Ombudsman urged to explain ‘fair and reasonable’
The insurance industry needs more clarification of what is “fair and reasonable” when it comes to making decisions on disputed claims.
The challenge came from panellists at the Financial Ombudsman Service’s (FOS) National Insurance Workshop in Melbourne last week.
Leading lawyer John Berrill, who is a board member of the Financial Industry Complaints Service (FICS), says panels such as FOS and FICS apply the law in contract terms and do not apply fairness, which he believes is wrong.
“We need a scheme that promotes a fair and reasonable ruling,” he said.
But CGU Dispute Resolutions Manager Chris Rodd, who is also President of the Australian Insurance Law Association, says this would not be fair on insurers, who have no right of appeal on a claims review panel decision.
Mr Rodd says the number of cases that come to FOS is minimal, and insurers try to resolve the issue themselves, in many cases paying out a claim to avoid further action.
“I’m a great believer that decisions need to be embodied by specific reference to contract wording,” he said. “‘Fair and reasonable’ shouldn’t play a part in the FOS terms of reference,” he said.
But conference participants made it clear they want to see some action on the “fair and reasonable” principle to make it easier to determine whether or not to pay a claim.
FOS General Insurance Adjudicator Ron Beazley says coming up with a definition of what is fair and reasonable is “incredibly difficult” when opinions differ not only between the applicants and the decision-makers, but between panel members themselves.
The challenge came from panellists at the Financial Ombudsman Service’s (FOS) National Insurance Workshop in Melbourne last week.
Leading lawyer John Berrill, who is a board member of the Financial Industry Complaints Service (FICS), says panels such as FOS and FICS apply the law in contract terms and do not apply fairness, which he believes is wrong.
“We need a scheme that promotes a fair and reasonable ruling,” he said.
But CGU Dispute Resolutions Manager Chris Rodd, who is also President of the Australian Insurance Law Association, says this would not be fair on insurers, who have no right of appeal on a claims review panel decision.
Mr Rodd says the number of cases that come to FOS is minimal, and insurers try to resolve the issue themselves, in many cases paying out a claim to avoid further action.
“I’m a great believer that decisions need to be embodied by specific reference to contract wording,” he said. “‘Fair and reasonable’ shouldn’t play a part in the FOS terms of reference,” he said.
But conference participants made it clear they want to see some action on the “fair and reasonable” principle to make it easier to determine whether or not to pay a claim.
FOS General Insurance Adjudicator Ron Beazley says coming up with a definition of what is fair and reasonable is “incredibly difficult” when opinions differ not only between the applicants and the decision-makers, but between panel members themselves.