Analysis: Insurers torched on Twitter over Liverpool Fire

computer fire

Consumer Intelligence found that

  • 86% of people were broadly happy with the industry response, but a vocal minority influenced the insurer response.
  • Attitudes towards the insurer response was polarised based on age.
  • While eight out of 10 consumers were aware of the fire, only 17% were aware that insurers were waiving the excesses of policyholders affected.

How social media influenced the response of insurers to the Liverpool fire

The insurer response to the Echo Arena car park fire has painted a picture of an industry unprepared.

U-turns and industry infighting followed in the wake of the Liverpool car park blaze, which destroyed 1400 cars on New Year’s Eve, framed in the context of an online public outcry on social media.

Post unravels the industry response to the fire, and explores how events like this may shape insurer policy in the future.

Exceptional circumstances

Within a few days of the blaze, discontent over the insurer response had already begun to spread online. Policyholders took to Twitter to vent their frustrations, chief among which was that they were being made to pay an excess.

Four days after the fire, a Direct Line policyholder told Post: “Yesterday I registered a complaint and was told that we would have to pay the excess if they cannot prove who was liable.

“I have said I will not be agreeing to this and should not be out of pocket for simply parking my car.”

Notable among those tweeting was Liverpool mayor Joe Anderson, who sent a tweet detailing a letter he had sent to Association of British Insurers director general Huw Evans.

“Some car owners whose vehicles were in the car park are reporting that their insurance companies are being less than helpful when it comes to processing claims,” the letter read.

“There is already a wide disparity in the responses of individual insurance companies, with some settling immediately and others dragging their feet, quite unacceptably.

“This must not become a cold, bureaucratic response.”

A petition was set up urging the Financial Ombudsman to step in and ensure that policyholders’ excesses were refunded, gaining hundreds of signatures in a matter of hours.

As the Twitter messages continued to flood in, insurers began to reverse their approach to dealing with the claims. LV announced that it would waive the excesses on an ex-gratia basis for customers affected, with a company statement citing “exceptional circumstances” as the reason for doing so.

Ageas and Tesco Bank also began to refund excesses paid, with Ageas citing the “unprecedented number of vehicles involved” as the reason why.

Markerstudy followed suit, and the next day so did Admiral, Hastings, Aviva and Co-op.

Direct Line and its brand Churchill, however, did not. “Each insurance company will decide how to deal with these claims independently,” the group tweeted. “One insurer’s decision will not necessarily affect another company’s.”

Two days later, both brands reversed their approach, with Churchill tweeting: “Due to the exceptional circumstances of the Liverpool fire, those affected do not need to pay their excess, NCD will remain intact and the claim won’t affect their premium at renewal.”

Communication problem

Another point of contention for policyholders was the language used by insurers at the point of claim. Many were angered that they were declared to be ‘at fault’.

A Churchill policyholder told Post: “As it’s a recorded ‘fault claim’ on my own policy my future premiums will increase. I had to haggle on the price of my vehicle despite having evidence of similar models for sale at a higher price.”

ABI head of motor and liability Rob Cummings explained that the language used did not mean that insurers viewed the motorists to be ‘to blame’.

“The use of the word ‘fault’ in relation to these claims is insurance terminology that reflects the fact claims are being made against customers’ own policies because there is no-one else to claim against, this is not insurers saying customers are in any way to blame,” he said.

“This is the same as when a vehicle is stolen, for example.”

Consumer Intelligence CEO Ian Hughes, whose firm recently conducted a survey into consumer responses to the fire, believes that reviewing the terminology around claims of this nature would limit the risk of a backlash in response to future events.

“It’s the words ‘at fault’, that cause the issue, because they are insurers’ words, built around people who are viewed as risks,” he said. “This is instead of customer’s words, such as ‘not covered’, or ‘not insured’.

“Those are the sorts of wordings that insurers should be thinking about.”

Insurers also failed to influence the narrative on a wider scale. Consumer Intelligence research revealed that while eight out of 10 consumers were aware of the fire, only 17% were aware that insurers were waiving the excesses of policyholders affected.

A dangerous precedent

The fire highlights a difficult conundrum for insurers in the wake of mass-claim events, which is to either anger existing customers or to adapt the response and risk setting an expectation for the same approach to be taken in future.

For example, Axa took a different approach to other insurers in the wake of the fire, opting to treat the claims as they would any other, regardless of what others described as the “exceptional circumstances” around the event.

One Axa policyholder, whose car was destroyed in the blaze, told Post: “I’ve been tweeting to Axa as it refused to refund my excess.

“Other insurers have either waived the excess or have refunded it if initially charged, they’ve reinstated NCD and they won’t be classing the fire as a fault claim. This shows Axa are not following industry standard practice.”
Axa CEO Amanda Blanc defended the insurer’s position.

“In the 30 years I’ve been in the industry, I’ve never seen an excess waived for an event such as this and, while we sympathise with those impacted by the Liverpool fire, it is no different to a flood, storm damage or a sink hole,” she said.

“Waiving the excess in this instance warps customer expectations and sets a dangerous precedent. How will the industry respond to the next large-scale event?

“At Axa, our aim is to treat customers fairly and we refuse to give less favourable treatment to our policyholders whose claims have not attracted the interest of the media.

“With that in mind, we will continue to employ the use of an excess – it plays a key role in our ongoing fight to keep our premiums competitive.

“Our focus is to build trust with our customers by being consistent in our decision-making and not acting in the interest of securing favourable headlines.”

Insurance ethics consultant Duncan Minty agreed with Axa’s approach. “For a policy to be fair, it needs to work for one loss or 1400 losses,” he said.

“What happens when there’s 100, or 10? What happens when there’s two, and one of them is say entertainer Stephen Fry, who’s got a social media presence far stronger than any insurer?

“What Blanc was saying was ‘Can we coordinate and think alike on this? Our reputation is important’ and there’s something in that.

“But what I would question is whether insurers are sitting down having a really in-depth discussion about the fairness of the ways that the policies react to a situation. I’m not sure if that sort of discussion really happens.

“The danger, taking Blanc’s phrase, is more in the power of the concerted voice of the customer. Those people were using the language of fairness, and fairness should be a philosophy that is essential to how insurance works.

“These events crystallise the question of whether the sector is taking a wide enough view of what fairness is, or if it’s got into a corner where it’s listening to itself too much.”

Shifting consumer expectations

When Consumer Intelligence questioned the public on their satisfaction with the industry response, it found that attitudes showed signs of polarisation based on age.

Hughes explained: “At one end, the over-45s seem more underwhelmed, with less than one-third of this segment saying they felt the industry had gone ‘above and beyond’ in their response to the fire, significantly below the average.

“We might speculate this could relate to levels of awareness of the industry response being lower among this demographic, as it received less publicity than the original action, and much of the publicity it did receive was via social media, which of course skews younger.”

The survey found that under-35s showed a wider spread of views, both positive and negative, which Hughes believes could signal a shift in consumer expectations, or “the polarising effect” of modern media.

“However, we note that overall, only a small minority of consumers believe the industry categorically failed in its response,” he added.

“While a small majority of consumers said they would expect the industry to act ‘pragmatically’ in future incidents like this, we note that younger demographics are typically more sceptical, not necessarily because of trust, but because they seem to understand their policy limitations better.”

Notably, the survey also found that 86% of people said they were broadly happy with the industry response.

“That means that only a small minority of people weren’t happy, but a vocal minority,” Hughes said. “The other thing the industry needs to be aware of is that you can have a very small and very vocal minority, however, those people can influence the media, get you onto the front page of the newspaper, so it doesn’t take much.

“The vast majority might think you’ve done a great job, but actually the coverage is informed by a very small and vocal minority.”

Future

Though the motor insurance industry’s total losses on an average day exceed the cost of the Liverpool fire, and though there have been some examples of coordinated online discontent following other mass-claim events such as floods, the scale of the online response to the fire was something insurers had not dealt with previously.

Minty believes that it will become increasingly common for this type of online response to occur following mass-claim events.

“People are more familiar with how to respond,” he said. “The use of hashtags allows that to be coordinated. They can see and hear other people saying the same thing.

“The industry has traditionally dealt with customers on a one-to-one basis, but when they coordinate their feelings, and their opinions, then insurers are going to find that a new experience.

“The UK insurance market hasn’t got a lot of experience of customer challenge. In other markets, such as the US, there is more of a tradition of groups raising points with insurers saying and the sector responding.

“The UK sector has less experience of that, but it needs to get ready for it because it will happen more.”

Hughes agreed, adding that insurers need to develop strategies to deal with mass-claim events before they occur.

“The trick is to see it coming and to try and build policy around how you deal with it before the incident happens, rather than making it up as you go along,” he said.

“The big challenge for me is insurers still think about customers as risks. They still don’t think as customers as human beings who have human issues, and then have human emotions and connect with other humans to outpour those emotions.

“As long as insurers think as customers as risks they’re going to have this problem.”

Incidents such as Churchill’s original excess stance and subsequent U-turn could paint a picture of a rushed and disorganised industry response. Hughes believes that insurers should view their responses to mass-claim events as an opportunity to shape their brands.

“If you’re a large insurer, when you see that there’s a building catching fire with 1000 cars inside it, you can be pretty much assured that one of those is going to be yours,” he said.

“So how do you deal with it? Do you wait for the claims to come in and leave it to a lowly claims assessor who’s just going by the rules that are there in front of them, or do you actually proactively respond to it, and make it part of your competitive advantage?”

insurer tweets

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