I read the article on the front page (12 December, Insurance Times) with interest. As an ex-banker now working in the insurance industry, I have had some experience in dealing with an ombudsman and I would like to assure your readers that it is not as bad as it sounds.
On the assumption that the ombudsman will deal only with cases where a compromise with the complainant cannot be reached, the ombudsman should become involved only when a letter of deadlock‚ has been issued by the insurer or broker to the complainant, who can then approach the ombudsman.
Normally, the ombudsman will deal only with personal clients and not business or corporate clients. The £700 fee is an overriding consideration when deciding to issue the letter of deadlock.
It should also be borne in mind that the costs start to escalate once the ombudsman becomes involved, as detailed reports will have to be prepared and this will need the input of someone senior in the organisation.
There is also the possible adverse publicity that may follow any complaint to the ombudsman, which may be the most damaging aspect. Thus you need to be absolutely certain as to your ground if you allow the ombudsman to become involved. There is a strong incentive to settle before reference to the ombudsman.
All too often in the past, insurers have treated clients in a cavalier fashion and I believe it will be healthy for the industry to have the financial services ombudsman to deal with complaints which cannot be settled to the clients' satisfaction.
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