Key points of the French Insurance Ombudsman’s report

Insurance Ombudsman – key figures in 2018

In 2018, the Insurance Ombudsman received over 15,000 requests for intervention – down 4.7% on 2017. This trend reflects a growing awareness among insurance companies and intermediaries of the need to process claims efficiently and proactively. 

The breakdown of disputes submitted to the Ombudsman by sector in 2018 was as follows:

61% of referrals concerned property and liability insurance (mainly automobile and home insurance);
39% of referrals concerned personal insurance: 9% for life insurance and 30% for personal risk insurance (health, creditor protection insurance, etc.).

Disputes frequently arose following total refusals to pay out compensation (32% of referrals), claim processing problems (27% of referrals) and problems concerning terminations, cancellations or waivers (12%).

72% of the Ombudsman's proposed solutions endorsed the insurance professional’s position. The proposed solutions put an end to the disputes in 99.5% of cases.

The Ombudsman's main recommendations for professionals

1- Claim management: the processing of claims is a major cause of dissatisfaction among policyholders.

Having a dedicated department that is independent of the technical departments and endowed with decision-making authority is a solution to be favoured by insurers. Keeping policyholders regularly informed about the progress made on their case, considering every aspect of the dispute and providing a quick, clear and personalised response are highly appreciated by customers. Providing explanations with precise references to page and article numbers in the General and Special Conditions can be another appropriate response.

2- Optimisation of beneficiary clauses in life insurance

Insurers are recommended to update the beneficiary clauses periodically to ensure that they effectively correspond to changes in the policyholder’s affective environment and in asset management techniques (especially regarding representation arrangements).

3- Limitations of glossaries: the presence of a glossary can improve the policyholders’ understanding of their policies.

However, it is important to avoid including terms of coverage in the glossary that are not specified in the coverage description set out in the policy. 

4- Insurance Product Information Documents (IPIDs) must be improved: insurance distributors must now provide policyholders with a standardized pre-subscription disclosure document called an “IPID”.

The mandatory points to be respected are the number of pages, order and location of headings, font size, column width, colours, pictograms, etc. The Ombudsman's initial observations highlight a number of breaches of the regulations that need to be addressed, including exclusions from coverage and the policyholders’ obligations.

5- Need to clarify vocabulary

The Ombudsman insists on the benefits of using consistent vocabulary and headings in the IPID and in all other documents relating to the same insurance product. 

6- Speed of settlements

The Ombudsman makes just one observation on this point – the manner in which our regulations are drawn up gives rise to contradictory demands. For example, our legislation requires the prompt settlement of life insurance benefits while simultaneously imposing new, time-consuming requirements (anti-money laundering measures, tax advice, recommendations on the choice of unit-linked products, etc.).

7- Inclusion of new illnesses

Many policyholders contest the denial of coverage based on the exclusion of mental illnesses when their work stoppage is due to “burnout” because they consider it to be a work-related condition rather than a psychological disorder. Unfitness for work or disability on grounds of fibromyalgia are also at the heart of many discussions. To address these issues, the Ombudsman invites insurers to draw up the contractual clauses in the clearest possible way, because policyholders must be able to ascertain the exact extent of their coverage.

8- Frequent tensions over appraisals

Policyholders frequently challenge the loss adjuster’s conclusions or the insurer's position, arguing that this information differs from what they were told during their interview. Given the specific nature of each policy and each situation, it is impossible to anticipate whether the loss will be covered at the time of the appraisal. Therefore, to minimise the likelihood of subsequent disputes with policyholders, the Ombudsman advises loss adjusters to refrain from giving any oral opinions on the possibility of losses being covered and, more generally, to behave with the greatest neutrality towards policyholders, while clearly informing them about the process.

Before taking any legal action, consumers can ask the Insurance Ombudsman to examine disputes
with an insurance company or intermediary concerning the performance of a contract.

Source: Rapport Annuel 2018 du Médiateur de la Médiation de l'Assurance (French Insurance Ombudsman’s Annual Report for 2018). June 2019