Reducing exclusions can boost customer trust and profitability – Holmes

Reducing exclusions within insurance policies could enhance customer experiences and boost profitability, Andy Holmes, chief executive at CFC, has said.

Speaking during the 2024 CFC Summit last week (12 September 2024), Holmes said that many exclusions in insurance policies were rarely used and primarily serve as protective measures for insurers.

Insurance exclusions define what a policy does not cover, outlining specific conditions, situations or types of losses that are not included in the coverage.

Holmes said that among exclusions commonly applied was “known circumstances,” which relates to issues the insured was already aware of before the policy’s inception.

He also highlighted “retroactive date” exclusions, which exclude coverage for events that occurred before a specified date.

“Both of these exclusions can be incorporated into the scope of cover as defined by the insuring clause,” Holmes said during a session entitled Insurance: the dinner date turn off? 

“The rest are just window dressing, comfort blankets for insurers and signs of threats for customers.”

Dispute costs

Holmes also highlighted the financial and reputational costs associated with disputing claims due to some exclusions.

He said that insurers can “often spend more on legal fees and coverage counsel to contest claims than they would if they paid out additional claims”.

And he argued that this was resulting in “significant costs” and the loss of “customer trust and goodwill”.

Holmes continued: “[From an underwriting perspective], reducing or eliminating certain exclusions could enhance customer experiences and underwriting profitability.”