Basic Search Fields

Conciliation Update - General Insurers get on board

 

One method we use to try to resolve disputes is conciliation, which offers the parties in dispute the chance to get together on the phone and talk through their dispute with the help of an independent FOS Conciliator. Conciliation conferences are confidential and voluntary for most dispute types, and can help the parties agree on a resolution that works for them. Three times out of four, a conciliation conference will resolve the dispute.

We have been using conciliation at FOS for many years now, but we’ve been excited to see an even greater uptake of this option by consumers and financial services providers in recent times. Interestingly, though we only started conducting general insurance conciliations relatively recently, those disputes now represent the majority of conciliations conducted by our specialist Conciliation team.

Between February 2012 and March 2013 we conducted 209 general insurance conciliations, and 152 (73%) of these cases were resolved at the conciliation. Most (81%) of the general insurance conciliations involved a home building/contents insurance product.

CASE STUDY

General Insurance Conciliations: Building bridges to resolve disputes

This case study is based on an actual dispute conciliated at FOS. The FSP has given permission for us to use the details.

N had a bridge going across a small creek on her property. The bridge was the only way to access her property.

A large delivery vehicle crossed the bridge to enter the property and after it had crossed, the bridge collapsed.

Without the bridge, the property was cut off and no vehicles were able to enter or leave the property. As the delivery vehicle was stuck on the property and unable to leave, N contacted a local builder who removed the damaged structure and installed a temporary culvert as an emergency measure. This work cost $7491.

N lodged a claim with her financial services provider (FSP) for “impact to her bridge by a vehicle.”

The FSP sent an engineer to assess the bridge, they reported that the cause of the collapse was the bridge being under-capacity and vehicle being over-capacity – in other words, the bridge was not capable of holding the weight of the vehicle. The report also stated that the bridge was deteriorating over time and was showing signs of weakening.

The FSP denied the claim for the cost of the culvert and for rebuilding of the bridge. Though it didn’t deny that a ‘prima facie’ claim had been proven (the impact to the bridge), it said that three policy exclusions would apply to allow it to deny the claim:

  1. the policy did not cover loss caused by wear and tear, rust, corrosion, deterioration etc
  2. the policy did not cover loss to driveways, paths or paving caused by a road vehicle, and
  3. the policy did not cover loss caused by structural or design fault that existed before the event.

The parties agreed to conciliate, and both the FSP and N brought a great attitude to the conciliation.

The setting allowed N to describe the circumstances of the event in a way that couldn’t be done through normal insurance claim data – for example, she explained the remote location of her property and the fact that she lives alone. She also talked about the emergency nature of the situation in that there was no access to and from her property in a remote rural area. Issues of trust, credibility and reliability were discussed.

The FSP was able to discuss the relevant policy provisions and the engineer’s report.

Sharing this additional information helped the parties to understand each other’s position. As a result, they were able to reach an agreed compromise. While the applicant had initially sought reimbursement for the culvert and costs for rebuilding the bridge, after discussing the matter the FSP offered the applicant an ex gratia payment which resolved the dispute.

It was a successful outcome for both parties and demonstrates the benefits of open discussion between parties in resolving complex disputes.

null