Skip to content
Liar Liar, pants on fire; ABI say “Premiums Higher”

Liar Liar, pants on fire; ABI say “Premiums Higher”

The amazing thing about many statements from the insurance industry is that they reveal just how internally focused the whole industry has become.  A typical example came following the Supreme Court’s decision that an insurance claim could not be struck out on the basis of a collateral lie.  This was defined as meaning a lie that was not relevant to the actual claim and therefore the claim would have been successful even if the lie had not been told.

Immediately there was uproar from the industry with statements from the Association of British Insurers (ABI) that ‘honest’ customers would pay the price for this as the number of claims would go up.  James Dalton, director of general insurance policy, even went as far as to say “allowing ‘collateral lies’ in the course of an insurance claim flies in the face of the work the insurance industry and government have been doing to crackdown on the cheats and fraudsters” and said the decision risks “pushing up the cost of insurance.”

Methinks he doth protest too much.  Firstly, this claimant was not a fraudster or a cheat, as the claim was deemed completely valid by the Supreme Court, irrespective of the lie.  Hence, their ruling that the lie should be considered a collateral lie.  Mr. Dalton appears to be saying that people who tell collateral lies on claim forms have the sole aim of trying to defraud the company.

Instead of attacking the judgement, perhaps he should take a moment to consider the reason why anyone would bother telling a collateral lie.  If the claim is valid, they have nothing to gain from it.  It appears that the real reason they do so is to bolster their claim, i.e. they are so afraid of being defrauded by the insurance company that they try to add in extra reasons for the claim to be approved.

This shows the shockingly low level of trust people have in insurance companies.  If insurance companies could be trusted to pay out on genuine claims, then nobody would bother gilding the lily by adding in collateral lies to try and ‘prove’ the genuineness of the claim.  They fact that they do is eloquent testament to the fact that many consumers don’t actually trust insurance companies to fulfil their side of the contract.

Mr Dalton’s remarks, conflating people telling collateral lies with people trying to defraud insurance companies, just increases the sense of an industry that will desperately try any means to evade its own responsibilities.  Ironically with his statement, he justifies the lack of trust that people have.  Indeed, the telling of a collateral lie may not even be deliberate, as for many people, particularly the elderly, the whole claims process is confusing and difficult to manoeuvre through, especially as they are reeling from a significant event that has caused them a loss.

The insurance industry would do better to reflect quietly on what this judgement indicates about the public’s view of its own probity rather than lashing out because a method of avoiding just claims has now been closed off to them.  Perhaps they should focus on ways of increasing the level of trust people have in them.  If they increase it enough, people might no longer feel the need to gild the lily when reporting claims and the issue will just quietly go away.

Share these Insights

Designing the Future of Insurance: A Long-Term Perspective

Has COVID-19 generated the greatest global impact of any event within our lifetimes? It is certainly possible. No industry, business…
Read More

Sink or Swim: A Mid-Term View of Virus Impact

If the past three months were an allegory, it might read like this: “Some insurance executives were standing at the…
Read More

The Insurance Data Journey into the New Normal

Data is vital. Right now, in the middle of a pandemic, no one seems to be arguing that data isn’t…
Read More