Altus Insurance whitepaper spreads - Flipbook - Page 10
Your journey planner for good
claims management (cont.)
The Legal and Regulatory Environment
Claims management doesn’t operate in a vacuum,
and over the last two decades, the sector has been
subject to a range of legal and regulatory changes
relating directly to claims. Some developments, such
as the introduction of the Treating Customers Fairly
principle, stating that customers should be con昀椀dent
they will be treated fairly by their insurer, led to a
signi昀椀cant amount of introspection and recognition
of the need to change by major players in the market.
This was followed by the Consumer Insurance
(Disclosure and Representations) Act 2012 which
formalised the approach that most insurers were
taking, namely that they could not simply refuse to
pay out on any element of a claim if a customer
failed to disclose all material facts when taking
out the policy.
The Insurance Act 2015 extended this approach to
commercial insurance (to a degree) and introduced
the concept of ‘damages for late payment’, under
which an insurer could be contractually liable for
losses that result from an unreasonable delay to
the settlement of a claim.
More recently, we have seen a renewed focus from
the FCA on claims outcomes, initially looking at
add-on products in 2018, and then again as part of
the Vulnerable Customer requirements introduced in
2019. The pandemic, which severely impacted most
sectors, exposed the frailties in the management of
claims, introducing an element of vulnerability for a
signi昀椀cant proportion of customers, as many people
entered into or faced 昀椀nancial di昀케culty.
FCA Principle 12:
“A 昀椀rm must act to deliver good
outcomes for retail customers.”
All of which brings us to the present day and the
introduction of the Consumer Duty, under Principle
12 of the FCA Principles for Business Handbook.
This applies to the whole insurance value chain,
but it is clear that a new requirement for ‘good
outcomes’ for consumers represents a likely shi昀琀
from ‘fair outcomes’, which could result in signi昀椀cant
regulatory scrutiny for the management of claims
in personal lines.
Recent regulatory timeline
Treating
Customers Fairly
2006
Vulnerable Customer
requirements
Insurance
Act
2013
Consumer Insurance
(Disclosure and
Representations) Act
2016
2018
FCA focus on claims
outcomes on Add-on
products
2019
2023
Consumer
Duty
Figure 3: Key recent legal and regulatory developments
10
