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Status: You are viewing the version of the handbook as on 2005-06-30.

COB 8A.4 Policyholders: performance standards for handling claims

Responding to notification of the claim

COB 8A.4.1R

An insurer must respond promptly to a notification by a policyholder of a claim.

COB 8A.4.2G

Notification of a claim is a demand of the insurer to pay or provide a benefit insured under the policy, for example, by submitting a claim form or giving the equivalent information orally, where permitted by the policy. An enquiry that precedes such a demand, for example, as to whether a particular loss is covered, and therefore whether a claim could be made under the terms of the policy, is not notification of a claim.

COB 8A.4.3G

COB 8A.4.1 R requires an insurer to respond promptly once it has received notification of a claim. Generally a prompt response would be one within five business days of a policyholder making a claim, although in some circumstances a prompt response could be less than five business days, such as where the policyholder would expect a swifter response because of the nature of the claim or the terms of the policy.

COB 8A.4.4R

The response referred to in COB 8A.4.1 R must:

  1. (1)

    provide the information set out in COB 8A.4.5 R;

  2. (2)

    be in a durable medium, unless the notification by the policyholder is made orally and the insurer does not require the policyholder to complete a claim form; and

  3. (3)

    provide the policyholder with a claim form, if the insurer requires one to be completed.

COB 8A.4.5R

The information referred to in COB 8A.4.4R (1) is:

  1. (1)

    that the claim relates to a risk that is clearly outside the scope of the policy, if that is the case (in which case no further information need be provided);

  2. (2)

    the action that will be taken by the insurer and when that action will be taken;

  3. (3)

    if the insurer is appointing any other parties to contact the policyholder on the insurer's behalf, in respect of each other party appointed the following information, if known (but, if the purpose of the appointment is to investigate the validity of a claim, the information need not be given if it would limit or prevent the effective investigation of the claim or any part of it):

    1. (a)

      its name (unless the other party trades under the name of the insurer);

    2. (b)

      its function; and

    3. (c)

      the work it will carry out in relation to the claim.

COB 8A.4.6G

The purpose of the rules and guidance in COB 8A.4.1 R to COB 8A.4.5 R is to provide the policyholder at an early stage with information in relation to the processing and settlement of his claim by the insurer. COB 8A.4.5R (1) is intended to prevent a policyholder pursuing a claim for which he is clearly not covered. It is not intended to pre-empt the outcome of an investigation of a claim.

COB 8A.4.7G

The purpose of COB 8A.4.5R (3) is to ensure that a policyholder knows the name and function of any party who will contact him in relation to a claim as a representative of the insurer, for example, an outsourced claims handling company. An insurer would not be expected to notify the policyholder of other parties who are appointed to investigate the validity of a claim if this would limit or prevent an effective investigation. However, if a third party is appointed to liaise with the policyholder on the insurer's behalf, as well as assess the validity of the claim, the insurer would be expected to disclose the information in COB 8A.4.5R (3) unless it would limit or prevent an effective investigation.

Investigation and processing of the claim

COB 8A.4.8R

An insurer must keep the policyholder reasonably informed about the progress of his claim.

COB 8A.4.9G

Where the investigation of a claim is likely to be protracted, an insurer should provide periodic progress or status reports, when appropriate, to a policyholder, including providing the policyholder with any relevant update in relation to the information provided under COB 8A.4.4 R. The insurer should also respond without undue delay to any reasonable request by the credit union for information.

Determining the claim

COB 8A.4.10R

An insurer must notify the policyholder as soon as practicable whether it:

  1. (1)

    rejects all of his claim;

  2. (2)

    rejects his claim but without prejudice to the rejection makes an offer in compromise; or

  3. (3)

    accepts all or part of his claim.

COB 8A.4.11R

If the insurer rejects the claim but without prejudice to the rejection makes an offer in compromise, it must notify the policyholder of the terms of that offer as soon as practicable.

COB 8A.4.12R

If the insurer accepts all or part of the policyholder's claim, it must notify the policyholder as soon as practicable whether:

  1. (1)

    as to the parts it accepts, it agrees to provide the money, property or service claimed by the policyholder in full; or

  2. (2)

    it makes some other offer in compromise. In that event, it must notify the policyholder of the terms of its offer.

COB 8A.4.13R
  1. (1)

    Unless the insurer accepts the policyholder's claim in full, the insurer must explain why it rejects all or part of the policyholder's claim or accepts his claim or makes a compromise offer, specifying any relevant term of the policy.

  2. (2)

    The insurer must offer the policyholder the choice of receiving the information at COB 8A.4.13R (1) in a durable medium.

COB 8A.4.14R

The insurer must, in respect of each part of the claim which it accepts, inform the policyholder whether the claim will be settled by paying him, or by paying another person to provide goods or services, or by providing those goods or services.

Settling a claim

COB 8A.4.15R

An insurer must settle a claim by a policyholder promptly.

COB 8A.4.16G
  1. (1)

    Settlement terms are agreed when:

    1. (a)

      the insurer accepts the policyholder's claim; and

    2. (b)

      the policyholder accepts the insurer's offer of settlement.

  2. (2)

    When the insurer settles the claim by paying the policyholder, the insurer should aim to make payment within five business days after the insurer and the policyholder have agreed settlement terms, subject to any pre-conditions laid down by the insurer or in law being met by the policyholder. This does not prevent the insurer paying a claim before the policyholder has finally agreed settlement terms.

  3. (3)

    The guidance in (2) will not apply if the insurer settles the claim by:

    1. (a)

      payment against a liability due on a future date;

    2. (b)

      the provision of goods or services;

    3. (c)

      making payments on a date specified by the policyholder;

    4. (d)

      payment of the claim through another party (eg a care home) on a monthly or some other basis;

    and in the case of (a) or (b) the insurer should make prompt payment or arrange for prompt provision of the goods or services after the insurer and the policyholder have agreed settlement terms.

COB 8A.4.17G

The arrangements for settlement set out in COB 8A.4.16G (3)(b) apply to arrangements to supply goods or services to the policyholder. In such situations, the goods or services should be provided promptly but where they cannot be, the insurer should inform the policyholder when to expect them.

COB 8A.4.18G

An insurer should note that unless it has previously informed a policyholder that a claim will not be met in full or in part until premiums have been paid, the insurer may not delay the payment of a claim on the grounds that premiums are outstanding.

Pre-Action Protocols

COB 8A.4.19G

A policyholder who does not accept an insurer's rejection of his claim (or part of it) may challenge that rejection. If he chooses to do so through the courts, firms should be aware that, in England and Wales, there are pre-action protocols which lay down certain requirements as to the steps to be taken before proceedings are issued. This chapter does not displace these requirements, to which firms should have regard in the event that a rejection of a claim moves towards litigation.