Cedric Stephens | Claim settlement through dispute resolution

QUESTION: I have a dispute with a life insurer. It involves millions of dollars. I do not necessarily want to resolve the matter through legal means but will if I am forced to. What are my options? 
 

- R.G., Kingston 6

INSURANCE HELPLINE: Many of the persons who seek information and advice from this column do so about non-life insurance matters. This does not mean that I shy away from issues relating to other kinds of insurance issues. Insurance is insurance.

Some of the problems that consumers encounter when they file motor insurance claims are like those that buyers of health, life, or critical illness face when they make claims.

An American legal firm that specialises in handling life insurance disputes on behalf of consumers puts it this way: "Anyone who has ever filed an insurance claim knows what a pain it can be. From car accident claims to home damage after a storm, the mere act of reading your policy is a chore. The terms and definitions in your coverage seem to contradict one another - and to be honest, you're not sure what the language actually means."

Insurance policies, the lawyers say, "are purposely written in the ambiguous language. When you try to file a claim, you are denied and told to 'read your policy.' Some people simply give up at this point, assuming the insurance company knows better than they do". These comments though written in the context of the United States, also apply to how the local life insurance operates.

My first bit of advice comes in the form of two questions: How did the insurer communicate the matter that is the subject of dispute to you? Was it in writing or by word-of-mouth?

If the company stated its position orally, ask them to convey that information to you in writing. Asking an insurer to put its denial of a claim on paper forces the company to be specific, "and when you have a specific reason, the denial will be easier to dispute."

Not reader friendly

Life insurance contracts are anything but reader-friendly. What is even more surprising is the fact that unlike most consumer-friendly legal instruments, they say absolutely nothing about the handling of complaints or disputes by the insurers. How local and even overseas insurance service providers have managed to avoid such commonsense measures in the second decade of the 21st century is a big mystery.

Jamaica is a member of the International Association of Insurance Supervisors (IAIS). It participates in that organisation through the Financial Services Commission (FSC). The FSC regulates non-bank institutions like insurers and intermediaries. In November 2017, the IAIS revised its Insurance Core Principles and said that its ICP statements are "the highest level in the hierarchy and prescribe the essential elements that must be present in the supervisory regime in order to promote a financially sound insurance sector and provide an adequate level of policyholder protection".

The statement that applies specifically to cases like yours reads: "It is important that there are simple, affordable, easily accessible, and equitable mechanisms in place, independent of insurers and intermediaries, to resolve disputes that have not been resolved by the insurer or intermediary. Such mechanisms, collectively referred to here as independent dispute resolution (IDR) mechanisms, may vary across jurisdictions and may include mediation, an independent review organisation, or an ombudsman. These are out-of-court mechanisms."

After you have received the insurer's written statement explaining its position in relation to the disputed matter, I recommend that you seek a resolution using the services of an IDR mechanism or an independent mediator. This approach would almost certainly turn out to be quicker, cheaper, and probably more effective than a pursuing remedy through the courts.

Exercising this option would involve writing to the insurer, advising them that you reject their arguments and telling them that you wish to resolve the matter by way of dispute resolution.

Some local attorneys use IDR as the first step in the process of getting justice for their clients.

- Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com