Reservation of Rights: A worrying trend

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A survey conducted by Airmic (the Association of Insurance and Risk Managers in Industry and Commerce) of its members in 2012 revealed a worrying trend in the use of ‘reservation of rights' letters by insurers in response to claims notifications.

65% of respondents had received a ‘reservation of rights' letter from their insurer, which they believed had been issued unfairly, and 57% indicated that the matter had not been resolved to their satisfaction. The scale of the problem is also of concern, with 35% of respondents receiving at least one reservation of rights letter in the past two years.

Airmic's survey results suggest that certain insurers are reserving rights routinely, and often in inappropriate circumstances. This situation comes as no surprise to those of us involved in dealing with insurers in relation to claims notifications. In our experience, there is a trend of insurers reserving rights far too readily; some even appearing to adopt it as the default response in relation to any high-value or complex claim notification, and this situation is being exacerbated by the ongoing economic conditions.

Produced by Lockton, this two page article sheds light on the findings and the implications for insurers and insureds.