A LEADING home insurance company has significantly changed the way it processes claims in order to reduce its costs but concern has been expressed the move will restrict consumer choice.
Allianz, one of Europe’s leading insurers, now insists builders on a pre-approved panel provide quotes for repair work in all cases and it is refusing under any circumstances to pay out more than the amounts its builders quote.
The insurer says its new system is more efficient and will save money but Dermott Jewell of the Consumers’ Association of Ireland said the changes could make it all but impossible for people to use builders they know and trust to carry out repairs covered under household policies.
Last year Irish homeowners faced premium increases of up to 20 per cent as insurance companies tried to reduce their losses after claims running into hundreds of millions of euro were made following major floods in some areas and three periods of heavy snow and freezing weather.
An increase in claims prompted Allianz to reassess how it managed them. Traditionally, a person making a claim contacts their insurer who sends a loss adjustor to assess the damage, after which the homeowner finds a builder to carry out the repairs which are then paid for by the insurer.
Early last year the company trialled a new system which it has now rolled out across the State after it assembled an Allianz Approved Repairer Panel (AARP).
Under the system, builders on the panel give quotes directly to the insurer. Should a policyholder wish to use their own contractor, the company will only cover the claim if the price quoted is equal to or lower than the panel member’s price. The company said “invariably the quote given by the AARP member is cheaper”.
It stressed that most people have been happy to proceed with work using its builders, which, it added “have been fully vetted, are properly insured, comply with all HSE regulations and guarantee their work”. Allianz said policyholders can use their own builders to do works once the scope is agreed “but in all circumstances, Allianz will settle the claim on the basis of the most competitive estimate, thus limiting the settlement value to the amount the AARP member would be prepared to complete the agreed scope of work for”.
The company denied it was refusing to disclose the quotes from its own panel to homeowners and said it would provide the information “but not at a time or in a manner that will prejudice the quote given”.
Mr Jewell said the move could restrict choice and competition and give builders on the panel an unfair advantage over other builders. “This happened with motor insurance policies and it did not lead to lower premiums for consumers but did lead to less choice,” he said.
Louise Ledwidge, a home insurance specialist with getcover.ie, accepted that some people “would like to use a local builder who they know personally” but claimed “the benefits of using a preferred supplier greatly outweigh those of using someone you know”.
She said that “generally the quality of workmanship is very high as the builder is getting a lot of work from the insurance company and so will want to remain on that panel of contractors so would be keen to please”.
She also said the changes would mean builders could no longer increase an estimate because they know the claim is going through an insurance company and said this “should lead to cheaper premiums”.
Brian McNelis of the Irish Brokers Association said insurers were “making a much more concerted effort to keep claims costs as low as possible while still meeting their obligation under the policy”.
He said avoiding the possibility of inflated claims was key to this and pointed out that the risks were “clearly higher during recessionary times”.
