problem with insurance broker.

[Tom Lee Pettimore]

Hello,

 

first post here and i'm hoping someone can advise me with a problem i'm trying to sort out for two friends of mine, a couple of brothers who run a small farm next door to me. they asked me to help sort out some paperwork for an insurance claim they had and it's turning into a nightmare. They've got insurance for their farm through a broker called moneynotion at derby, they have passed this on to another broker called Towergate insurance, who in turn provided insurance underwritten by royal sun Alliance.

 

They've had to make a claim for a machine that caught fire accidentally whilst they were harvesting, the claim has been passed as valid, but there is apparently a dispute about the valuation, we've provided evidence of similar machines advertised for more money than they are asking for, and have sought advice from a dealer who specialises in these machines as to the value.

 

To cut a long story short, the machine was insured for £5000, they wish to claim £5000 and in my opinion and that of the dealer / expert, that is the least the machine could possibly be worth even if it was in very poor condition, which it was not.

 

The broker has dragged the claim out for 9 weeks now, and no progress has been made, the broker has been very rude to my friends and has upset them, and told them that the best they can expect to get is £3000 if they waive all rights to claim for hire of another machine whilst theirs has been out of action.

 

He said that if they wanted more they would need to provide evidence of their valuation, i have drafted an email for them where we put links to a number of online adverts for similar machines, all at more than the £5000 they were claiming, and a copy of the emailed opinion on valuation we had received from the dealer.

 

My friend then received a hectoring phone call from the broker accusing him of wasting his time with emails, despite the fact that this was the information he had asked for.

 

I thought this would simply be a matter of finding some information to support the valuation for my friends, but the broker seems to be stonewalling any progress and actively trying to talk down the value of the machine. I've advised my friends to contact Towergate directly but they are reluctant to speak to them and tell them to deal through the broker.

 

They don't want to speak to the broker because he is so obnoxious, i would offer to draft emails for them but the broker realises that it's not my friend writing them as he's already said he can't use the internet, and he would ring my friend and start being rude to him again.

 

Any suggestions as to how they can deal with this would be greatly appreciated.

[unclebulgaria67]

Provide the evidence of the value, as they have to be in position to replace the machine with one that is similar. Threaten to take the matter to court and ask the broker whether it is them that the court claim needs to be issued against or another party. Tell them that if it is another party who is reponsible for not paying the correct value for the machine, that they should advise which party is responsible.

 

I think this should hopefully do the trick. The way I believe that this works is that the broker buys Insurance wholesale and they have to manage the loss ratio across their particular book. So they are incentivised to keep claim payouts low or they face having to pay more for the Insurance, which then makes them less competitive when they sell policies on to clients.

[Tom Lee Pettimore]

Provide the evidence of the value, as they have to be in position to replace the machine with one that is similar. Threaten to take the matter to court and ask the broker whether it is them that the court claim needs to be issued against or another party. Tell them that if it is another party who is reponsible for not paying the correct value for the machine, that they should advise which party is responsible.

 

I think this should hopefully do the trick. The way I believe that this works is that the broker buys Insurance wholesale and they have to manage the loss ratio across their particular book. So they are incentivised to keep claim payouts low or they face having to pay more for the Insurance, which then makes them less competitive when they sell policies on to clients.

 

Ah, i see, thankyou for that, it did seem that he had an interest in reducing the claim, that could well be why, it would also explain why towergate were reluctant to speak to my friend directly. We have provided ample evidence of the machine's value, i emailed this to the broker and my friend got a hectoring phone call in return.

 

They've got a lot of friends including a chap who's a senior partner at a law firm in nottingham who's offered to help them if necessary. My friend mentioned in his last phone call from the broker that he'd get his solicitor involved and he just replied that "towergate would love that, if you get lawyers involved then they'll just shut things down and not reply and you'll get nothing for six months". I'm concerned that he's going to keep bullying my friends into accepting a lower settlement. They're a bit intimidated by dealing with people like this, i can tell them the best things to say but i can't do it for them.

 

If it were me i'd just threaten him with the solicitor and follow it through. not sure if these lads will have the nerve to do this and stick to it.

 

They've spoken to towergate directly today, the person they spoke to has agreed to speak to the valuer and get back to them by monday. I thought they might have more success dealing with towergate as the person they talk to will just be an employee, and not have a direct financial incentive in stone walling them.

[Trojan1401]

The advice given here is good but to add to it, the scheme will be a "binding" authority where Towergate sets the rates. They have a number of such schemes. The broker will take a commission to sell and administer policies through their agency. However, claims should be directed to and handled by Towegate.

Policy sound like the standard farming all risks policy however I'm surprised there is a limit as low as £5k for this.

 

 

If the issue though is with your broker I suggest you report them firstly to Towergate then to the FCA. Towergate have the ability to remove the broker from their panel.

[Tom Lee Pettimore]

Hi Trojan, thanks for the advice.

 

The reason that the value of the machine is set at £5,000 is because that's what the brothers paid for it, they brought it from a friend who was retiring and it needed some repairs to it. They're very honest sorts so when asked to value it for insurance purposes they gave the value they paid for it. It seems that the machine is worth a bit more than they actually paid, i've been told by an expert who kindly offered to value it that the very bottom value of the machine for export to Poland is £5000, most similar machines are advertised for at least £6500, the brothers would be happy with £5000 though.

 

I think, from reading a very snotty email the broker sent that the insurers have not attempted to value the machine at all, their assessor has simply validated the claim as legitimate. they've offered the brothers 2 to 3 thousand based on a percentage of the insured value, if they'd have insured it for £10K then they might have offered £6K, and so on.

 

Th broker is being really obstructive and rude, verging on harassment, is it correct as suggested above that he would have a financial incentive in reducing the claim value? as this is the only explanation i can think of for his behaviour.

 

It seems to me that he's just obfuscating in the hope that they will either settle for the smaller amount or give up and forget the claim, would you suggest dealing with towergate direct and bypassing the broker? one of the brothers rang towergate and did get some small amount of sense from them, they also seemed to be concerned about the brokers behaviour, though after the'd spoken to towergate he got an email from the broker saying something like 'thank you for going behind my back to towergate, this has just wasted more time....it went on at some hectoring length, i can't remember the exact words but it was very rude.

[manofmystery]

It depends really, the definition of indemnity is putting someone back to the position that they previously enjoyed before the loss, if by giving you a reduced amount (some may take ware and tear in to consideration if it is a market value policy) you should be paid the amount to buy the same machine in similar condition based on the market price, if they have not given you enough money to do this they have breached their contract. Did they ask for the market value of the machine? or did they ask for the new replacement value if it was on a new for old basis?

 

Disregarding what they would be happy to receive, if the insured has estimated the value below what they should of the insurer can apply average(under insurance), this is the amount that they insured themselves for divided by the amount they should have insured themselves for times the loss. so even if it should have been insured for 6500;

 

5000/6500 = 0.76

x 6500 = 5000

 

I would go to the broker, ask if they deal with the claims in house or whether Towergate deal with them. If they do then go through the complaints procedure, exhaust it then go to the ombudsman(it will cost them £600 just to have the case investigated) however the ombudsman can take a long time (you can also go to a claims court if you do not agree with their decision but it is binding to the insurer)

If towergate do then go directly to them, complain in writing about the service you have received.

 

You can always seek advice/services from a loss assessor.

 

Hope this has helped.

 

Let us know how it goes!

 

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Please note that this advice is given informally, without liability and without prejudice. Always seek the advice of an insured qualified professional. All my legal and nonlegal knowledge comes from either here (LB),my own personal research and experience and/or as the result of necessity as an Employer and Businessman.

 

By using my advice in any form, you agreed to waive all rights to hold myself or any persons representing myself of any liability.

 

 

" No one can make you feel inferior without your consent " - Eleanor Roosevelt

Edited October 7, 2013 by manofmystery

[Tom Lee Pettimore]

It depends really, the definition of indemnity is putting someone back to the position that they previously enjoyed before the loss, if by giving you a reduced amount (some may take ware and tear in to consideration if it is a market value policy) you should be paid the amount to buy the same machine in similar condition based on the market price, if they have not given you enough money to do this they have breached their contract. Did they ask for the market value of the machine? or did they ask for the new replacement value if it was on a new for old basis?

 

The assessor did ask what they thought the machine was worth, and the brothers said £5000 as this is what they had insured it for and what they had paid for it, though they had already seen that it was going to cost them more than that to buy a replacement. The broker has offered them £3000 as this is what he claims the assessor has valued it at, though he's said different things at different times regarding the assessor's report, first he said it was just to assess the validity of the claim, and it was up to the brothers to prove the value, then he said that the engineer couldn't value it because he was an expert on buildings not machinery, now he's said that the engineer had valued it. I get the feeling he's just making it up as he goes along.

 

Disregarding what they would be happy to receive, if the insured has estimated the value below what they should of the insurer can apply average(under insurance), this is the amount that they insured themselves for divided by the amount they should have insured themselves for times the loss. so even if it should have been insured for 6500;

 

5000/6500 = 0.76

x 6500 = 5000

 

 

I would go to the broker, ask if they deal with the claims in house or whether Towergate deal with them. If they do then go through the complaints procedure, exhaust it then go to the ombudsman(it will cost them £600 just to have the case investigated) however the ombudsman can take a long time (you can also go to a claims court if you do not agree with their decision but it is binding to the insurer)

If towergate do then go directly to them, complain in writing about the service you have received.

 

I get the impression that Towergate process the claim, but i presume that the broker has some sort of financial interest in reducing it or persuading them to cancel the claim all together, in their last conversation with him, when he offered 3000 as a 'final offer', my friend said we can't accept that, it's worth that much to break up for spares, to which the broker replied "well why don't you do that and not bother claiming then?". He claims that he is liaising with Towergate on their behalf, I believe it would be possible to talk to Towergate directly, and this is what i will suggest they do next i think.

[manofmystery]

Hey,

 

Yeah, I mean if he doesn't apply average then they should just pay up to the amount that you insured yourself for if its a total loss. It all seems a bit dodgy and that they are trying to take advantage of someone who doesn't really know how to argue against it. Ask him how he has come to this figure of £3000?

 

The main thing you need to do is provide proof that at the time the policy was incepted that that was an adequate market valuation. Although from here;

 

To cut a long story short, the machine was insured for £5000, they wish to claim £5000 and in my opinion and that of the dealer / expert, that is the least the machine could possibly be worth even if it was in very poor condition, which it was not.

 

It seems that they have under insured themselves. My main experience is within personal lines / niche insurance, so im not 100% how the machinery is rated/listed;

-If machinery was covered up to a certain limit this should be fine, however if it was listed on the policy then the premium was partly based on this figure, by under insuring you have paid a lower premium than you should have.

 

 

However all of that said, they way they have dragged the claim on in unacceptable, from the way he has been I have the feeling that you will get nowhere with him. Put a formal complaint in with him, his company then has 10 weeks to come to a decision. Ring Towergate and find out from them who deals with it, if it is them, don't waste any more time with him.

 

Goodluck

 

-------------------------------------------------------------------------------------------------------------------------------------------------

Please note that this advice is given informally, without liability and without prejudice. Always seek the advice of an insured qualified professional. All my legal and nonlegal knowledge comes from either here (LB),my own personal research and experience and/or as the result of necessity as an Employer and Businessman.

 

By using my advice in any form, you agreed to waive all rights to hold myself or any persons representing myself of any liability.

 

 

" No one can make you feel inferior without your consent " - Eleanor Roosevelt

[Tom Lee Pettimore]

Hey,

 

Yeah, I mean if he doesn't apply average then they should just pay up to the amount that you insured yourself for if its a total loss. It all seems a bit dodgy and that they are trying to take advantage of someone who doesn't really know how to argue against it. Ask him how he has come to this figure of £3000?

 

The main thing you need to do is provide proof that at the time the policy was incepted that that was an adequate market valuation. Although from here;

 

 

 

It seems that they have under insured themselves. My main experience is within personal lines / niche insurance, so im not 100% how the machinery is rated/listed;

-If machinery was covered up to a certain limit this should be fine, however if it was listed on the policy then the premium was partly based on this figure, by under insuring you have paid a lower premium than you should have.

 

They insured it for what they paid for it, i think that possibly since they bought it the export value has risen, hence the 'bottom book' equivalent valuation is at least £5000, their machine is serviceable and useable but TBF not the tidiest, £5K is not an unreasonable valuation for it, it's what it would make if sold into the trade, to buy a similar machine from a dealer with a degree of comeback would cost a bit more, hence machines we'v seen advertised are around th 6 to 7 thousand mark, or more. I can't really see how the insurers can argue on one hand that it's underinsured and on the other say it's worth £2K less than they insured it for though. I do think that had they insured it for more, they'd have got the £5K, because i don't think the insurers have any idea what the machine is worth, they're just working on paying out a proportion, say 60%, of the sum insured. regardless of the actual value.

 

 

However all of that said, they way they have dragged the claim on in unacceptable, from the way he has been I have the feeling that you will get nowhere with him. Put a formal complaint in with him, his company then has 10 weeks to come to a decision. Ring Towergate and find out from them who deals with it, if it is them, don't waste any more time with him.

 

I agree, going straight to towergate seems like the best option. what concerns me is that this man is doing similar things with his more vulnerable clients on a regular basis. i they issued a complain would it need to be directly to the broker or via towergate?

 

Goodluck

 

Cheers

[morisleilei]

do they have invoice when they bought it?

[Tom Lee Pettimore]

To update on what happened with this issue, we'd just about given up trying to get any sense out of either towergate insurance or the broker. In addition to this thread i had another advice thread running on the british farming forum, there were a large number of posts on that detailing the problems we'd had as well as posts from other people who'd also had difficulties with towergate. I noticed that towergate had an active account on twitter, and as a last resort i tweeted their twitter account with a link to that thread and asked if they had any comment on the disgraceful way they were treating their farming clients.

 

Within 24 hours we'd been contacted by a senior claims handler, colin gave permission for me to speak to her on his behalf and it's taken about 6 weeks but we have negotiated a settlement with though it's still below what the market value of the machine is, is acceptable to my friends as they are able to keep the machine.

 

I got a manitou expert to value the machine, he wrote a letter to say the export price, (ie the equivalent of bottom book trade price) was £4750, so pretty much the least the machine could be worth even if it was in very poor condition. they ended up offering £4000, with a £1200 reduction if they keep the machine + £50 excess, so basically they get £2750 to put towards repairing the machine, or we had a buyer for the machine for parts as is at £3K. so provided they keep the machine they can just about get out of it ok one way or another.

 

It's not really ideal, given that it's taken 4 months and still hasn't been finalised yet, and that the offer is still below what our evidence suggests it should be, i think if it came to a dispute with the insurance ombudsman, given the evidence we have to support our case, ie an expert valuation, we'd win, but ultimately it's up to my friends, and they just want to move on from it, and i can't say i blame them, £2750 and keep the machine is still better than the original offer of £3K final settlement.

 

They've also moved their farm buildings' insurance to another broker and saved over £1000, when the insurance for the tractors runs out they will change that as well.

 

One question i would ask from the other posters on this site who may know more than me, is once we've accepted the offer, is it still possible to submit a complaint about the way the claim was handled by the broker?

 

All i can add is whatever you do, don't have anything to do with wither towergate insurance, or R M Brown insurance TA Moneynotion.

[unclebulgaria67]

Yes they can accept the claims settlement and continue a complaint about the handling of the claim. They should advise the company that while they will accept the claims settlement, they will be continuing their complaint about the way they have been treated.