M Wxxxx Gordon D. Clement Managing Director & CEO 28 xxxxxxxxxxx Budget Direct Mt. Gravatt QLD 4122 Insurers Hotline Pty Ltd xxxxxxxxxx@hotmail.com ACN/ARBN 003 617 909 PO Box 342 TOOWONG QLD 4066
30 September 2007
Dear Mr Wxxxx
Claim Number 11139XXXXX-01 Incident Date 22 July 2007 Insured Mxx Bxxxx
I am bringing to your attention a dispute with Insurers Hotline that is intended to go before the Insurance Ombudsman at the earliest possible time. It involves the above claim which resulted from an accident that occurred on 22 July, and which has not yet been finalised, 73 days later.
An amount was agreed on 17 August but the client subsequently received a cheque for partial payment and an unacceptable alternative offer. The client received cleared funds from the partial payment into her account on 29 August and since settlement has not been effected, the client now claims other amounts which she should equitably receive.
Insurers Hotline seem to be acting as though their client has some fault in the accident when evidence available to Insurers Hotline shows that she had no fault. By acting this way, Insurers Hotline is making liars of their client, her witness and the police who attended the accident. Alternatively, Insurers Hotline never had any intention of establishing fault, which results in unethical practice.
I ask that all further communication from Budget/Insurers Hotline be in writing, by email or letter.
This letter deals with the following matters:
1. Insurers Hotline has not honoured the settlement agreed on 17 August, but in its letter of 21 August 2007, makes an alternative offer so that settlement is not yet effected for an accident that occurred on 22 July 2007. 2. Insurers Hotline has taken an adversarial position in dealings with its client and has neither offered nor provided any assistance to its client in attempting to expedite the claim, but has impeded its client’s claim against the other party’s insurers, RACQ. 3. It took an extraordinary long time for Insurers Hotline to respond to this claim and tomake a settlement offer. 4. At a time when its client was suffering from injuries incurred as a result of the accident, Insurers Hotline has caused her great anxiety and distress by acting unprofessionally and by failing to act with due diligence. 5. Effecting a claim with Budget requires the client to have the skills of a negotiator, of a solicitor, of a used car dealer, of an insurance professional, and of an investigator, or alternatively, to acquire the assistance of a third party. 6. Availability of Tapes. 7. Insurers Hotline letter of 12 September 2007 requesting details of the accident! 8. Amounts now sought by the client. 9. Final Decision Letter.
1. Insurers Hotline has not honoured agreed settlement Insurers Hotline letter of 21 August states "banking of this cheque constitutes acceptance of this offer as full and final settlement". This acceptance is denied. The alternative offer to that agreed on 17 August is noted. The contract between the parties is the policy in the form of the Product Disclosure Statement (PDS), Part A, and the specific policy details, Part B. The contract contains no provision for Insurers Hotline to unilaterally vary contract conditions. Variations could be made with the consent of the client, but such consent is not given in this case. It seems that Insurers Hotline, after agreeing to a settlement amount on 17 August is attempting to be clever and coercive by making an alternative, reduced offer and enclosing a cheque as enticement to the client to roll over. The agreed settlement amount was $25,133. and the client now requires immediate payment of the amounts specified below. Insurers Hotline must act according to the policy conditions and it is not doing so. If the offer of 21 August has been calculated as the 17 August offer less $400.00 excess, then I refer you to the clause on page 9 of Part A of the Product Disclosure Statement which reads ”You do not have to pay any excess if the car is involved in a no fault accident with another vehicle …”. I also refer you to your website which states “No excess to pay when third party is identified and at fault”.
2. Insurers Hotline has taken an adversarial position Insurers Hotline has taken an adversarial position in dealings with its client and has neither offered nor provided any assistance to its client in attempting to expedite the claim. Not only that, but rather than assist its client, Insurers Hotline has impeded settlement of Ms B’s claim with RACQ, the other party’s insurers, by giving them incorrect information, resulting in an offer by RACQ of an amount substantially less than costs actually incurred by Ms B which she would otherwise be entitled to for costs of alternative transport to enable her to engage in her employment. I understand that Insurers Hotline has advised RACQ that it made a settlement offer to Ms B on the date that it assessed the damage to her vehicle, 8 August. That is not a true statement. Negotiations of settlement commenced on 16 August and were concluded on 17 August.
The first indication that Insurers Hotline were going to make the claim as difficult as possible came with advice by Insurers Hotline clerk, S, that Insurers Hotline refused to accept advice of a pending claim from other than the insured, and that notice of intention to claim was required within 24 hours of the accident. This was misinformation and an apology was subsequently received from Insurers Hotline officer, D.
If ‘good guy, bad guy’ tactic is an approved strategy of Insurers Hotline management, then throughout this ordeal the staff have done their job well. The pattern of ‘good guy, bad guy’ responses from Insurers Hotline staff continued throughout the 27 days it took to get a settlement offer.
The next indication that Insurers Hotline were going to make the claim as difficult as possible came with Insurers Hotline letter of 25 July. In this letter, Insurers Hotline implied fault on the part of its client in spite of having been informed on 23 July that the other party had apologised on 22 July, and admitted fault not only to Ms B and a witness, but to the police who interviewed the other party at PA Hospital. One phone call by Insurers Hotline to the relevant police would have confirmed that police accident report QP070018XXXXX confirms this. Contrary to policy conditions, Insurers Hotline letter of 25 July states that: a.an excess of $400 will apply to Ms B’s claim. b.her rating will be affected (future premiums increased)
The trust relationship between insurer and client which the client had enjoyed for decades with previous insurers was broken by Insurers Hotline.
The result for Insurers Hotline perverting the fact is the saving of $400 in settlement and the prospect of increased premiums in the future. At this point, Ms B broke down. She realised that a cheap premium comes at the cost of extreme difficulty in progressing and concluding a claim and asked me to act for her.
With respect to a., see comments in 1. above. With respect to b., the PDS on page 10 states, ”You will not lose any NCD with us on renewal if the car is involved in a no fault accident with another vehicle.” The Budget website states “MaximumNo Claim Discount Protection entitles you to make 1 claim during your current insurance period or 2 claims in a three-year period without affecting your Maximum No Claim Discount (Rating 1).” Breaches of conditions of Product Disclosure Statements are prosecutable by Australian Securities and Investments Commission <http://www.asic.gov.au/>and will be referred to ASIC unless rectified.
Insurers Hotline letter of 25 July also asks the client to provide the following documentation:
a. Confirmation of police report details b. Photocopy of the drivers licence details for Ms B c. Driving history for Ms B d. Any correspondence from the other party e. Third Party details
Insurers Hotline are capable of obtaining the items at a. and c. without passing this administrative task to its client and involving the client in further expenditure. The details at item e. had already been provided by phone to Insurers Hotline on 23 July.
If passing to the client the responsibility for obtaining claim documentation which requires payment of fees is an approved cost reduction strategy of Insurers Hotline management, then in this ordeal the staff have done their job well.
Insurers Hotline letter of 25 July also states that, “Our Claims department will contact you at regular intervals to ensure you are kept up to date with the progress of your claim.” It did not.
We contend that, under the circumstances, it would have been reasonable for Insurers Hotline to have done the following things to assist its client; things which it is known are done by insurers such as AAMI and RACQ: 1.Professional assessment of the replacement value of Ms B’s vehicle. 2.In dealing with the client, cognisance of the fact that she suffered severe injuries, totally incapacitating her for several days, and that suffering and treatment are ongoing. 3.Assist Insured in dealing with other party and with other party’s insurers. 4.Prompt advice of the items that Insurers Hotline requires to complete its documentation. 5.Prompt assessment, written communication and negotiation, and prompt, equitable settlement offer. 6.Advise Insured of those items she should claim from Insurers Hotline, those items she should claim from the other party’s insurers, and those items she should claim from the Nominal Defendant. obtain for itself such documents as Queensland Transport Traffic History Report, confirmation of ownership, reference number of police accident report, and confirmed details of content of police accident report.
3. Extraordinary long time for Insurers Hotline to make a settlement offer. Ethical questions aside, the much advertised recommendation by former NRMA Director, Richard Talbot, that “Budget Direct keep their prices low through careful risk selection and excellent operational efficiency, not by reducing the quality of their service or level of coverage” must be brought into question in view of this ordeal. It is noted that Mr Talbot, and in all written, Internet and television advertising I have seen, Budget/Insurers Hotline focuses on cheap premiums and steers clear of commenting on Budget/Insurers Hotline’s manner of handling claims, which at best could be called dilatory. · 22 July Sunday 10.15pm approximately - the accident occurred. · 23 July Monday - Insurers Hotline were advised of the pending claim. · 23 July, Monday Insurers Hotline letter to client enclosed ‘Insurance Certificate - Your Personal Details’. The letter contains no request for or commitment to action. · 25 July Wednesday, Insurers Hotline letter to client enclosed ‘Insurance Certificate - Your Personal Details’. This letter seems to be identical to the letter of 23 July, and serves no purpose. · 25 July Wednesday, Insurers Hotline letter to client contradicts policy conditions, asks client to do provide Insurers Hotline with documentation listed (within 3 working days!). · 2 August Thursday - My letter to Insurers Hotline reiterating the accident description given by phone on 23 July and pointing out that at that time, twelve days after the accident, the client had not yet been advised by Insurers Hotline of the progress of her claim, nor even whether her vehicle would be repaired or written off. This impacted on how much longer she must contract to hire a vehicle. No written response was received from Insurers Hotline to this letter, and questions remain unanswered. · 8 August Wednesday. Eighteen days after the accident, client’s car removed from Harvey’s Towing yard at McGregor for assessment by Insurers Hotline. · 8 August Wednesday. Eighteen days after the accident, Insurers Hotline ‘assessor’, D phones to advise of his assessment of the pre-wreck value of the car. · 16 August Thursday. J phoned me to seek negotiation of a settlement on the basis of the car being written off. This resulted in my suggesting an amount that the client would accept. J said he would ask his manager to review the negotiation and make an offer. · 17 August Friday. J phoned me and made a settlement offer of $25,133. · 21 August Tuesday. D phoned asking for proof of ownership. · 21 August Tuesday. Insurers Hotline letter to client (received 5.30pm 23 August) enclosing cheque for $24,733 and seeking ‘acceptance of this offer as full and final settlement. · 21 August Wednesday. Insurers Hotline letter to client (received 5.30pm 23 August) stating that the policy is cancelled from 21 August. · 12 September Wednesday. Insurers Hotline letter to client asking for an accident description and a diagram!
4. Insurers Hotline caused client great anxiety and distress by acting unprofessionally and by failing to act with due diligence At a time when its client was suffering from injuries incurred as a result of the accident, Insurers Hotline has caused her great anxiety and distress by acting unprofessionally and by failing to act with due diligence. Eighteen days elapsed before Insurers Hotline acted in assessing the damage to her vehicle. During the following week, an ‘assessor’ named D contacted me regarding his estimate of the pre-wreck value of the car and the method he used to calculate it. I remonstrated about the delay in having the vehicle damage assessed and was told that he was “busy doing other things”. D was apparently not familiar with the claim so I suggested that, rather than waste my time, he read the file and phone me back. He mentioned that he had had the file for only 8 hours and seemed to suggest that was sufficient reason not to be appraised of its contents.
There was never any settlement offer made by D , no decision as to whether the vehicle would be repaired or written off, and no discussion of any element that would be included in a settlement offer, other than the pre-wreck value of the car. In any event it is unbelievable that an insurance company would put its shareholders’ investments at risk by permitting itself to be bound by offers made by a junior ‘assessor’.
The laxity demonstrated makes a nonsense of Insurers Hotline’s advertising that: “Over the Phone Claims - At Budget Direct, in most cases you can make car insurance claim requests over the phone. … another example of our understanding approach to claims” and “If you need to make a car insurance claim call 1300 139 591 and one of our claims consultants will help you get back on the road as soon as possible. In most cases you will be able to deal with any car insurance claims requests over the phone. We aim to have all claims processed promptly to avoid any inconvenience”.
These and similar statements are not merely an enticement to contract but are a statement of what a client can reasonably expect when they contract with Insurers Hotline. As such, these may well breach the provisions of the Trade Practices Act regarding false advertising.
During the 27 days that elapsed before an officer of Insurers Hotline made a settlement offer, the client did not know if her car would be repaired or written off. D stated on several occasions during the week 8 August to 15 August that if the client did not accept his estimate of the pre-wreck value of the vehicle, then it would be repaired. I passed on to him the client’s agreement to this with the proviso that the car would need to be returned to the condition it was in immediately before the accident, as required on page 10 of the PDS. I also suggested that Motorama be a good arbiter of whether standard tolerances were achieved in the repair, and I believe D accepted this. However, in a subsequent phone call he revised upward the estimate of the pre-wreck value of the car, but still not to a level that could be regarded as the reasonable cost to replace the vehicle with one of the same make, model, age and condition as the vehicle was at the time of loss or damage, even having regard to allowance for warranty, stamp duty and transfer costs.
This was low down horse trading at its worst. It seemed that ‘repair of the vehicle’ (which seemed impractical) was being used as a threat against the client to minimise her claim, and that she was being worn down by confusion and the personal cost of long delays imposed on her by Insurers Hotline, alone.
D did not seek negotiation, but merely acceptance of his estimate as being legitimate. His arguments amounted to deliberate and calculated attempts minimise the claim by coercing the client to accept, after three weeks inaction by Insurers Hotline, a value for her car that did not resemble market value and certainly would not permit replacement with an equivalent vehicle. Neither Ms B nor I regarded D ’s estimate as reasonable and we were therefore required to research the market - travel to all Brisbane Toyota dealers and used car dealers that advertised 2005 model Sportivos. It required that we spent more than two days travelling throughout the city and surrounds even though, until 16 August, Insurers Hotline did not confirm whether the vehicle would be repaired or written off. This impacted on how much longer Ms B must contract to hire a vehicle. All these factors constitute unreasonable costs being incurred by the claimant.
The insured vehicle was like new, and no vehicles of the same type were found to be equivalent to it. High kilometre and well worn vehicles were found and they were priced about the same as D ’s estimates. I questioned D as to how he arrived at his estimate. He replied that he had searched several Internet car sales sites and had found equivalent vehicles. However, he was unable or unwilling to provide the URL’s of the websites that advertised the vehicles despite repeated requests to do so.
Under the rules and examinations of the former Australian Insurance Institute there was much more required of a person before they could be called an Assessor than merely having the ability to research car prices on the Internet. That can now be done by the average ten year old. Surely the ANZIIF has not permitted standards in the insurance profession to fall to this level.
After the claim was passed to Insurers Hotline officer J he confirmed on 16 August that the only equivalent vehicle he could locate was selling for $26,000, the same figure that Ms B had agreed was reasonable, and $4000 more than D’s estimate. By this time the anxiety and distress caused by Insurers Hotline had indeed worn Ms B down and, still being in pain and poor health, she despaired of even receiving a settlement offer.
The phone discussion on 16 August with J was the first communication either Ms B or I had with an Insurers Hotline officer who was perhaps authorised by Insurers Hotline to make and be bound by a settlement offer, and even then, J stated that he could not be held to the offer but that he would first need to seek the approval of his manager. The fact that J was stated by D as being his senior therefore means that D was never capable of making a settlement offer as has evidently been conveyed to RACQ by Insurers Hotline.
It is fair to say that, in order to progress a claim through Insurers Hotline that it is necessary for a claimant to have the skills of a negotiator, of a solicitor, of a used car dealer, of an insurance professional, and of an investigator. It is entirely unreasonable of Insurers Hotline to require this of claimants, and iniquitous to require it of claimants who are suffering injury from an accident.
If it is a profit creating strategy of Insurers Hotline to simultaneously a.offer claimants no assistance to prosecute claims with Insurers Hotline or other parties, while b.intimidating claimants to accept a lower than market value for their vehicle, lower than would normally be paid by mainstream insurers then, throughout this ordeal, Insurers Hotline staff have done their job well.
Ms B was indeed worn down by Insurers Hotline’s intimidating practices and accepted the first offer of settlement made by Insurers Hotline. J stated that he wanted to reach agreement that day, 16 August, because he would be absent from his position from end of business, Friday 17 August. Ms B agreed to his offer of a settlement figure of $25,133.
5. Assistance of a third party required It has been demonstrated during this ordeal that to conclude a claim with Budget/ Insurers Hotline has required the client to have the skills mentioned in 4. above. Insurers Hotline were made aware by phone on 23 July and other dates, and in writing on 2 August, that Ms B sustained internal injuries in the accident and that suffering and treatment are ongoing. In the absence of assistance by Insurers Hotline, and because of their adversarial approach, to pursue and progress her Insurers Hotline claim, and progress her claim with RACQ, required that she engage assistance. The cost to date of doing so is $2750.
6. Tapes Ms B has only ever asked that her legitimate benefits and entitlements under her insurance contract with Insurers Hotline be honoured. There has been a lot of argument. Insurers Hotline has failed to communicate effectively in writing, and has failed to contact the client or me at regular intervals to ensure someone is kept up to date with the progress of the claim.
At various times during the month of this ordeal it was mentioned that telephone calls are recorded. I ask that true copies of the recordings, or transcripts if you have them, be provided as soon as possible so that argument and further distress to your client are both minimised, and resolution is reached as quickly as possible.
7. Insurers Hotline letter of 12 September 2007 Why ask again, 52 days after the incident, for details of the accident? The details are simple enough, were described by phone on 23 July, are reiterated in detail in my letter of 2 August, and are contained in the police accident report QP07001XXXXXX.
The request makes a falsity of Insurers Hotline advertisement which states,“No Paper Forms to Fill In Ever - We've developed a completely paperless system which means you'll never waste time filling in complicated insurance paperwork.” 8. Amounts now sought by the client. It has been necessary for the client to finance by credit card costs and expenditures which are a direct result of both the accident and of Budget/Insurers Hotline failure to honour its commitment to ensure that, “one of our claims consultants will help you get back on the road as soon as possible. In most cases you will be able to deal with any car insurance claims requests over the phone. We aim to have all claims processed promptly to avoid any inconvenience”.
In that Insurers Hotline has failed to honour the settlement agreed on 17 August, but rather, make an alternative offer in its letter of 21 August 2007, the claim is not yet settled and therefore in addition to the payment of $24,733 received, the client now claims the following amounts to effect settlement:
Loss of income by insured due to hospitalisation and recuperation 640.00 Loss of income by insured due to Insurers Hotline requirement that she obtain the proofs and perform administration that insurance companies would normally obtain/perform 480.00 Cost of a low rate rental vehicle 26 July to 29 August 1,774.40 Any amount of excess retained by Insurers Hotline 400.00 Assistance to progress and attempt to finalise the claim 2,750.00 Pharmaceuticals dispensed in hospital 9.80 Photocopying, telephone, printing 30.95 Qld Transport Traffic History report 6.75 Bus fares, for insured and assistant 11.80 Interest on credit card to 30 September - 14.5% for relevant outlays 55.23 $6168.93
It may be that part of these costs would be met by the Nominal Defendant or by RACQ since the RACQ client has admitted fault to the insured, to a witness, and police accident report QP07001XXXXXX confirms fault. However, that should be negotiated by Insurers Hotline since all delay in finalising the claim and placing the insured in funds has, and is, being caused by actions, lack of actions, and breaches by Insurers Hotline. Certainly the insured has acted reasonably at all times and has a reasonable claim, but I don’t think it is reasonable to require her to face a grossly miss-matched contest and arbitrate between two insurance companies that have unknown vested interests and have vastly superior legal might.
Since it is in the interest of the insured, and in to avoid the extraordinarily long delays that Insurers Hotline has demonstrated that it requires to take action on a claim, Insurers Hotline are requested to pay to the insured immediately, the amounts now claimed, and resolve any negotiations with RACQ as the companies find convenient.
9. Final Decision Letter Insurers Hotline officer, D , informed me of Insurers Hotline internal disputes resolution procedure. The history of this claim displays cleverness by Budget/Insurers Hotline, disrespect for client rights, and disregard for the well-being or equity of its client. It is therefore beyond probability that any adjudication by Insurers Hotline internal dispute process could be impartial. I have therefore set out in this letter the main elements of the matter to permit Budget/Insurers Hotline management to review the claim and reach its own conclusions. On the basis of their conclusions I ask that a Final Decision Letter be issued promptly so that the matter can be pursed initially through an independent arbiter, the Insurance Ombudsman, and if necessary, through peak bodies and other institutions having jurisdiction.
Should Insurers Hotline nevertheless require dispute resolution through its internal protocol, then I ask that it consider the time cost to its client and her assistants, and that RACQ, which has a stake in the dispute, be given in writing the opportunity to have an officer present to observe and hear the discussion. By doing so, RACQ will have a better understanding of the causes of the claims made against it and will gain the information it requires to make a more equitable assessment.
I may be contacted by email or post at the above addresses.
Yours sincerely
Gordon Clement
c. S S - Insurers Hotline c. P F- Chief Legal Officer, RACQ
