FOOL'S EYE VIEW
Do You Trust Your Insurance Company?

By Jane Mack (TMFJane)
December 13, 2002

Okay! This is almost getting to be funny. In recent weeks, following the arrival of the post, I seem to find myself standing in the hallway shouting loud exclamations of 'Hah!' followed by a seriously offensive set of expletives.

The reason is because of my dealings with the insurance company who is handling the travel claim I first wrote about back in September. Briefly, our car was broken into in France on our way back from holiday and loads of CDs were stolen. Back then, I was puzzling over the small print of our policy because it didn't seem to be terribly clear about whether we were in the right place at the right time to be covered.

The insurance company accepted that we were, but they still only want to recompense us to the tune of less than a third of what we thought we'd insured ourselves for. In fact, the cheque they keep sending me has been stapled and unstapled so frequently from the correspondence we have exchanged, that it's now a bit ripped and dog-eared at the top left-hand corner. As I mentioned in a later article about this saga, if we cash the cheque, then we'll have effectively accepted the payment as 'full and final settlement' of our claim so we have to keep sending it back.

My most recent 'Hah!' occurred last week when they enclosed a single page from a policy pointing me at their definition of 'Valuables'. The page didn't actually contain a definition of 'Valuables' so I've had to write back asking them to highlight it just in case both my husband and I have gone blind and haven't realised it yet. As you might imagine, I'm not a happy bunny at the moment.

It's not because I'm in 'bolshy cow' mode, although I have to admit that I am. It's just that insurance companies seem to be letting us down in a rather big way. Think Equitable Life for a start. Followed by those delightful phrases, 'pensions scandal' and 'endowments scandal'. No wonder public faith in such companies has been severely dented.

Earlier this week, Norwich Union announced it was increasing the cost of guaranteed critical illness cover by 40% with immediate effect. Yes, 40%! Apparently, it's due to advances in medical science and increases in its reinsurance costs. Other companies are expected to follow suit sooner or later because they're facing the same problem.

It stands to reason, of course. Between them, members of the Association of British Insurers and the National Association of Pension Funds own about half the shares traded on the London Stock Exchange (LSE: LSE). The stock market has fallen badly in the last couple of years so they've suffered huge losses. No wonder they're putting prices up. And no wonder the Financial Services Authority recently announced plans to overhaul the regulation of the industry. They're going to put more pressure on insurers to act responsibly and to ensure they have adequate financial resources to manage their risks. Duh!

Nevertheless, I don't think companies should be trying to get out of paying what people have already paid for and they certainly shouldn't get away with sending customers obtuse letters in the hopes that we'll get confused, give up and make do with what they offer. 

If you've never looked in on our Equitable Life discussion board, you wouldn't believe the trouble some of the policyholders have had trying to get their money off the company. Like many of them, I'm in the mood for fighting back against my own insurer.

Maybe I'll come a cropper and maybe I won't get anything out of it in terms of recompense -- but I'm getting a bit annoyed at being thought stupid. It makes me antsy...

More: The Fool's Guide To Insurance

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