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FRAUD IS NOT ALWAYS IN BLACK AND WHITE

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Open-access content Wednesday 4th January 2017

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I read your article -- 'Insurers' tough line on fraud paying off ' -- and have to take slight issue with Alexander Darragh, of Weightmans, who, following the Versloot Dredging vs HDI Gerling & Others case, worry that insurers will have to "redraw their policies to include specific terms regarding the employment of collateral lies by their insured" and assess risks when individuals were "able to lie to them and recover in full".

The pathology of why some claimants 'lie' or mis-state their claim may reside to some extent in Sian Fisher's statement that the "public has a lack of trust in the insurance industry". This alleged lack of trust may lead claimants to try and 'please' the insurer and ensure their claim is met, especially if there is something 'odd' about the circumstances.

All of us who have worked in claims recognise times where claimants have, if you like, said too much in an effort to address possibly contentious issues. This may lead them to overstate or 'lie' about some aspects of their claim.

We need to recognise that: a) we are dealing with humans with human frailties; and b) if there are mis-statements we only act on them if they are germane to the claim. The rules have changed on misrepresentation under CIDRA and the Insurance Act 2015; there is a general trend towards the customer in this area. There is now a heavier burden on insurers to ask questions and where the information is not deemed that it should have been volunteered by the insured, i.e. 'fair presentation of the risk', the onus is on the insurer to ask. If they have not asked a question they should have done, given the information presented to them, it is my understanding that they then cannot act negatively on the information if it is revealed during a claim.

The insurance industry has an alleged poor reputation because it has relied on smallprint to avoid claims and in some recent cases, in my opinion, apparently still does. We are here to provide a service; assurance that if the insured meets with a loss, we will meet it and we must, in my opinion, always err on the side of our customers. There are times, regrettably, where the policy will not respond to a claim for good reason.

These times cannot be avoided but I would still hope that insurers would act proactively in mitigating the effects of a declinature; certainly by clearly explaining the reasons for the declinature and ensuring that the event, if possible, will be covered in future. For example, if the insured has not bought appropriate cover, offer to cover the risk in the future. If we are to regain public confidence in our industry, we have to be more customer-focused. In my role as an underwriter, I sometimes had calls from the claims department that would begin "we're looking to reject a claim", to which I would reply: "Could we look at paying the claim?"

The customer has paid good money for cover against financial loss and we MUST ensure that unless it is absolutely unavoidable, we provide them service we offered. If the insured has 'over-egged' their claim or made a misstatement that does not invalidate the claim, we must use our professionalism to ensure that we fairly meet the claim by

ignoring the cost inflation and perhaps, educating the insured about making truthful statements in the future. We must be able to see the difference between fraud and incidental 'lies' and understand why the latter may be made. Solicitors may see things in black and white but, as insurers, we perhaps need to see things in shades of grey. Phil Rudge Dip CII

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