Purpose of Insurance

I’ve recently had to fight over a few months with the claims director of an insurer to pay a valid claim to my client. The quibble the claims director had was over procedural matters and there was absolutely no doubt that the defaulting borrower owed money. In fact, the borrower already issued an confirmation of debt.

So even though the claim director agreed to pay the claim, he wanted some additional documents executed.

In the end, we had to get my global head to talk to the head at the insurance company to resolve the issue but it’s too late. I received instruction from the client to use them less in future.

I thus wonder if it’s worth it from the insurer’s point of view? Now you’re going to pay the claim but your client has decided you’re a pain in the ass and does not wish to work with you in future. You’ve lost both the battle and the war.

I also wonder if insurers remember why insurance started is because people decided to pool together to share risks and with risk comes claims. As an underwriter, if you had a clean loss record doesn’t mean you’re a good underwriter at all. It just means you were useless in sharing risk. And I’m not saying this because I’m a broker. I started my insurance career as an underwriter albeit in life insurance.

A good underwriter prices the risk correctly such that the risk pool he underwrites contributes a fair premium into the total pool to fund claims.

Well, I suppose some lessons need to be learnt the hard way.