Getting insured is one thing, Getting paid is another.

I was asked to quote a motor insurance for a friend. He had met with an accident in 2010 and he was not invited for renewal from his current insurer. By that, it means the current insurer decided not to renew his motor insurance and he need to source from other companies. When one company rejects you, many other companies will do the same even without looking at the application.

I sent his info all my business partners which involves almost all the insurers in Singapore and only three replied. Two of them gave sky rocket premiums that will be translated into “I am not interested to quote”. Therefore we left with one choice which in my opinion offered a reasonable premium with his claimed amount.  As I was going to help him to apply with this particular insurer, I got a call from him and I was told that another insurer had offerd him a much lower quote. It happened to be one of the insurer that I had requested for quote but got rejected and I was very curious to know how he managed to get quotes thru’ another agent.

Here’s what had happened… He had browsed online for insurance broker and found one that says they have access to the cheapest quotes. He submitted his info and the claim details of a claim made by himself amounting to $5,000 which had been fully paid and a claim by a third party amounting to $7,000 which was still pending. By that insurer’s standard, they will reject any new application that make a claim of $10,000 or more. What had happen is that agent which he found online had only submitted the info that he had claimed $5,000 but not on the $7,000. The agent’s logic was the amount may not be paid at all since the claim was still pending. Would you agree with his logic?

In the above scenario, the insured ought to declare both the settlement of $5,000 and the pending $7,000. The insurance company shall decide to take consideration of that pending amount or to ignore it. The insurance company may accept the case when you fail to declare the pending amount but they have the right to void the contract when you make a claim in future.   There is a breach of utmost good faith because there was no full declaration made. Uberrima fides or “utmost good faith” is the legal doctrine which governs insurance contracts. It means that all parties in the insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal.

I make two proposals to my friend –

1) Continue to deal with that online broker, pay a lower premium and risk not getting paid when a claim arises.

2) Do a full declaration, pay a slightly higher premium and no worries when a claim arises.

I am glad that my friend ,just like any of my clients, made the right decision by choosing to pay a higher premiums. I could had chosen the easy way by suggesting to do what the online guy did since I have access to them as well. However, insurance is not about how much premium you had paid but its about how much compensation the insurance company will pay. I would not want to put my clients in a situation of ‘getting insured but not getting paid’. I would rather lose a deal than to hide any truth during an application.

There are plenty of online brokers and platform that allows an individual to purchase insurance of (almost) any kind with a click of the button. I am not sure how pleasant is your experience when you call certain customer services hotlines for enquiries and end up pressing the numberical keys longer than you actually speak to a CS officer. My personal experience of calling these hotlines always reminds me that the numbers are called hotlines because they never failed to make me ‘hot’ every time I called them. Can you imagine how you feel when you are calling to make claims if you don’t enjoy calling them for enquiries?

If you need a better solution to avoid these unpleasant scenarios, all you need is drop me an email.