The three keys to dealing with disputes

The Financial Ombudsman Service has released its Annual Report in relation to activity in the 12 months to 30 June 2013. The report includes detailed information regarding the nature of disputes being handled by FOS.

FOS handled 7581 general insurance disputes during the year, compared to 7595 the previous year – a very small decrease on last year’s figures. Of these, 93% related to domestic insurance, and the most common issue across all general insurance disputes was the insurer’s decision to deny a claim.

The increase in the total number of FOS disputes relating to brokers will require careful monitoring in the future and leaves no room for complacency.

The number of disputes involving general insurance brokers was 195, an increase from 112 the prior year. The FOS report notes the main issues in disputes involving brokers were claim amount, delay in claim handling and denial of claim.

Of the 7,065 disputes relating to domestic insurance, only 2% involved insurance brokers. The main causes of disputes in this category related to denial of cover and the amount of the claim. Interestingly, FOS has reported a significant increase in the number of disputes regarding pet insurance.

In the small business/farm insurance category, the main areas of dispute were commercial property and commercial vehicle. Of the 359 disputes, 82% involved general insurers and 14% involved brokers.

There were 26 disputes relating to professional indemnity insurance, and 5 of these related to insurance brokers.

What do these figures mean for brokers?

It is pleasing to see the very small number of disputes being handled by the Financial Ombudsman Service in relation to general insurance brokers – only 2.6% of the total number of general insurance disputes – but the increase in the total number of FOS disputes relating to brokers will require careful monitoring in the future and leaves no room for complacency.

In order to avoid disputes going to FOS, brokers need to ensure they do three things:

  1. Ensure the client receives quality, professional advice and support, consistent with the terms of engagement with the client.
  2. Communicate with the client in a clear and effective manner, so they understand what is happening, the nature of the cover that is being purchased on their behalf, and the areas of risk that are and are not covered by the insurance policy.
  3. Provide a clear complaints and dispute resolution framework, so the client knows what to do if they are uncertain about their situation, or are unhappy with what is happening with their insurance policy or their claim. The aim should be to ensure complaints and disputes are successfully resolved at the broking firm’s Internal Dispute Resolution stage, and do not need to progress into the FOS process.

And of course it goes without saying that it is critical that brokers maintain appropriate records and detailed file notes of discussions, client instructions and advice.

You can read or download the entire Annual Review from the FOS website. Visit


Product Category Disputes in 2012 – 2013 Disputes in 2011 – 2012
Domestic Insurance 7065 7141
Small business/farm insurance 359 384
Extended Warranty 54 54
Professional Indemnity 26 11
Not yet classified 77 5
Total 7581 7595