Verification paves the way for average-free insurance

There has been a recent change to this and the service that this industry offers, has been clarified to be verifications.

Brokers, underwriters and insurers use verifications in several scenarios during quoting

stage, inception of the policy, renewal or when a claim arises. First prize is to have this

conducted before accepting a risk. In this way, all parties can make informed decisions

about the rate, whether it is an acceptable risk as well as the value of goods in order to

establish the correct sums insured.

This is a far cry from the situation in the industry where many insurers still rely upon a verification at claims stage and then apply average. It is no wonder that the image of the insurance industry leaves much to be desired.

Some brokers and individual clients who pay for the verifications themselves to ensure peace of mind during the life of the policy. There was a recent case where a client with property in Cape Town and Saint Francis bay decided, upon advice from his broker, to pay for verifications for his buildings and contents in both regions.

Sadly, the verifications for the Saint Francis house had been conducted shortly before the fire struck the area. The reports were in the midst of processing which means that the client did not have the opportunity to increase his sums insured to the correct value.

As a token, the underwriter didn’t apply average and he received payout on his sum insured for his building, though he still lost out as a result of not having adequate cover.

All this can be easily avoided by having a verification on file at the inception of your client’s policy. At this stage, you can inform them accurately, point out any deficiencies that may be relevant to a particular client and assure them that they will not have average applied if they insure according to the recommended value.

You are also treating customers fairly by offering them sound advice on how much to insure their belongings for. Clients do not have the knowledge or understanding of replacement costs to complete an inventory themselves. They also do not include all items to the inventory.

 

Yet, it is astounding how few clients, and even brokers, are aware of such a service. How can we place the onus of the sums insured upon the client when he is paying for an expert’s advice?

It is important to select the correct verifier who has professional indemnity cover and sound experience and knowledge in the field of verifications. You could be caught out at claims time if this is not the case.

 

There are anumber of questions to ask. Do you guarantee, or take responsibility, for your verifications? Do you include all items present, or do you allow the client to selectively include belongings? Are verifications done onsite with the client? Do you allow a client to change the report after the visit to suit him? Are all categories verified in detail, or do you use percentages to calculate certain values in the house?

 

The answers to these questions could impact heavily on a client at claim stage. Quite often, verifiers (often at a cheap fee) allow clients to dictate how and what they want on the report, and an assessor is appointed when a claim arises and finds the client underinsured which means that there was basically no point in paying for a verification.

Ensure that you do your homework when selecting the verification company.