NEW RESEARCH, from insurance specialists, Mactavish, has revealed that companies who take insurers to court, or public arbitration, over non-payment of a claim only win around one in three cases.
Mactavish reviewed every UK court case or arbitration appeal relating to payments under primary business insurance policies (excluding consumer and re-insurance cases) between 2013 and 2019. Over this period, just 32% of decisions went in the policyholder’s favour.
The research also found that the sector most involved in public disputes with insurers was construction, followed by manufacturing and transportation. For construction-specific cases, only 25% of decisions were won by policyholders.
According to Mactavish, the majority of disputes are settled through private arbitration, primarily because of unfavourable, and generally unchallenged, policy terms that limit the policyholder’s options in the event of their insurer disputing a claim.
Mactavish estimates that on average it takes around three years for disputes to be resolved, and where settlements are made, they tend to be for around 60% of the original amount claimed.
Research also highlighted that the main causes of insurance disputes are whether the loss is covered by the policy at all, followed by how the value of the loss should be calculated. Secondary causes of dispute are breaches of policy conditions and inadequate risk disclosure.
Bruce Hepburn, CEO of Mactavish said: “Our findings are disturbing for organisations that are looking to challenge their insurer’s decision not to pay-out on a claim when they perceive the decision to be unfair. However, hiring professional consultants to help in this area can greatly enhance your chances of success – both to prevent disputes arising when handling a claim and to resolve them if they do.”