In 2014, the most frequent reason for complaints filed with the Syndic’s Office was the representative’s failure to properly explain, inform and advise. According to preliminary reports, a third of complaints made so far in 2015 also concern this failure.
A FEW OBSERVATIONS
The Syndic’s Office receives many complaints that result from a misunderstanding on the part of the insured. For example, in signing an assignment of claim to the supplier mandated by the insurer, the claimant believes that he is consenting to, amongst other things, having his damaged property removed for disposal. He does not understand that the supplier can actually take measures to restore his property.
Here is an example related to replacement cost: An insured does not understand why his insurer has only partially reimbursed him for an invoice he submitted to cover the replacement cost of his property. In fact, the insured has not understood that the payment represents the balance due to him, since the compensation paid at the very beginning of the process represented the value of his property on the day the loss occurred.
During our investigations, we actually see many cases where the professional is able to confirm to us, supporting notes in hand, that he did in fact explain the issues to the insured. For example, we are able to verify that the various stages of settling the claim, the scope of the assignment of claim to be signed and the meaning of the non-waiver agreement were all explained to the insured following the loss. In certain cases, the limits and exclusions that apply to his case were mentioned when the insured purchased his policy.
Given this situation, the conclusion is clear: Either the explanations given were insufficient or unclear, or perhaps a bit of both. Shouldn’t we instead be talking about poor communication?
FULL, CLEAR, APPROPRIATE EXPLANATIONS
An insured who suffers a loss often finds himself under great stress. The claims adjuster will have to be in contact with the insured a number of times since he is responsible for explaining the nature of the various documents to be signed, the steps involved in the settlement, and how compensation is calculated. Given the circumstances, however, the claimant may have trouble concentrating, despite all his best efforts.
Furthermore, damage insurance is complicated for ordinary people. Be it when purchasing an insurance contract, modifying coverage or determining the amounts of coverage or the deductible, incomprehensible insurance jargon can make people feel uncomfortable and insecure.
It is therefore not enough to sufficiently inform and explain the issues to the insured—everything must also be clear and tailored to his specific situation and level of knowledge and experience.
Indeed, as Justice Chevalier of the Court of Appeal wrote in the case of Les marbres Waterloo Ltée v. Gérard Parizeau Inc., 1987 QCCA 773:
The [degree of] importance of the duty to advise must, moreover, vary according to the circumstances of the case. One such circumstance relates to the insured’s ignorance or understanding of the issue at hand; this last point is particularly relevant to the matter under dispute. [unofficial translation]
As a precautionary measure, the Syndic’s Office suggests you communicate clearly, using plain, simple language that most people would find easy to understand. Be aware that it is your duty to ensure that the person with whom you are speaking truly understands what you are saying. You should therefore:
- Use simple, common words.
- Speak in short sentences.
- Explain specialized terms and complicated ideas.
- Illustrate your points using graphics, tables or charts, as needed.
- Make sure your client has understood you by asking him to repeat in his own words what you have just told him.
In a nutshell, be clear!
It is worthwhile reviewing a few of the ethical obligations of damage insurance representatives and claims adjusters with respect to the duty to explain, inform and advise.
Code of ethics of damage insurance representatives
Code of ethics of claims adjusters
Act respecting the distribution of financial products and services
By Me Marie-Josée Belhumeur, LL.B., syndic