Delta starts automated renewal pilot with brokers

Delta Insurance unveiled a new, digitised renewal process that it hopes will make policies “significantly simpler” for clients. According to chief operating officer Kent Chaplin, automation will allow the company to take “a significant step forward” in “the digital revolution happening in our business”.

Chaplin said automating otherwise time-consuming insurance processes is no longer the way of the future.

“It’s the way of the present – particularly in the Covid-19 environment,” he said. “The best performing insurance companies globally are changing their operations to automate significantly and simplify their processes in the face of strong consumer expectation, particularly in how they respond to Covid-19.”

Delta has teamed up with Auckland software firm FormsByAir to make its transformation. complex forms of insurance offered by Delta. Previously, underwriters had to follow up policies manually with brokers for each client, demanding time from the intermediary, insurer, and client.

Delta Insurance New Zealand managing director Dinesh Murali said the changes would make the experience more “efficient” for all parties, particularly brokers, “a vital” partner. “This is something our end-users have been seeking – a simpler process and better experience.”

Under Delta’s new system, a looming renewal expiry date automatically triggers an online questionnaire to the client via their broker.

Submission of the completed questionnaire, which is prepopulated with the client’s data, triggers the approval and renewals process.

“If any major changes are required, the process takes a little longer, but if there are no major changes, the actual renewal takes less than five minutes,” Murali said.

The insurer had been working on the process for roughly a year. It will be rolled out over the next 6-12 months, starting with a pilot group of brokers.

Delta will make the system available to all brokers who wish to take it up, though intermediaries can opt-out.

Murali said Delta’s ultimate goal was to adapt the questionnaire to enable more complex policies to be renewed digitally. The software leaves the underwriter room to develop new features in the future.

“The future is about automation and simplification – using smart technology to reduce manual intervention and re-keying, allowing underwriters to concentrate on value-added tasks, such as product development and enhancing customer service.

“Digital modernisation is a journey, and we’re off to a great start with this renewal process – watch this space.”

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Service or repair claim contested

Person A runs a small business importing farm machinery and selling it to New Zealand farmers. The machinery is complex so as part of the sale, the insured’s business also installs the machinery and sets it up to the farmers’ requirements. The setting-up of the machinery is commonly called ‘commissioning’, and it requires expert knowledge.

A step was missed by the insured’s employee during the commissioning of one particular piece of farm machinery. Because of the mistake, the machinery got damaged once the farmer started using it, and Person A’s business was responsible for repairing it.

The costs to repair the damaged machinery was over $20,000, so the insured made a claim under his two business insurance policies. The insurer considered his claim under both his general liability policy and his professional indemnity policy. After reviewing both policies and all of the claim information, the insurer declined the claim.

The insured was unhappy that his claim had been declined because he believed the repair costs should be covered under at least one of the policies. They asked the insurer to review their decision, but their decision didn’t change.

The insured then complained to FSCL. Dispute

The insured did not agree with the insurer’s decision to decline his claim and he wanted the claim to be accepted.

The insured had asked his insurer to consider the claim under a few different clauses in the policies, and they declined cover under each clause.

By the time the insured brought the complaint to FSCL, the dispute was whether the commissioning of the machinery should be considered a ‘service or repair’.

The insured argued that it was a service or repair and so the claim should be covered, whereas his insurer argued that the commissioning was different to a service or repair – so the claim shouldn’t be covered.

Review

Whilst the insured had focused on the ‘service or repair’ issue, FSCL needed to look at the claim in its entirety in order to understand what had happened. It was quite complicated, because there were two policies and both of them had been altered from the standard wording.

When the insurer first looked at the claim under the general liability policy, they advised him that, while there could have ordinarily been some cover under the ‘defective workmanship’ clause, that clause had been deleted from the insured’s policy, so it didn’t apply. This deletion was clear in the policy schedule, and FSCL was satisfied that the insured had accepted this.

In relation to the professional indemnity policy, the insurer explained that there was an endorsement that had been added to the policy that amended the clause the insured was relying on.

The amendment removed cover for any product or good (the damaged machinery was a product). The costs claimed were for the damaged product only, so FSCL was satisfied that the insured understood the claim wouldn’t be covered under this policy because of the endorsement.

The insured’s main argument was that his claim should be accepted under the general liability policy because the commissioning of the machinery was a ‘service or repair’. In order to determine the meaning of the words ‘’service or repair’’, FSCL looked at the dictionary definitions of the words, the context of the clause in the policy as a whole and considered the purpose and timing of the commissioning work.

FSCL decided that the commissioning work was related to the installation of the machinery, so