‘Statements of Fact’ or ‘Statements of Insurance’, whereby insurers fill in policy questionnaires on behalf of their clients are a plague on our industry. I raised this at the BIBA conference in May. Speaking in a panel discussion on claims I warned delegates about the problems with these documents. They don’t work. The majority of commercial ones seen by Mactavish are just wrong. Insurers do not get them right and customers don’t correct them.
Two months later and those warnings are no longer theoretical; they are real and sit at the heart of a £2m legal claim working its way through the High Court.
Bellhouse v Zurich revolves around a house fire that destroyed a couple’s home in Chiswick, West London. While the case has yet to be tried, what emerged during a recent preliminary hearing was that Zurich filled in the Statement of Fact on the home insurance policy, including ticking the box to state that no contract works would take place to the property over the next 12 months. When contract works did take place, and a fire occurred destroying the property, Zurich refused to pay, citing not just a failure to disclose the works but fraudulent misrepresentation with respect to the Statement of Fact.
This raises the interesting philosophical – and legal – question of whether it is possible for the Bellhouses to have made a misrepresentation when all they did was rubber-stamp information provided by Zurich.
All this will be dealt with at trial. Before then Zurich, represented by Clyde & Co, has a whole set of other problems to deal with. The insurer was given a flea in its ear by the court about the “extraordinary” manner in which it has defended the claim, including refusing to deal with the misrepresentation question. Zurich “should have known, and acted, better” the judge concluded, ordering the insurer to amend its defence to address “inadequate” pleadings.
The criticism is pretty startling and just compounds problems that started with one blindingly obvious mistake, filling in a questionnaire that in any sane world only a customer should be allowed to complete. As I said at the BIBA Conference, if it is really the case that your customer can’t or is unable or unwilling to fill out their own Statements of Fact, don’t insure them.
The case continues. We’ll be watching with interest.
Mactavish Claims Litigation Index
The Mactavish Claims Litigation Index aims at tracking insurance litigation and claims performance and getting the market to focus on what really matters, the product you buy with your premiums, not just the premium itself.
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