accepted get-out-of-jail-free card,” the lawyers warn. Examples include:

  • Why didn’t you see a doctor? Covid-19.
  • Why was there a delay in responding? Covid-19.
  • Why did it take so long to repair the vehicle? Covid-19.
  • What are these extra cleaning charges? Covid-19.

“We are yet to see a significant move into social media advertising targeted at the public in relation to coronavirus-related claims, but the early signs are there,” they suggest.

“We have identified a number of law firms updating their websites to include specific coronavirus compensation sections, focusing on challenging insurers whose policies are not reacting to claims.”

In third-party claims, firms are also advertising in respect of employers’ liability from contracting Covid-19 due to the failure in supplying personal protective equipment, despite there being widespread shortages.

The Kennedys lawyers conclude: “Covid-19 presents a new frontier for claims and claim behaviours. Following declining claim numbers in areas such as motor, EL and PL personal injury, Covid-19 opens new opportunities for CMCs.”


CLAIMANT LAWYER VIEW

Slater & Gordon is one of the many law firms offering its services to aggrieved insureds. On its website, it says: “Many businesses felt reassured that they had an appropriate insurance policy in place, which they had taken out to protect them against future extraordinary events such as the one we all currently face. Some policies have been held for a considerable period of time, during which time the business has paid the required premiums.

“Many businesses with the benefit of these insurance policies have now been forced to make claims under them. Slater & Gordon has sadly learnt that some insurers are denying claims made under their polices. Claims are being denied despite the policy terms appearing to cover the current coronavirus pandemic and resultant lockdown. “Not all the policies cover the current situation but if they do, the insured business would expect to receive a payout rather than their claims being denied. We’re always on the consumer’s side and contracts entered in ‘good times’ to cover defined difficulties should be honoured when those difficulties occur.”

Liz Booth is contributing editor of The Journal

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