Tuesday, November 24, 2015

Unfair for insurer to reject a claim due to non-reporting by their insured policyholder

Dear Mr Tan,
I am writing to request your expert advice on motor insurance terms and conditions, since you were previously NTUC's CEO.

I met with an accident this May. The third party was at fault. The entire incident was captured on video and the video together with my report was filed to claim from the insurer of the third party, which was NTUC.

NTUC claimed that their insured had not reported the accident to date and that makes them not liable for the claim from me. They have repudiated the claim. Based on this, I made a claim against my own policy and my insurer has managed to counter claim from the third party directly on my behalf, except for my loss of use, which my insurer will pursue.

I would like your expert advice on this clause which allows the insurer to repudiate the claim despite the aggrieved party having sufficient proof to make a rightful claim. This may be an industry practice for insurers to repudiate non-reported claims, but is this fair to motorists? Motorists are made to buy insurance for the very purpose it serves, but if that purpose can simply be negated by a simple and fraudulent technicality such as 'non-reporting', then motorists will beg the question, 'Why bother buying insurance in the first place?'

I am going to write in to the current CEO of NTUC. I hope to get some advice from you first before doing so. What can be done for the industry to acknowledge legitimate claims despite the insurer's own client failing to comply with the insurer's own terms and conditions? The industry practice has to change in my opinion.

I agree with your view.

When I was CEO of NTUC, I instructed the claims manager that it is not fair for them to repudiate a claim due to non-reporting by the insured policyholder, unless there are justifiable reasons. 

There is the possibility that the accident never occurred, or a case of mistaken identity, or the insured policyholder rejects liability for the accdient. In these cases, the insurance company could rightly reject the claim for non-reporting. 

In your case, you were able to provide evidence to identify the car concerned. It is not fair for the insurer to repudiate the claim and cause problem to the third party claimant. 

To avoid this trouble, it is best for you to leave the claim to your insurance company. A good insurance company will allow you to keep the No Claim Discount, if the accident is clearly not your fault.

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