AA Insurance: Tower wrong to say 20 per cent of claims 'withdrawn'

Thursday, 7 November 2019

Stuff readers provide reasons why one in five insurance claims is 'withdrawn' by the policyholder.

AA Insurance chief executive Chris Curtin has dismissed Tower's claim that 20 per cent of all insurance claims are 'withdrawn'.

Insurers say they decline less than one per cent of claims, but Tower chief executive Richard Harding told an insurance conference earlier this week that around a fifth of all claims made were 'withdrawn' by policyholders.

'At Tower, and I'd be surprised if it were different across the industry, one in five customers end up with what we call a withdrawn claim,' Harding said.

Chris Curtin, chief executive of AA insurance, says Tower chief executives claim that a fifth of all insurance claims is 'withdrawn' did not tally with AA Insurance's statistics.

But while Curtin believed Harding was right to raise the hidden issue of withdrawn claims, he said: 'I get a little bit animated when the implication is that 20 per cent of all claims the industry gets are withdrawn.

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'That doesn't resemble our statistics.'

'Our withdrawn claims are half of that. That's quite a significant difference.'

Harding raised the issue of withdrawn claims in a speech to the Insurance Council of New Zealand conference on Tuesday at which insurers acknowledged public trust in them had fallen to record low levels.

It prompted Stuff readers share their stories and beliefs explaining why so many claims were withdrawn ranging from insurer bullying, to policyholders being caught padding claims, to ignorant policyholders claiming for things their policies did not cover.

Richard Harding chief executive of Tower Limited.

Curtin said the main reasons AA Insurance policyholders withdrew claims was finding their claim was worth less than their excess, or that they had claimed for something that was not covered by their policy.

Figures given at the conference by Helen McNeill, chief risk officer at Suncorp, which owned 68 per cent of AA Insurance, showed in the years 2014 to 2018 AA Insurance had received 603,302 claims inquiries from its policyholders.

Of those 535,032 claims were pursued by policyholders, meaning 68,270 claims, or just over 11 per cent, were withdrawn.

Of the claims pursued 99.4 per cent were accepted, and paid by AA Insurance, said McNeill.

The company had a plan to get the number of withdrawn claims down, Curtin said, echoing a pledge made by Harding at the conference to reduce the level of claims that are withdrawn at Tower.

'We take the view here that any time there's a moment of disappointment or surprise, that moment erodes trust with the organisation and the industry,' said Curtin.

AA Insurance could do a better job of getting people to understand some of the fundamentals of their policies, he said.

The whole insurance industry had to do better, he said.

But there were challenges. People who bought their insurance online were more likely to make claims for things not covered by their policies, Curtin said.

And more and more people were buying their policies online, as opposed to buying them through a broker, in an insurance branch, or by phone.

While the wider insurance industry had a trust deficit, AA Insurance was ranked in the top five most trusted companies by Colmar Brunton, ranking joint third with TVNZ and Toyota, behind Air New Zealand in first place, and Pak 'n Save.