Boardroom Briefing | June 2020
There are many boardroom challenges in the age of COVID-19 and one of the those is keeping an eye on circumstances that could give rise to a claim. It might be circumstances that have arisen in the ordinary course of business or a ‘new’ risk arising from the pandemic itself. There is now potential for an increase in financial claims against the company and/or directors and yet this is the time when it is easy to be distracted by newly arising day to day challenges. This is how your Lockton broker drives claim results and what happens when an insurer won’t come to the party.
Regular review: Whilst the company must have in place its protocols to elevate claims, or potential claims, up to the person in charge of risk, your Lockton broker also ensures that there are regular claims meetings throughout the policy year to assess all current and potential claims. Now, more than ever before, there needs to be regular ongoing assessment of possible claims by employees, shareholders, regulators, creditors and other third parties. It is vital for everyone in the company to keep contemporaneous files notes of important conversations and Zoom meetings. Are there circumstances, unique to Covid-19 or otherwise, that need to be notified to your insurer? Your Lockton broker can help you make that important assessment and frame your notification.
Mindful management: Reporting claims or potential claims to your insurer is the first most essential step but it doesn’t end there. Claims management is an ongoing process. Has the notification been accepted by the insurer, does the insurer need to be updated further and has the company received formal confirmation of indemnity? A notification should never hibernate it must be reviewed regularly in conjunction with your Lockton broker.
Active advocacy: Sometimes an insurer doesn’t see eye to eye with your notification, this is when your Lockton broker can actively advocate on your behalf for acceptance and resolution of the claim. First step is a strategy, a best way forward roadmap of why the claim should be paid (useful for the company’s internal use and in advocating to the insurer). Maybe there are sections of the Insurance Contracts Act (ICA), engineered as consumer protection legislation, that your Lockton broker can use to drive the claim forward when engaging with the insurer. The all-important duty of utmost good faith has been given a shot in the arm by recent amendments empowering ASIC to enforce substantial penalties against insurers that contravene their duty (sec. 13(2A) ICA). Another strong incentive for insurers to do the right thing is the General Insurance Code of Practice, in the process of a revamp, which promotes claims investigation transparency. Your Lockton broker has a sound understanding of how sections of the ICA work as tools for advocating the acceptance and, the ultimate goal, payment of your claim.
Revving up resolution: If our broker advocacy still hasn’t resolved an impasse with the insurer, sometimes the most cost-efficient solution is found in the Federal Court’s ‘short matters’ insurance list. The list is a comparatively inexpensive and efficient way to resolve discrete questions of policy or legislative interpretation without the expense and stress of a full-blown legal dispute.
IN BRIEF: Despite the challenges of corporate life at the moment, keep an eye on claims or potential claims that need to be notified to your insurer. Your Lockton broker can use the ICA and other advocacy tools to drive the best possible claim outcome. We can help with drafting in-house protocols to escalate possible issues, formulating your notification to the insurer, reviewing regularly your claims progress and advocating claims resolution on your behalf.