The Insurance Ombudsman said that insurance agents do not advice clients on special electrical equipment policies but instead sold fire insurance policies for which premiums are much lower. "According to fire insurance policies, there must be evidence of a fire by way of burn marks in order for a claim to be paid. But when electrical appliances are damaged due to a power surge caused by lightening, there are no burn marks," Dr. Wickrema Weerasooria, Insurance Ombudsman said. He told the Island Financial Review that because insurance agents sold fire insurance policies instead of the electrical equipment policies, claims are not paid by insurance companies when expensive electrical equipment are damaged by a power surge. "The insurance agents are only interested in selling a policy and claiming their commissions. They do not advice people on the difference between the two policies. It is important that the insurance companies take steps to ensure that the public is adequately informed about the appropriate insurance policies," he said. Dr. Weerasooria said that many households and business establishments use expensive electrical equipment from basic kitchen appliances to expensive computer and telecommunication systems. He advised the public to inquire about the cover for damages to electrical equipment caused by a power surge before signing up for an insurance policy. "If people want cover for damages to their electrical equipment, then they must go for the special electrical equipment policies even though the premium may be relatively high." Dr. Weerasooria recently released the Insurance Ombudsman’s Report for 2007/2008. Another problem he encountered during the year the report reviewed was that damages caused by rain water floods are not covered by a normal flood policy. "A lot of marsh land has been filled up and drains are clogged leaving no room for rain water to seep through. There have been instances where a factory was effected by rain water flash floods but the insurance company did not pay the claim as it was not a flood," Dr. Weerasooria. He stressed the need for the insurance industry to come out strongly with clearly defined terms and distinguish between ‘rain water’ and ‘floods’. During the year, from March 2007 to February 2008, the Insurance Ombudsman’s office received 378 complaints. The breakdown of the complaints are: third party motor insurance claims, 25 percent; comprehensive motor insurance cover, 10 percent; life insurance related complaints, 25 percent; fire and burglary, 20 percent; complaints from agents against agents, 10 percent and miscellaneous complaints, 10 percent. Dr. Weerasooria said that about 60 percent of the third party motor insurance policy complaints could not be resolved as three insurance companies, namely Ceylinco, Eagle and HNB, had opted to follow the Motor Traffic Act No 136. "According to this act, an insurance company will pay the claim to a third party only if the policy holder is convicted in court and the three insurance companies had rightly informed me that they would not submit to my inquiry," he said. Dr. Weerasooria said he had to advise the claimants to seek legal recourse. "But only a small fraction of them would ever do so. The purpose of having an Ombudsman scheme is to give people a chance to settle disputes outside the legal frame work which costs time and money," he said. The complaints received on non payment of claims on comprehensive cover on motor vehicle policies were related to penalties imposed on policy holders for undervaluing their vehicles to get away with paying smaller premiums. The issues relating to life policies were mainly due to non-disclosure of health conditions and the failure to pay in premiums. Dr. Weerasooria said that 90 percent of the fires and burglaries had been self induced. |
