5 Tips to navigate the claims process

07 February 2019

As the Mergers & Acquisition (M&A) insurance market expands, insureds may be increasingly likely to encounter claims. It is easy to understand why responsiveness and perceived simplicity of process are often prioritised when selecting an insurer in the heat of the deal, perhaps neglecting the true value of the policy (its ability to honour claims). JLT has a dedicated claims resource to assist insureds and their lawyers from the point a potential issue is identified and throughout the life of the claim.

Top Tips: Navigate the Claims Process:

1 Be Prompt: the policy will contain provisions setting out the requirements for notification to insurers. Any deadlines should not be missed, as they can be terminal to the claim. Prompt engagement with insurers (and JLT) on a claim or even a potential matter/circumstance that might lead to a claim is invaluable.

2 Be Precise: insurers will pay claims based on proven breaches of particular insured warranties that are tied to proven losses. It is often the case that a number of warranties could be relevant to a breach event. A claims notice that is as precise as possible about those facts and relevant warranties will be better received

3 Be Particular: when it comes to losses, it is tempting to submit a claim with the loss at its highest conceivable quantum. It is important to be self-critical as to the loss that flows from a breach (without selling your claim short) and, with that in mind, being as realistic as possible in insurer notification and communications.

4 Be Prepared: a frequent question that arises is whether a breach has been disclosed and is therefore excluded from the policy. If there is something within the disclosure that causes you a concern, you will need to consider how you prepare for and deal with that. You should also consider the other policy exclusions, anticipate issues insurers might raise and consider whether those need to be addressed with insurers head on.

5 Be Patient: the handler working on the claim will have to justify internally why any payment should be made. There may be co-insurers and/or other insurer participants on the placement that the leading insurer will need to interact with and the insurer may need to claim under its own reinsurance. All of this often requires external legal and other expert advice (including the review of deal documents/due diligence) to provide an objective justification for the claim payment. Just as there is a process to undertake when running a claim under a sale agreement, there is also a process to follow with the policy, which takes time to complete.

We understand that perceived delays in the claims process can be frustrating. Whilst claims will not be processed overnight, a deeper understanding of the claims procedures, (including what insurers need and when) is likely to lead to a smoother and more efficient claims process.

Our Recent Success

Case Study 1: In late 2018, JLT assisted an insured and its lawyers to obtain a prompt payment of a tax related claim. Following constructive discussions between JLT, the insurer and the insured’s lawyer, a settlement was agreed within seven weeks of the claim coming to light.

Case Study 2: JLT assisted in a multi-million recovery for an insured under their Warranty & Indemnity policy. The claim was particularly challenging as a result of the allocation of loss between covered and uncovered aspects of the claim circumstances. Ultimately, JLT negotiated and achieved an excellent outcome for the insured.

For further information please contact Sam Vardy, Associate on +44 (0)20 7558 3587 or email sam_vardy@jltgroup.com

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